Regulator inaction slammed on real estate overpricing

CONSUMER Affairs Victoria has failed to prosecute a single estate agent for using misleading price advertisements despite promising to crack down on the widespread practice five years ago.

The regulator's unwillingness to halt the use of prohibited ''price plus'' quoting methods has been branded ''unfair'' and ''pathetic''' by consumer groups and prominent industry figures.

''It's pathetic that these rules have been in for five years but the authorities have done nothing about it, and to some extent, appear to be in denial that there even is a problem,'' said veteran agent and critic John Keating. ''We should have maximum certainty in price quotes rather than the uncertainty that comes with these practices and the smoke and mirror tactics unfortunately practised by too many agents.''

The regulator had moved to clean up the industry in November 2007 through a set of new guidelines warning against ''misleading'' price-quoting terms such as ''price plus'' (for example, $500,000-plus), ''in excess of'', ''expect over'' and ''interest around''. Agents were required to advertise a property for sale with a single figure or a price range of no more than 10 per cent.

''It just gives absolute clarity to people how we will view the law, if you like, in taking enforcement action,'' then Consumer Affairs executive director David Cousins said.

But The Saturday Age found the regulator has not launched enforcement actions against any agents despite the constant use of ''price plus'' methods in print and online advertisements, media reports and in verbal quotes.

Buyer Shez Bukhari, 36, who has looked at more than 40 properties, said agents' chronic misuse of price quotes was frustrating and wasted the time of both buyers and sellers.

''We probably went in with an expectation, naively, that price quoting would work like it does with normal things so you'd get some idea of what you're really dealing with. We've heard all those [pricing] terms, but they don't tell you anything,'' he said. ''It's quite appalling, really.''

But Biggin & Scott Richmond director Russell Cambridge said the restrictive quoting guidelines run contrary to the whole purpose of auctions. ''Using a single figure or a range artificially caps the price of a property, which is unfair to the vendor. A price-plus quote is a message to a buyer that if you've got less than this you won't get it, but if you've got more than that you should have a look,'' he said.

Agents also say that while the regulator has privately indicated it is ''not comfortable'' with the practice, the authorities prefer to see some form of price quote in the marketing rather than none at all.

A Consumer Affairs spokesperson said the guidelines did not legally bar ''price plus'' methods but were ''provided to help real estate salespeople meet their obligations under the law''.

Gerard Brody, of the Consumer Action Law Centre, said the regulator's inability or unwillingness to enforce the guidelines called into question whether they had any purpose at all. ''We think that's unfair not only for consumers but for the agents that are doing the right thing,'' he said.

The Baillieu government declined to comment on whether it planned to enforce the guidelines.

This story Regulator inaction slammed on real estate overpricing first appeared on The Sydney Morning Herald.