OFT Qld Updates

Published: 16 March 2007.

Keech ups ante on agents & auctioneers

Real estate agents and auctioneers will be forced to substantiate their estimates of the value of properties they are selling under new legislation proposed by the Beattie Government.
Fair Trading Minister Margaret Keech said agents and auctioneers involved in under and over-quoting of prices and reserves would face fines of up to $40,500 and corporations up to $202,500 under proposed amendments to the Property Agents and Motor Dealers Act 2000.
"The new legislation will require real estate agents and auctioneers to substantiate any price or reserve quoted with a comparative market analysis (CMA) which compares similar prices in the area," Mrs Keech said.
"A CMA compares like sales in the area, which will be defined as three properties of similar style and standard sold within a 5km radius within the previous six months.
"Any quoting of a range of selling/purchase prices must fall within the range indicated in the CMA.
"If a CMA is not available because of a lack of sales activity in the area, then the agent must provide the seller with a written explanation of how the agent arrived at the market or selling price for the property.
"Complaints of misrepresentation by some agents of the selling or purchase prices of residential property prompted my proposal to strengthen consumer protections and require more ethical conduct from real estate agents and auctioneers."
Mrs Keech said some agents gave sellers an inflated estimate of the property's value in order to obtain the listing.
"The agent lures the seller onto the market with a high price expectation then when it becomes apparent the property will not sell at that price the agent presents offers at the lower end of the price range until the seller finally accepts," she said.
"These agents put a broad range on a listed property to attract potential buyers to their office to get them interested in other properties for sale.
"Buyers also complain about the understatement of the estimated selling price. They have been misled into wasting time and money on pest inspections and other checks when the reality is the house is well outside their budget."
A Redcliffe real estate agency and its principals were fined $12,000 for this practice of grossly under-estimating selling prices in 2004 in the Commercial and Consumer Tribunal in the first prosecution of this type launched by OFT.
It was alleged the agency advertised properties well below their intended price, with one being advertised in a range almost $200,000 below the seller's price.
"Such conduct is annoying to people looking for homes. It wastes their time and often gives them false hope of buying their dream home," Mrs Keech said.
"From the response I got after the prosecution of the Redcliffe agency and the warning I subsequently issued, it is obvious people hate this practice.
"Strengthening our laws in this regard will require higher standards from agents in their dealings with clients."

Media contact: David Smith 3225 1005 / 0409 496 534

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