In early October, NSW Fair Trading released the results of their underquoting compliance inspections for June.
Over the month, 87 agent inspections took place and the results were as follows:
- 50 agents were not compliant – that’s a whopping 57%! The most common breaches were a lack of written records for verbal price guides, unreasonable estimated selling prices and a failure to comply with the licensees rules of conduct and the supervision guidelines
- of these 87 inspections, 45 were to previously non compliant agents. 66% of these were found to be compliant – but conversely, 34% of those who had been previously in breach were still found to be breaking the underquoting rules.
Now for the astounding part. Only 28 of these agents were fined and the total of the fines was $52,800, so an average fine of $1,886 per agent. 22 agents escaped without a fine with 10 receiving warning letters and 12 verbal warnings and guidance.
When looking at the median Sydney house price of $1,110,660 in Sydney (Core Logic, 1 October 2023), the average commission on the median priced home is $22,213 (2% commission rate). These penalties are hardly a deterrent for agents.
How do these NSW Fair Trading findings compare to our experiences?
The majority of properties we inspect are being heavily underquoted. While we do understand that sometimes it can be difficult to predict the level of competition on a particular property, some agents are very blatant in their underquoting.
One recent example is a property on the Northern Beaches our clients were interested in. The price guide being quoted by the agent was $1.75M which remained unchanged throughout the campaign. The property was still actively being quoted at this level the day prior to the auction, and had naturally attracted strong interest – 15 buyers registered to bid on auction day. The property sold for a whopping $2.5M and we later found out that the reserve was around $2.4M.