Misleading Property Price Guides (Qld)
At one time it was a common practice in real estate to offer a low quotation for a property in an effort to attract a large pool of competing buyers and increase the final sale price. In Queensland, there are now strict consumer laws that outlaw this practice and prevent the dissemination of misleading property price guides. This article explains the practice of underquoting in real estate in Queensland and outlines the responsibilities of real estate agents and the rights of sellers and buyers in these transactions.
Misleading Advertising Or Representation Of Price
Underquoting, bait advertising and price baiting are just a few of the terms used to refer to the act of representing a property at a price that is less than the true expected sale price. This type of misleading commercial behaviour causes prospective real estate buyers to spend time and resources looking into properties that they have no hope of buying.
In Queensland, a real estate agent must not distribute misleading price guides in marketing and advertising material, or through written or verbal communication with prospective buyers. In practice, this means that an agent must not give a price guide that is less than the asking price or the price that the seller is willing to accept, less than the reserve price at auction, or less than the likely sale price of the property.
Bait advertising is not restricted to real estate. All kinds of businesses use bait advertising to increase traffic, holding out the promise of a product at a low price but then ‘bait and switch’ to a more expensive product. The Competition and Consumer Act 2010 prohibits this type of deceptive or misleading conduct. In practice, this means that an advertised product must be available for a ‘reasonable’ period of time in ‘reasonable’ quantities.
In addition to the federal law pertaining to misleading commercial behaviour, bait advertising in real estate is also prohibited under Queensland law. The Property Occupations Act 2014 imposes strict rules on a real estate agent providing misleading property price guides.
Punishment For Misleading Pricing
A breach of Australian Consumer Law can be punished by a penalty for an individual of up to $500,000.00 per offence. An agency is liable for a fine of either $10 million or 3 x the value of the accrued benefit. If there is no way to calculate the benefit, then the penalty may be 10% of the agency’s previous annual turnover.
Underquoting can be difficult to prove, as the disparity between the price guide and the sale price can be attributed to higher demand or vendor change of mind. It is necessary to have evidence in writing of the misleading pricing in order to successfully complain about an agent’s behaviour.
Property Price Guides
A real estate agent in Queensland is legally obligated to provide an accurate estimate of the selling price based on recent comparable sales in the area. The agent is also obliged to revise the estimate and price guide if there are grounds to believe that the price is no longer accurate.
It is possible for a property to sell for more than the agent’s estimate without the agent being guilty of underquoting. The residential property market is grounded on competition, and a bidding war can drive the price of an individual property well above the expected sale price. This would not constitute bait advertising, as the real estate agent had a good faith belief that the price advertised was reasonable. At any stage in the selling cycle, a real estate agent must be able to support their price estimate as up-to-date, fair and grounded in real sales.
In Queensland, an agent can only use the phrase offers over if the price is the actual minimum that the vendor is willing to consider.
Auction Price Guides In Queensland
In 2014, the Queensland government passed new legislation to crack down on the incidence of underquoting. Under the Property Occupations Act 2014, a real estate agent is prohibited from giving any type of price guide to potential buyers when a property is going to auction in Queensland. As an agent cannot know how high the final bid will be, it is misleading to give a price guide. It also prevents agents from ‘heating up’ an auction by drawing in bidders who have no chance of being the final winning bidder.
The team at Armstrong Legal is well equipped to advise real professionals on their obligations in relation to advertising and representing price in Queensland. Alternatively, if you believe that you have been the victim of misleading commercial practice, our solicitors can advise you on your options to claim or complain. Please get in touch with our solicitors today on 1300 038 223 for help in this area of law or any other consumer or property law matter.