For most observers, real estate is all about the high drama of the auction, the record price rises or the envy-inducing luxury homes that regularly attract headlines.
But behind the scenes 2016 has been one of the busiest years on record for people in the real estate business whose job it is to make sure the way they operate their business not only delivers the service that people expect but is compliant with legislation.
There have been a raft of legislative changes in NSW this year, the most noticeable relating to pre-purchase property inspection reports and under-quoting reforms. Queensland underwent a similar legislative overhaul in 2014 though there are moves afoot to introduce new laws relating to disclosure of structural defects and any unpleasant history of murder or drug labs.
The NSW legislative changes sound straightforward enough but each set of legislation seems to have been drafted with a great deal of ambiguity. Take for instance the pre-purchase reports. Owners are not obliged to provide building, pest inspections reports, strata and community reports however the agent is obliged to inform the buyer if there is a report. The buyer can choose to rely on these reports or commission their own.
Another important legislative reform relates to underquoting. Anybody who has been on the hunt for a home, and there are some whose search has extended for a year or more, will be acutely aware of the time and costs involved – both financial and emotional.
The new legislation came into effect in January this year and had an immediate impact on the way in which agents expressed price guidance in advertising and to prospective buyers.
However the first prosecution under the new regime went nowhere when in May a Sydney agency charged with underquoting managed to extricate itself through a loophole in what in retrospect was a poorly drafted piece of legislation.
Properly constructed, the legislation can serve as a powerful deterrent to any agency or agent tempted to fudge the figures. Every real estate operator in Australia would have taken note when a Victorian agency was fined $330,000 earlier this month for underquoting.
People might suspect otherwise, but the real estate industry is keen to see these types of reforms, which protect the public from unscrupulous practices, up and running effectively. It creates a level playing field and provides certainty for those of us who are committed to increasing the professionalism of the industry.
However it needs to be remembered that pricing real estate is not an absolute science and the fact that a property sells for a price far higher than expectation is a consequence of a market subject to many variables especially in a hot market where auction prices regularly surprise.
All you need is two bidders with their hearts set on a property to see the reserve fly out the window. But this is quite distinct from a deliberate attempt to entice buyers through bait advertising.
Perhaps the best insurance you can take against this kind of activity is to carry out your own research and due diligence. If the price guide is significantly lower than comparable sales, either the agent is not doing their job or the house has issues that you might wish to investigate in any case.
With so much information about house pricing readily available it would be a foolish agent indeed who’d risk their career for the sake of attracting buyers to act as ballast at an auction.