Victoria’s new underquoting laws

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May 1st 2017 has been and gone and there has been very little noticeable change to the way property is being quoted online. Whilst the new Statement of Information is not required for any properties currently being marketed with authorities dated prior to May 1st, the new advertising rules do apply according to the Consumer Affairs Website.

These laws only apply to sales authorities signed on or after 1 May, 2017. If your sales authority was signed before 1 May 2017, you are not required to prepare a Statement of Information for the property, but any price you advertise on or after 1 May must adhere to the new advertising requirements.
Source: Consumer Website

And that means no price plus quoting. No price over quoting and only a single figure or 10% range can be used. It does not preclude having no price or “Contact Agent” or “Price on Application” but it does consider any embellishment on pricing. Whilst it may take around 4 – 6 weeks before we see all advertised properties including a statement of information, we will see the removal of the advertising range embellishments and the like.

Once the new rules fully take hold we will see a “Statement of Information” included with all online advertising and displayed at all open for inspections, and private appointments, in a similar way to the disclosure statement that currently must be displayed. This statement of information needs to include a median price for the suburb. This median has only been specified for duration not where the information needs to come from. So, whilst the median may be over 12 months or 3 months it does not specify the data set. Already there are 4 major players in property data and all their medians are distinctly different. For example the REIV median of Camberwell for the March Quarter 2017 is $2.295m and Core Logic has it at $2.055m and at the other end of the scale Narre Warren’ house median according to the website is $500,00 and REIV has it at $580,000.

Also, the legislation doesn’t even say how much data you need, therefore, in theory, you could use a single salesmen’s last 3 months sales in a suburb, or the company’s or the last sales from Valuer General or the Real Estate Institute of Victoria. Basically the median price tells you very little about the property you are considering.

Also, the Statement of Information must include:

  • an indicative selling price for the property. This may be a single price or a price range of up to 10 per cent. It must not be less than:
    • your estimated selling price
    • the seller’s asking price
    • a price in a written offer that has already been rejected by the seller.
  • details of the three most comparable properties, including the address, date of sale, and sale price; or – if you did not take into account three comparable properties when setting the estimated selling price – a statement outlining that you reasonably believe there are less than three comparable sales within the prescribed period

Source: Consumer Website

Note the words “most comparable” this is a very subjective statement and will be the single most important part of these new rules. If the real estate agents decide to look at the truly comparable properties then this change in legislation will be extremely useful and should help people when buying property. But if agents want to keep underquoting in order to affect their competitors campaigns, then they will use comparables that may not be the “most comparable” Only time will tell. We will see what happens over the next 4 – 8 weeks.

If you need some assistance purchasing a property in Melbourne, please feel free to give us a call for a chat.

Ian James
JPP Buyer Advocates

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About the author

Ian has been operating his own businesses for more than 25 years. During this time the self taught lessons of building the business, dealing with staff, suppliers, clients and economic woes have been invaluable. Ian is a fully licensed Real estate Agent, a member of the REIV and registered with the Business Licensing Authority.

Buying property is not just sticking up your hand and outbidding your rival. It is an emotional, fiscal and psychological decision that needs to be planned and well executed. Ian is usually involved in over three hundred property negotiations per year; ranging from the $250,000 first unit purchase for a young couple to multiple million dollar residential developments. Ian's business background and endless numbers of negotiations make him one of the industry's leading negotiators.

Ian is married with two adult children, living in Patterson Lakes. He is a keen fisherman when weather and business allows the time.

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