C&G’s Guide to Victoria’s New Real Estate Quoting Laws

As of May 1, real estate agents in Victoria must comply with a new set of regulations concerning the advertised sale price of properties on the market. C&G has rounded up all the need-to-knows for both buyer and vendor, so you’re across the changes.

What is Underquoting?

Over the past few years in the rising Victorian real estate market there has been much discussion about underquoting, which is generally understood as advertising a property at a price below its value in order to stimulate demand. Accusations of underquoting have been the cause of much consternation in the wider real estate industry, as the heat in Melbourne and Sydney markets has seen properties sell well above their reserve because of high demand and fierce competition – and not necessarily underquoting.

What has Changed?

The government has brought in a new set of regulations which Victorian real estate agents must comply with. Failure to abide by the regulations will see agents convicted of underquoting subjected to hefty fines and loss of commission on sold properties. Similar measures were introduced in Sydney at the beginning of 2016, and officials believe that these changes to quoting have made a positive difference. 

From May 1, Victorian real estate agents will no longer be permitted to use terms like ‘from’, ‘plus’ or ‘offers above’. Selling prices must now be calculated against three comparable properties that are deemed to be of similar style, condition and size to the property in question. Buyers will also be able to view a Statement of Information at open inspections, auctions and upon request throughout a sales campaign.

What Constitutes a Comparable Property?

When calculating property value, an agent is required to use three other comparable properties as their point of reference. To be deemed comparable, they must be of a similar standard or condition, sold within the last 6 months and be within 2km of the property for sale (Melbourne metropolitan areas only). If the property is outside the metropolitan area, the comparable properties must have been sold within the last 18 months and be within 5km of the property for sale. 

Agents are permitted to provide a price range of no lower than 10% of an estimated sale price, providing the price was calculated fairly and according to the new laws. This means that a sales range of $700,000-$770,000 is acceptable, so long as a reasonable estimate of the value of the property is no higher than $770,000. If the sales price changes during the campaign, vendors, prospective buyers and advertising materials must be updated accordingly. 

The Chisholm & Gamon team is on hand should you have any further questions on the new laws and how you’ll be affected as a buyer or vendor. You’re also able to read further information on the Consumer Affairs Victoria website here.