A dozen South Australian real estate agencies are under investigation for the possible underquoting of house prices.
According to a press release from Deputy Premier John Rau, the SA’s Consumer Business Services (CBS), is increasing activity to “flush out” agents who are intentionally misleading buyers.
This year, CBS compliance and investigation officers have audited the property sales and management files of 37 registered land agents.
Of those 37, seven real estate agencies are currently facing further scrutiny. There are also an additional five agencies under investigation for price misrepresentation according to the press release.
Underquoting is the practice of an agent advertising a house for a price which is lower than what the seller is willing to accept. The agent does this to create a “buzz” around a property and encourage competition among buyers.
Under SA law, those found to be underquoting can face fines of up to $20,000 or up to one year in jail. Under federal law, the penalty is fines of up to $220,000 for an individual and $1.1 million for a corporate entity.
“Underquoting is an issue in South Australia. We don’t want to see a dodgy few ruining the reputation of the whole real estate industry,” said Rau, who also serves as the Minister for CBS. “We are committed to ensuring that all consumers can expect fair and honest dealings from the South Australian real estate industry.”
The crackdown on underquoting has the full support of the Real Estate Institute of SA (REISA).
“This is a serious matter and I am pleased to see that CBS has those that use the ‘quote it low and watch it go’ practice in their sights,” said REISA CEO Greg Troughton. “Whilst an auction can see extra spirited bidding from time to time, and some extraordinary prices achieved, an agent that consistently and systematically obtains much more than the vendor wanted for a property is either no local market expert or is simply underquoting.”
CBS’s investigation is ongoing.