Estate Agents Amendment (Underquoting) Bill 2016
13 September 2016
13 September 2016
Ms RYAN (Euroa) — I also rise today to make a contribution to the Estate Agents Amendment (Underquoting) Bill 2016, which proposes a series of measures that amend the Estate Agents Act 1980 to address the practice of underquoting.
I must say at the outset that I had to have a bit of a chuckle when listening to the member for Broadmeadows attempting to reveal a great split within the coalition. I would suggest that he have a look at his colleagues if he is looking for a split, because I can assure you, Acting Speaker, that there is none on this side. We are quite capable of articulating a broad range of perspectives on this side of the house and remaining unified — believe it or not. It might come as a surprise to those opposite.
From the outset I have to say that I do agree with the motivation behind this legislation, but I do have quite serious concerns about how it will operate in practice. We have all heard anecdotal evidence about buyers being misled about the likely selling price of a property. I have friends who were involved in the property market and recently bought a house in Melbourne. They have found it an exceedingly frustrating process. It seemed that they turned up Saturday morning after Saturday morning in order to try to buy a property but would always find that it would be $100 000 to $150 000 out of the price range that they were quoted.
I think certainly this is an issue within parts of metropolitan Melbourne in particular, but I do think it is a much bigger issue in the city than it is in the country. The shadow minister for consumer affairs, the member for Morwell, pointed out during his contribution some comments from Tony Roccisano, the director of Roccisano Property Group in Mildura. He was quoted in the Mildura Weekly back in April, where he said that he did not really think that it was an issue in regional centres, and I quote:
The real estate industry is an necessarily over-regulated as it is … The industry is so over-regulated it's becoming a nightmare to police and control.
Underquoting isn't an issue we have a problem with here in Mildura — it's an issue more centred on the larger metropolitan areas.
In regional areas this type of change is overkill. While we might see some fluctuation in prices, it's nowhere near as severe as what you might see in some areas of Melbourne for example.
I would have to say that that was my experience in buying a property in regional Victoria. I did not find that the quoted prices were greatly outside the price range of the property that I ended up purchasing. Tony went on to say that the government's changes will 'mean more work and increased costs for local real estate agents', which is something that the member for Polwarth, I think, very adequately pointed out.
There are mixed views in my electorate. I note that different real estate agents had varying opinions when I consulted them. There is a real estate agent in Benalla who has been there for some 20 years and he too, I suppose, agrees with Tony in Mildura that the real estate industry is becoming over-regulated. He has several concerns about the operation of these changes and in particular the fact that a vendor often instructs an agent as to the value of the property.
One of the key changes in this bill, as others have outlined, is that it will require estate agents to produce a statement of information for a residential property that includes an estimated selling price. Agents will need to provide prospective buyers with a comprehensive analysis of the property, including three recent comparable sales, an indicative selling price and also the median price of a suburb — or I would say a community in regional Victoria because suburbs are not overly applicable. I think that this actually has potential to create a number of problems. Firstly, there will be instances where a vendor sets a reserve price during an auction that actually exceeds the estimated selling price. Vendors, as we know, are often reluctant — for their own interests, and rightly so — to tell agents what a reserve price is until a hammer is actually about to fall in an auction process.
This bill requires agents to give an estimated price within a 10 per cent range, but it could actually result in a situation where if a vendor changes their reserve price or simply informs an agent, I suppose, too late in the process, that agent may not have sufficient time to advertise a new estimated price. I think it does have the potential to leave agents in a position where they have done the right thing according to law but if a vendor changes their price at the last minute, then an agent may look like they have underquoted. Effectively they will be the meat in the sandwich.
Secondly, I can see some problems arising from the requirement that agents set an estimated price by comparing three other properties. In metropolitan Melbourne, under the bill, these properties would have to have been sold within the preceding six months within a 2-kilometre radius, and outside of metropolitan Melbourne it would be in the preceding 18 months within a 5-kilometre radius. I have some concerns about the ambiguity of what is a comparable property. I understand that agents need to compare the standard, the condition and the location of different properties, but I think there are many other things that can sometimes determine the value of a property.
For example, you might have a situation, particularly in a metropolitan area, where a developer has bought the neighbouring property and they are bidding in a particular sale in order to be able to redevelop it. That is going to perhaps artificially change the price of a property, and therefore I think that does lead to some questions around how effective that actual process of having three comparable properties is. I also point out that in some country areas I do not know that it is overly realistic to find three comparable properties that have sold within 18 months in a 5-kilometre radius. I bought a rural property that is actually in a farming zone but it is still a residential property. There would not have been three properties to compare it with that had been sold in an 18-month period within a 5-kilometre radius around my property. That just would not have been possible.
The member for Morwell also raised concerns that metropolitan Melbourne has not been defined by this legislation and that there is some uncertainty about the definition of a residential property and how that applies to farms and primary producers. Again, I can see that that would have impacted on my personal situation as well.
In conclusion, there are some mixed views about this bill. In my mind there is no doubt that the issue of underquoting does need to be addressed, and I think there are agents in my area who are supportive of doing that. Another agent in my area has said, and I quote from an email he sent me a few days ago:
Having been a licensed real estate in Victoria for 35 years and running a very successful business I have seen underquoting by some agents which is very bad.
… we are very much against this continuing in Victoria by inexperienced and devious agents …
There are many agents out there who are doing a great job and who do not want dodgy agents in the market because they give everybody a bad name, but there are still some very substantial issues in this bill which I do not feel have been adequately addressed by the government, and I urge the government to have a look at them before the bill proceeds to the upper house.