[Author – Tim ODwyer]
Queensland’s Beattie Government has once again claimed to have toughened up its real estate laws. This time it is to “combat” the practice of estate agents’ misrepresenting residential property selling prices to gain listings.
Fair Trading Minister Margaret Keech said the “crackdown” was one of a number of consumer protections resulting from a review of the Property Agents and Motor Dealers Act 2000, and targeted “those rogue real estate agents and auctioneers who indulge in the practice of over-quoting residential property prices”.
“Their objective,” she said, “is to secure listings by over-quoting the potential market value of a property to sellers to secure a listing”.
Mrs Keech said misleading sellers and buyers by over-quoting the market price of property “promoted” not only unfair competition against ethical agents but also unrealistic expectations by sellers about the selling price of their properties.
The government’s amending legislation would, according to the Minister, address this conduct by “requiring real estate agents and auctioneers to substantiate any price or reserve price quotation by giving their vendor a document called a Comparative Market Analysis (CMA).”
The Minister continued: “A CMA will substantiate agents’ quotations by including pricing information about ‘like sales’ in an area. ‘Like sales’ are the sales of at least three properties of a similar standard and condition sold within a 5km radius of the property, within the preceding six months. If a CMA cannot be given because of a downturn in the property sales market or if the property is located in a regional or remote area where no other properties or sales have occurred within the radius, the agent must then provide a written explanation of how they determined or appraised a property’s value. The process of providing advice to vendors about the market value of a property is a central part of the services provided by real estate agents, so the requirement to document how they reach a market value is a most reasonable obligation to impose by legislation. These new requirements will simply require this information to be provided in a written form which will make it easier for sellers to make informed decisions about setting a selling price for their properties.”
Minister Keech’s media release concluded with a familiar mantra: “These amendments will contribute directly to the consumer protection objects of the Property Agents and Motor Dealers Act 2000 and ensure a clear message is sent to those rogue operators that this type of behaviour will no longer be tolerated.”
Sounds good, but was the Minister aware that this radical new law was just as loop-holed as much of the Beattie government’s previous efforts to protect real estate consumers?
What the amended legislation actually provides is that price substantiation is legally required of agents only when two conditions are satisfied.
Firstly, a person wanting to sell needs to ask a real estate agent for information about the price at which the property is “likely to be sold.”
Secondly, and most significantly, “the real estate agent decides to give the person the (requested) information.”
Got it? The key-word is “decides”. All “rogue operators” will do is decide not to estimate “likely” selling prices. But no doubt they will still get their share of listings with some smooth double-talking – about “the market,” interest rate rises, population movements, oil prices, growth in the coal industry, global warming, the booming Chinese economy, the war on terrorism and so on.
Pity the Beattie government (and every other State government), has yet to realize what my mate Peter Mericka and I have long advised our seller clients: the only reliable assessment of the market value of your property will come, not from any real estate agent’s “comparative market analysis”, but from an independent and professional valuer’s official valuation.