Buyers and agents claim all the worst practices of the last property boom in 2015 are returning as unscrupulous agents attempt to cash in on big commissions and bonuses.
Alleged antics include:
- Underquoting the value of properties to attract more buyers and push up the sales price;
- Overstating sales prices – in some cases by millions of dollars – to pump up average sales prices and encourage buyers to pay more. It takes months for the correct price to be agreed when the deal is settled.
- Seeking bonus commissions above an agreed price that will be easy to top because it does not reflect fair market value.
Regulators claim they are tackling the problem but industry professionals claim huge financial incentives from bonuses and commissions continue to encourage unscrupulous practices.
Ms O’Brien suspects they have been lured by agents who needed bidders at an auction to push up the final sale price from the guide of $1.65 million to $2 million.
“The agent knew our max was at the $1.8 to $1.81 level. She needed us at the auction to push the other party to this amount,” Ms O’Brien says.
State governments have different policies intended to prevent underquoting. Ministers in Queensland, Victoria and NSW claim they are aware of the problem and have stepped up efforts to prevent it from happening.
In Victoria agents must provide a quote and are expected, where possible, to support it with prices from recently sold comparable properties.
Last month, Hoskins Real Estate and director Brent Peters were ordered to pay nearly $890,000 in penalties and compensation for underquoting 24 properties.
The underquoting allowed the business to claim ‘incentivised commissions’ when the properties sold at a much higher price.
Queensland agents do not provide quotes, while Sydney agents can choose between no quoting, or providing evidence of recent sale prices.