The number of investigators enforcing the rules is set to increase. As of July were there 19 frontline inspectors and 13 investigators overseeing more than 20,000 active real estate agents across NSW. That is set to rise to 40.
Underquoting has become so rife across Sydney that in a call-out to readers to share their auction experiences, this masthead surveyed more than 9100 people about their experience with misleading price guides. Respondents reported widespread and blatant underquoting, with 6344 people reporting they had spent time and money investigating the purchase of properties they were ultimately unable to afford.
In this masthead’s data analysis of 36,000 auction campaigns, nine out of 10 properties sold at auction did so for more than the guide.
Following an exposé by the Herald, former Ray White agent Josh Tesolin and his company, Tesolin Consulting, were slapped with a four-month suspension in August, pending possible disciplinary action, after a slew of allegations for serious and repeated breaches of the law.
Star agent Josh Tesolin pictured leaving his Bella Vista home on Friday.Credit: Sam Mooy
Agents have adopted a notional 10 per cent buffer on price guides in the decade since amendments were last introduced to the Property and Stock Agents Act aimed at stamping out underquoting that required agents stop using open-ended guides.
However, agents have increasingly gamed the auction pricing process to the extent that 48 per cent of auction sales analysed by this masthead were shown to sell for more than the 10 per cent guide. Of those, 16 per cent of sales sold for 20 per cent or more above the guide.
Moves to mandate advertised price guides and roll out uniform rules around pricing were welcomed by Real Estate Institute of NSW president Thomas McGlynn.
“Of the three main states with auction markets, NSW is the only one that doesn’t have standardised rules around pricing,” McGlynn said.
Buyers can go to three different properties in the same price range and all will be marketed in terms of price differently, said McGlynn. “One will have no price guide, one will have a set price ahead of auction and one will have a guide.”
By contrast, in Queensland there is no price guide on auction sales, and in Victoria a price guide is mandatory.
Many of the changes being proposed by the Minns government echo the rules that were rolled out in Victoria in 2017, whereby agents must provide a statement of information on the price guide that is backed by three recent comparable sales.
However, this masthead’s Bidding Blind investigation found that underquoting was still rife in Victoria because agents deliberately picked comparable sale results from properties that were not genuinely similar to the one for sale.
Over 18 months until June this year, more than half of the homes taken to auction in Melbourne sold for more than the top end of the price guide provided to buyers.
Following the investigation, Victoria’s peak real estate lobby group announced it would support the mandatory pre-auction disclosure of reserve prices by sellers, marking a significant policy shift for a group long resistant to such a proposal.
Key real estate industry leaders in NSW have also backed that model, as did 92 per cent of the 9125 Australians who responded to this masthead’s survey on misleading price guides.
However, the Victorian government has refused to say whether they are considering any further reforms, including changes to reserve disclosure, instead announcing a small shift to guidelines to address problems with agents picking bogus comparable properties.
And calls for mandatory pre-auction disclosure of reserve prices have been overlooked in the NSW government’s latest proposed reforms.
Long-time industry leader Tim McKibbin said more needed to be done in terms of agent training and enforcing compliance among agents.
McKibbin said three days training for agents just set them up for failure in the market, and called on Fair Trading to look to technology to more actively monitor agent behaviour.
“In my 21 years as chief executive of the Real Estate Institute of NSW the one consistent thing has been government determination to exclude any serious industry consultation,” McKibbin said.
NSW Strata and Property Services Commissioner Angus Abadee said the reforms were designed to bring greater transparency to property sales.
“By outlining our vision for clearer documentation and stronger penalties, we’re making it easier to hold agents accountable for underquoting,” Abadee said.
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