What is the term “underquoting?”
It is the method of promoting a property for the purpose of drawing a higher number of prospective buyers and creating a stronger perception of competition for the property.
Though most real estate agents follow ethical standards in their methods of marketing properties, there are still those who don’t, despite the recent changes implemented in New South Wales.
Underquoting, also known as “bait pricing,” make both parties frustrated, especially the buyers who believe that the home of their dreams is within their reach, only to be crushed when they are outbid at auction.
The consumer body responsible for regulating underquoting in NSW is the NSW Fair Trading in New South Wales.
New underquoting regulations relating to the sale of residential properties was launched back in January 2016. With the reforms, NSW real estate agents are required by law to quote prices no lower than 10% of the highest appraised price and must not be lower than the lowest price on their appraisal. This helps make sure that buyers are not deceived into investing in a property that they cannot afford. Agents who are found to have underquoted may lose their commission and fined up to $22,000.
In addition, it is now illegal in NSW to put ads with the terms “offers over” or “offers above” but some agents are getting around this buy advertising “Price Guide $…….”.
Safeguard yourself against underquoting by checking comparable sales. Study up-to-date property reports and suburb profile reports that contain the sale prices and auction results of similar properties within the area.
You can also check with professionals. Talk to third party real estate agents or buyers’ agents and request information on the actual estimate of the sale price. Chat with locals who are knowledgeable about the area, especially people who are recent transplants there.