Call For Urgent Change
OPINION
by George Rousos
Director
Industry Training Consultants
george@itc.nsw.edu.au
After receiving glowing support from my clients and colleagues, it was now time to take decisive action by requesting to the NSW Minister- The Hon. Virginia JUDGE, BEd MP that urgent amendments to real estate laws in NSW be introduced in parliament.
What follows is my letter to the Minister, written after my reading of the following article which appeared in the Sydney Morning Herald:
Watchdog raids real estate agents
July 29, 2009
Consumer Affairs Victoria has conducted a blitz of more than 60 Melbourne real estate agents’ office looking for evidence of misleading price advertising.
During the unannounced visits, which occurred yesterday, the watchdog looked through files on about 1000 recent property transactions in search of suspicious activity.
"Our inspectors collected information relating to the estimated selling price established by the agent, the vendors’ price, the advertised price, the final sale price and other information for analysis," said Consumer Affairs director Claire Noone.
CAV visited offices in Brunswick, Clifton Hill, Coburg, Craigieburn, Essendon, Pascoe Vale, Point Cook and Werribee to give it a broad picture of the Victorian real estate market.
"Any agent engaging in dubious practices will be thoroughly investigated," Ms Noone said.
The blitz happened on the same day Reserve Bank governor Glenn Stevens warned of the possibility of a housing price bubble, spurred in part by low interest rates and the expansion of the first-home owners’ grant.
CAV staged a similar blitz of the inner south-east suburbs in April, seizing more than 160 completed sales files.
And monitoring by CAV during the 2008-09 financial year resulted in five civil proceedings and two criminal prosecutions for underquoting by an agent.
One real estate agent was forced to pay a $20,000 fine against because of his conviction.
"Dear Minister,
I make this urgent request, that you consider having legislation passed through parliament, for all seller's of properties, to have a building/pest inspection and an independent valuation done, before their home is listed for sale.
Australian house prices are overvalued by around 20 percent and the size of the average mortgage has reached an all time high, fuelling fears of a property bubble as reported in the media. http://money.ninemsn.com.au/article.aspx?id=848005.
I've just finished speaking to one of my trainers about real estate agents inflating prices of properties (being the vendor asking price, not what is true market value) in order to obtain listings. In this case, if the agent publishes a listing price which is not a true estimate of the selling price or it cannot be truly substantiated in accordance with the estimated price guidelines, then it is a false and misleading advertisement under section 51 of the act. Under the rules of conduct ( Rule 9), it states , that an agent must act in accordance with a client’s instructions unless it would be contrary to this Act or regulations under the Act, or otherwise unlawful to do so.
Further to above, under section 52 of the PSBA Act 2002, any person who, while exercising or performing any function as a licensee or registered person, by any statement, representation or promise that is false, misleading or deceptive (whether to the knowledge of the person or not) or by any concealment of a material fact (whether intended or not), induces any other person to enter into any contract or arrangement is guilty of an offence.
The standard contract for sale of land needs to be amended ( rather than having to prepare your own version of pages 1 and 2 on a computer or typewriter) also, to allow the vendor and purchaser to add additional clauses to the contract.These are the “special conditions”. Generally in the past, special conditions were not an option for many purchaser's wishing to bid at auction, however, due to the US sub prime crisis, banks are now becoming more conservative in giving out unconditional approvals prior to signing a contract, buyer’s are also fed up with wasting money on dodgy building and pest inspections.
There is also evidence to suggest little or no disclosure about the condition of a property offered upfront with the sales contract and the fact that buyers are already lumped with huge costs, with stamp duty being the worst of all.
I again request that amendments to their respective legislation that covers the sale of property include compulsory pest and building inspections and an independent valuation. These reports should be attached as part of a duty of disclosure to contracts for the sale of land. This would save buyers, sellers and agents time and money.
As a compliance trainer and course writer of the property industry, to often in my classes ,I hear stories of conduct that continually breaches the above provisions of the act and a system clearly not working.
The only way I see stopping all this greed and skulduggery occurring in the property industry, is by simply legislating what is obvious to protect consumers, traders and tax payer's of NSW.
I look forward to your response."
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