An article on Page 2 of the Northern District Times on 9 March describes the recent auction of 14 Allerton Road by McGrath agent Wayne Vaughan, with 69 bids from just below Wayne's advertised guide price to a final selling price that was 25 % above his guide price.
On a hot rising market, it can be difficult to forecast how an auction will end up, but in today's depressed market that's not a valid excuse. In this case the final sale price was not significantly better than the generally expected price for the property, but anybody who knew the market knew the guide price was ridiculously low.
This spurred me to do a bit of research on Wayne, and McGrath in general.
I found many remarks on the web like, "From what I can see McGrath in Sydney constantly under advertise the values of properties", and "Currently I just don't bother looking if they are listed with McGrath as I've no idea what the true value is".
With so much unhappiness amongst would-be buyers, one hopes the OFT will be doing something about it! Underquoting is defined by laws regulated by the NSW Office of Fair Trading as when "an agent or employee is considered to falsely understate the estimated selling price of residential property ... less than his or her true estimate of that selling price".
The basic rule is that agents must act fairly and reasonably in their dealings with buyers and sellers and the price guide should be consistent with the estimated price in the agreement signed by the agent and vendor.
Under NSW rules, the maximum penalty for deliberately misleading buyers is $22,000. Under new laws the Federal Government is considering putting into effect from January 1, the maximum fine would be $1.1 million for agents and $220,000 for vendors.
We understand that complaints have been made to the Office of Fair Trading and look forward to hearing the results.
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