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Hi !FirstName,
An amendment to the Property, Stock and Business Agents Act 2002 (Property, Stock and Business Agents Amendment (Underquoting Prohibition) Bill 2015) in respect of Underquoting Prohibitions comes into force on 1st January 2016.
ADL will have any required Agency Authority changes ready to go first thing on the 1st January for your immediate use.
These changes have been introduced to provide greater protection for both sellers and buyers to help ensure that:
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Sellers have the opportunity to maximise their return on their property; and
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Buyers don't waste time and money on inspecting properties that will sell for a value higher than they can afford or are willing to pay.
An agent must 'include their true estimate of a property's likely selling price in the agency agreement' (refer page 1 of the OFT fact sheet - Underquoting Reforms*). When advertising a price or informing a prospective buyer of the price of the property, that price cannot be lower than the agent's Estimated Selling Price as indicated in the Agency Authority/Agreement.
This however appears to prevent a situation allowing a Vendor to try for a quick sale by opting to sell a property for a value less than what an agent may believe the property to be actually worth (That is, the agents 'True Estimate of the Property's likely selling price'). Even if the Vendor instructs the agent to sell at a lower price the agent can't actually advertise the Vendor's listing price if it is lower than the agent's Estimated Selling Price or price range.
Not only is the agent prevented from advertising at this lower price but section 73A of the Act precludes the agent from representing to a buyer or prospective buyer that the property is likely to be sold for a price that is less than the Estimated Selling Price. (Note: For more information about what to do when the vendor wants to advertise a lower price refer to page 5 of the OFT Fact Sheet - Underquoting Reforms* under the section headed 'Agents - Questions and Answers').
Oddly enough there seems to be no prohibition against advertising a property at a price greater than the Estimated Selling Price.
We have already drafted changes to our Agency Authorities to comply with the new legislation and help protect our clients. Although, as the new Regulations have not been released at the time of this newsflash, further minor changes may still be required prior to distribution in respect of the Regulations.
We have also drafted a new form (Notice of Revision of Estimated Selling Price) that an agent should use when revising an Estimated Selling Price during the term of an Agency Authority, to help ensure compliance with the requirements under s72A(4) of the Act.
Please refer to the following links for more information:
The Property, Stock and Business Agents Amendment (Underquoting Prohibition) Bill 2015
*OFT fact sheet - Underquoting Reforms
Click on the link below to:
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