The NSW government's new laws that crackdown on property underquoting could result in fines doubling for real estate agents.
Victor Dominello Minister for Innovation and Better Regulation, last month stated that the government will look to stamp out underquoting by introducing new legislation this year providing tougher penalties for offenders. He said:
"Buying property is an expensive process, and when it comes to buying a home, there is also an emotional investment.Particularly in this very robust real estate market, it is important that the government protects consumers where there are irregularities."
He also recently reiterated the point that the government must ensure consumers are aware of their rights and also that real estate agents know their obligations.
What is underquoting?
Underquoting is where an agent advertises a price that is less than the vendor is willing to consider as a genuine offer. The practice encourages more buyers to look at a property, but is generally deceitful and can be a waste of time for potential buyers.
What will the new penalties be?
The new legislation will maintain the current penalty of $22,000 for underquoting, and also impose a forfeiture of fees and commissions for sales that have involved underquoting.
EXAMPLE:
The average price of a property in Sydney is $900,000.
Commission on this price would generally be around $18,000.
If underquoting had been involved in such a sale, in addition to a fine of up to $22,000, a real estate agent may lose fees of $18,000.
The government is also to establish a strict liability offence (currently in force in South Australia) which it as anticipated will act as a deterrent against underquoting.
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