SA Consumer and Business Services: Concerns about trust accounts and underquoting
/1 July 2022
Some agents will underquote to get more potential buyers to look at the property, even though the real asking price is a lot higher. This frustrates buyers as they end up wasting their time looking at properties that are actually outside of their price range.
Consumer watchdogs across Australia have been cracking down on the illegal practice of underquoting for many years now. South Australia’s Consumer and Business Services (CBS) department has publicly advised that they will be cracking down on agents partaking in underquoting this year, bringing to light the unfortunate fact that many agents are still willing to mislead their clients to draw attention to listings, despite heavy penalties.
An agent or sales representative must have reasonable grounds for advertising a property at the price stated in the advertisement, or they can face penalties under the Australian Consumer Law of up to $500,000 for an individual or $10 million for a company.
Underquoting is when a property is advertised at a lower price than:
- the agent’s genuine estimate of the property’s value
- the vendor’s acceptable selling price
- the auction reserve price
- a genuine offer or expression of interest by a prospective buyer that the vendor refused.Some agents will underquote to get more potential buyers to look at the property, even though the real asking price is a lot higher. This frustrates buyers as they end up wasting their time looking at properties that are actually outside of their price range.
Buying a property is a big investment. Potential buyers should be provided with correct information so they can make the right decision.
By providing false or misleading information about a property, a real estate agent or sales representative is committing an offence.
Read more about underquoting on the CBS website.
In addition to their commitment to investigating suspected instances of underquoting, CBS has also made it clear they have concerns around illegal trust account activity and general trust account issues.
