New South Wales has passed a brand new law regarding the behaviour of real estate agents, specifically around the act of “underquoting”. While this legislation offers some serious penalties that should curb the practice, there are some steps that you should take in order to make sure you aren’t a victim of this strategy and make the most of your home loan.
How to recognise underquoting
Know thy enemy. Underquoting comes in a number of different forms, but in essence it involves a real estate agent misleading the buyer with quotes that are lower than that of the actual estimated value of a property. This creates a huge amount of interest for the property in question, hence the phrase “quote it low and watch it go”. However, when it actually comes to the sale, the buyer turns up and finds out the seller will not settle for their offer.
If you’ve just spent a lot of time figuring out your borrowing power and speaking to your finance broker, this can be incredibly frustrating.
it is ultimately down to you to ensure that you are paying a fair price for a property.
While these new laws should put a damper on the practice in general, underquoting may still be used by unscrupulous vendor’s agents. So how can you evade this practice and ensure that you are going to pay the price that you expect?
While you will likely have done some research on your potential neighbourhood, it becomes all the more important when it comes to avoiding underquoting. Prices for a particular property must now be advertised within a particular range ($500,000 to $550,000 for example), making it all the easier to ensure that your potential home is not overvalued for your neighbourhood.
- Play the field
You don’t only have to work with a single agency. Speak to a number of different agents and keep a record of what they value your potential property at. If there is a big disparity across the board, it might be a case of agents valuing according to very different criteria – or evidence that someone might be underquoting.
- Simply ask
Real estate agents are not required to disclose the selling price or reserve of a particular property, but it never hurts to check. The new laws have locked out some of the selling strategies available to agents, so you may find that sellers are more willing to be frank with their pricing discussions.
While the new laws protect you as a buyer from this unscrupulous strategy, it is ultimately down to you to ensure that you are paying a fair price for a property. To start or continue your journey on the property ladder, speak to the mortgage broking experts at Premium Mortgage Group today.