In November, CoreLogic’s home value index showed a 3% increase in property values in Melbourne. But as prices rise and the market becomes tighter, how can buyers be sure the price they have been told is not much lower than its likely sales price?
Underquoting is a method sometimes used by sellers or real estate agents to misrepresent a property when advertising.
It is illegal for an agent to advertise or tell you a price that is less than:
- The seller’s auction reserve price or asking price
- A price in a written offer already rejected by the seller
- The agent’s current estimated price
If any of these change during the marketing process, the agent is required to let buyers know of the new price.
Spotting underquoting
One way to identify underquoting is to ask the seller’s agent to show you the property’s Statement of Information. By law, all residential properties advertised for sale in Victoria must have one. You can get the statement at the property’s open for inspection or from the agent (they have two days to provide it to you if requested). Or, agents often include the statement in the online property listing.
This statement must include:
- A selling price or range for the property of up to 10%
- Details of three comparable property sales including addresses, date of sale and sale price
- The median house or unit price for the suburb
Do your research
If you have a general idea of property values in the location you are buying, you are more likely to spot underquoting. You can keep track of sales and auction dates here.
Consumer Affairs Victoria keeps track of underquoting. If you believe you’ve been underquoted, you can report the issue here.
Freya Southwell is a property lawyer and principal of Sutton Laurence King Lawyers.
For expert advice on property law and conveyancing contact Sutton Laurence King Lawyers today on 03 9070 9810 or .