Property News

Agents forced to make more sense for your dollars

16 October 2006

Many Queensland home buyers are still trying to wrap their heads around some of the amendments to the Property Agents and Motor Dealers Act, introduced in late August.

Some of the changes mirror those introduced in NSW and Victoria, such as bidders registering prior to an auction.

In Queensland, auctions have become increasingly popular, but mostly for the more expensive homes.

But a clampdown on the way agents indicate the price of a particular property has made a few heads swim. Queensland's Office of Fair Trading is trying to rid the industry of "buying listings", that is, quoting a high price or telling the vendor what they want to hear in order to get a listing, and then spending valuable marketing and sales time lowering the vendor's expectations.

In its Good Business Guide, Fair Trading says this practice was popular with some agents as a pre-auction education strategy (a nice term for vendor bashing), putting a client on a roller-coaster ride that is unethical and is now an offence.

On the flipside, agents who market properties by telling buyers expected prices that are lower than what the vendor will accept are also on notice, with fines for misrepresentation of $40,500 for an individual and $202,500 for corporations. Pricing now hinges on providing comparable sales via a comparative market analysis (CMA). This list of sales in the area has to be provided to the vendor, and with the vendor's permission released to prospective buyers.

According to Dene Tucker, from Harcourts Bayside Property Group and this year's Real Estate Institute of Queensland auctioneer of the year, CMAs will make some agents do a bit more homework and make them more accurate and responsible in their pricing. Tucker says what is really crucial is the way agents explain to vendors why it's important this information is available to the buyers, and to educate buyers about the new regulations.

He says research shows most buyers look at an average of 17 properties when considering a purchase. By the time they come to the auction, they know more than just about anyone else about local values.

Nick Penklis, an auctioneer and director of Space Property Agents in Brisbane, agrees that it's good that agents need to show a substantial amount of information, and are better informed. But he says prospective buyers at open-for-inspections get annoyed when they can't be told directly if a property is in their price range.

It also makes it difficult with email inquiries, a growing area, as people do research on real estate from their desks.

"I think it will settle down," Penklis says. "People will work their way through it and come up with solutions once buyers, as well as agents, understand better how to cope with it."

Already phrases such as "buyer feedback indicates $ ..." are becoming more common, but whether this is simply clouding an issue that was meant to become more transparent remains to be seen.

It should be pointed out, too, that CMAs are not valuations, and past sales, for example, might not reflect changes to a property, such as a major renovation since that time.

That raises the question of whether the sale of a nearby unrenovated property should be used as a comparison. It also raises the question of whether an agent is just that, an agent trying to get the best price, or a valuer.

Source: The Australian

majellacorrigan@bigpond.com