Auction reform is needed to stop rogue agents from misleading potential buyers by underquoting houses by tens of thousands of dollars, former Real Estate Institute of Victoria (REIV) ethics committee chairman John Keating believes.
The Woodend-based Keatings Real Estate director said underquoting was a problem across the state but a more serious issue in areas with a high concentration of auctions.
‘‘It started in the inner city areas about 20 years ago and, over the past 10, it’s got out of control,’’ he said. ‘‘It’s so prevalent now that the auction system is almost predicated on the fact that the agent is overquoting to the vendor in order to win the business, which is equally dishonest as underquoting, when the agents know the property is going to go for much higher than they’re quoting or they know the vendor wants much more.’’
Mr Keating said the deceptive practice was more than an inconvenience for potential buyers.
‘‘People get their hopes up, they get excited about the property, put time into the inspections and get their finance and legals in order and then find on the day they’re nowhere near,’’ he said.
Mr Keating wants agents to be required to publish the vendor’s reserve price in all advertising for a property. ‘‘The property is then on the market for fair, open, transparent competition by the buyers,’’ he said. ‘‘What buyers want is maximum transparency.’’
While Mr Keating believes 30-40 per cent of agents support his proposal, they are not prepared to put it into practice for fear of missing out on listings.
With the industry unlikely to self-regulate, Mr Keating is calling on both sides of politics to act.
‘‘They’ve simply got to address it as a consumer issue.’’
REIV chief executive Enzo Raimondo said the institute was undertaking ‘‘comprehensive consultation’’ with members to tackle under- quoting.
‘‘We are committed to ensuring this issue… is addressed,’’ he said.
While the state government wouldn’t be drawn on potential reforms, Consumer Affairs Minister Jane Garrett has directed 200 surprise auction inspections to crack down on underquoting. Eight major investigations, involving large and smaller real estate agencies, are under way, with the next 100 inspections to be conducted this autumn.
‘‘We’re cracking down on underquoting,’’ a government spokesman said.
‘‘Buying a house is one of the biggest decisions people make, and it’s heartbreaking when they are lured into properties they can’t afford.’’
