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The Beattie Government has strengthened legislation to combat the practice of misrepresentation of residential property selling prices by real estate agents to gain listings.
Fair Trading Minister Margaret Keech said the crackdown was one of a number of consumer protections resulting from her review of the Property Agents and Motor Dealers Act 2000.
"The Beattie Government has targeted those rogue real estate agents and auctioneers who indulge in the practice of under or over-quoting of residential property prices," Mrs Keech said.
"Their objective is to secure listings by over-quoting the potential market value of a property to sellers in order to secure a listing or to fraudulently under-quote a property value so as to attract potential purchasers.
"The real estate industry has universally condemned such practices as fraudulent and unprofessional. It is also recognised that these practices do not enhance the industry's reputation and need to be addressed in a comprehensive fashion."
Mrs Keech said misleading sellers and buyers by over or under-quoting the market price of property promoted unfair competition against ethical agents attempting to properly and professionally advise their clients about market conditions and prices.
It also promoted unrealistic expectations by sellers in relation to the selling price of their properties.
"The Bill addresses 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)," Mrs Keech said.
"A CMA will substantiate agents and auctioneers' 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."
Mrs Keech said auctioneers would also now be required to seek a reserve price from their vendor prior to the auction.
"However, if the vendor instructs that no reserve price will be set, the auctioneer must advise the vendor in writing of the consequences of auctioning a property without a reserve price, which is the property is on the market from the commencement of the auction," she said.
"The Bill also preserves the confidentiality of reserve prices. This ensures the auctioneer achieves the best possible competitive offers from potential bidders and prevents misrepresentation of the reserve price or likely selling bid in order to entice bidders to attend the auction.
"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."
First issued to media 9 March 2006
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