NORTHERN beaches real estate agents have been targeted by NSW Fair Trading as the regulator cracks down on the illegal practice of property underquoting.
Although property prices are soaring on the northern beaches, a Fair Trading (FT) spokeswoman said "underquoting and a hot market have no connection".
"Underquoting is an action undertaken by an agent and the market condition doesn't play a role at all," she said.
The FT spokeswoman said compliance operations are always an announced inspection of agencies. But she would not provide information on which agencies or suburbs in the northern beaches were targeted by inspectors during a week-long blitz in late March.
Recently, a number of homes have sold for well above the price guide at auctions, including 51A Beaconsfield Street, Newport which had a guide of $4.9 million, but sold for $5.9m. A three-bedroom home at 20 Whale Beach Road, Avalon Beach had a guide of $2.6m but sold for $3.7m; while a unit at 5/37 Surfview Road, Mona Vale had a guide of $1.4m but sold for $2.61m.
The Northern Beaches Review is not accusing these agencies of underquoting and contacted each one for this story.
The Review was onsite for the auction of 20 Whale Beach Road and McGrath Pittwater principal and director Adrian Venturi said "if I can encapsulate what happened at that auction, it was desperation".
He said a lack of stock, reports of booming prices and the fear of missing out fuels desperation among buyers who end up bidding higher than expected in order to secure the property. Mr Venturi said people at this auction had been looking for a home for a while and had missed out on other properties, leading to higher bids.
READ MORE: On the market: from farms to beachside pads
Mr Venturi said a larger house on a bigger block across the road sold for $2.255m in February. His original guide of $2.495m was based on this combined with the rising property market. Then, after feedback at open for inspections, the guide was increased to $2.6m.
Cunninghams Real Estate managing director John Cunningham said the northern beaches property market is volatile right now and something he's never seen in his 42 years in the industry. High prices are fueled by a lack of supply and buyers who keep missing out on properties as prices increase.
If I can encapsulate what happened at that auction, it was desperation.McGrath Pittwater principal and director Adrian Venturi
"When you have a low supply and high demand, this is what happens," he said. "Stock is moving so quickly and we're down to an average of 14 days on the market."
Mr Cunningham said there used to be a saying among some real estate agents - "pitch it low and watch it go" and unfortunately some agents still underquote their price guides.
"If they don't revise it [their price guide] that's where one of the biggest things is, it should be about communication and transparency," the experienced operator said.
The LJ Hooker Palm Beach agent who sold the home at 51A Beaconsfield Street was unavailable for comment prior to the print deadline. LJ Hooker Mona Vale, which sold the Surfview Road unit, did not respond to the Review's interview request.
FT said it does not provide information about specific complaints lodged against a business, however, if 10 or more are lodged in one calendar month they will be placed on the Complaints Register.
Minister for Better Regulation Kevin Anderson said FT inspectors had visited real estate agents across Sydney to crack down on the illegal practice of falsely advertising property or indicating it will sell for less than its estimated selling price.
Agents who underquote can be fined up to $22,000 and could lose commission and fees earned from the sale.
What is property underquoting?
When a real estate agent:
- Knowingly advertises or provides a price guide that is lower than their estimated selling price
- Fails to amend an estimated selling price based on written offers or buyer feedback or recent comparable sales
- Does not provide a reasonable estimated selling price which is based on market trends, experience of the market, property conditions and comparable sales.
- Ask the real estate agent what the estimated selling price is and what the seller's expectations are.
- Do your homework and research recently sold properties in the area. If the price is dramatically different for a similar property, question it.
- If you suspect a real estate agent has deliberately underquoted call NSW Fair Trading on 13 32 20.
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