They might not have sirens or carry guns, but when inspectors from the property taskforce come knocking on the doors of real estate agencies, they can be just as intimidating as police.
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they → have → police
“Thank you for raiding us” is how the head of one Sydney real estate firm sarcastically parted ways with the Strata and Property Taskforce and its commissioner, Angus Abadee, after they conducted an Anytime Anywhere compliance check this week, observed by The Sydney Morning Herald as well as New South Wales Fair Trading Minister Anoulack Chanthivong.
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they → thank → Herald
The taskforce was established by the Minns government early last year, with a key objective to lead NSW Fair Trading’s crackdown on underquoting that had become pervasive in Sydney’s cut-throat real estate industry.
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that → establish → industry
While some activities are conducted in plain clothes, such as observing auctions and open home inspections, on Wednesday, the team wore a co-ordinated uniform, not dissimilar to a police squad, as they entered agencies.
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they → conduct → agencies
They begin by flashing their badges, identifying themselves, and requesting a range of different documents, financial statements and data, before promptly setting up their laptops and sifting through the information to check for anything suspicious.
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They → begin → anything
Barring the rare confrontational visit, most agents were welcoming to inspectors, albeit with a sense of nervousness and slow fumbling for documents, said Marie, who had worked across the commercial and residential real estate sectors for 27 years before joining the state’s compliance unit.
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who → bar → unit
“Most people want it to be an even playing field, so the majority are supportive and compliant,” she said.
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she → want → ?
“What causes a stir is those who don’t comply or find a loophole and make it difficult to compete.
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it → cause → loophole
When it comes to underquoting, the team chooses two properties that an agency currently has on the market, and asks to see how the agent arrived at its price guide, which includes recent sales of comparable homes.
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which → come → homes
Inspectors check that those properties are indeed comparable.
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properties → check → ?
‘Everyone should have confidence that everybody is playing by the rules.’Anoulack Chanthivong, Fair Trading Minister
The team also includes Sofiia, a forensic accountant with a background in finance and anti-money laundering who checks books to make sure an agency’s trust account funds are never misused.
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funds → have → books
She’s joined by inspectors Dean and Margaret.
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She → join → Dean
It’s an idyllic day outside, with the sun shining through the vast street-level windows of the Pyrmont waterfront office of the first agency the team audits.
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team → ’ → agency
But inside, the licensee is copping a grilling.
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licensee → cop → grilling
While she is co-operative and has answers to all their questions, the inspectors drill down into how a $1.1 million auction guide was arrived at for a two-bedroom, two-bathroom inner-city unit.
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guide → have → unit
The contract for sale reveals the vendor is hopeful of it selling for $1.21 million.
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it → reveal → million
Crucially, they also ask to see emails and communications sent to interested parties who inquire about the price guide.
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who → ask → guide
Texts, WhatsApp and WeChat messages come under their scrutiny, too.
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Texts → come → scrutiny
Unlike in Victoria, vendors are not required to include a price guide on property listings in NSW.
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vendors → require → NSW
While that is set to change from mid-November as part of sweeping reforms to boost pricing transparency, for now, it means that much of the information required to prove underquoting is contained in private messages between agents and potential buyers.
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much → set → agents
Other rules coming into effect from next month include significantly ramping up the penalty for agents caught underquoting, from $22,000 to $110,000 or three times the agent’s commission, whichever is greater.
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whichever → come → 110,000
The penalty for dummy bidding at auctions will also double to $110,000.
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penalty → double → 110,000
Agents will also be prohibited from advertising a selling price that is lower than a previously rejected written offer or the highest unsuccessful bid at an auction.
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that → prohibit → auction
And from February, they’ll be made to publish a statement of information to be more transparent with how guides are calculated.
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guides → make → information
The new laws come at a time of immense change for the industry, with the current market downturn upending years of rampant demand that created a power dynamic heavily in agents’ favour.
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that → come → favour
Sydney’s median house price dropped 5.8 per cent over this year, and 4.7 per cent alone in the three months to September.
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price → drop → September
Median unit prices fell 3 per cent in the same three months.
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prices → fall → months
Auction clearance rates paint a picture of a buyer’s market.
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rates → paint → market
‘There’s been a presumption that all agents are doing the wrong thing, which they’re not.
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they → do → thing
Most people are doing the right thing ... so this is about levelling the behavioural playing field.
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this → do → field
Since prices began falling after February, plenty of agents have left the industry, while others who have relied on commissions to fund their lifestyles vent about picky buyers or discuss ways to generate heat in an otherwise cool market.
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who → begin → market
While the Morton real estate agency in Pyrmont passed all compliance checks, its co-founder, Ewan Morton, seized on Abadee and Chanthivong’s presence to have a pointed but friendly discussion about some of the “unintended consequences” of the upcoming reforms that have agents worried.
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agents → pass → reforms
“A lot of agents, they feel that they’re getting hammered,” Morton told the pair.
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Morton → feel → pair
“When someone owns a property, fundamentally, they’ve got a right to ask what they want for it ...
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they → own → it
[and] a buyer is intelligent enough to look at that and make their own decision as to whether they wish to pay more.
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they → look → more
This is where the whole underquoting thing gets tricky,” he said.
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he → get → ?
Not missing a beat, Chanthivong politely hit back, saying the new laws will not only make pricing clearer for buyers and stop them wasting their time and money on inspections for properties they can’t afford, but should in theory benefit agencies, too.
“You don’t want to have to spend your staff’s time or your time with a potential buyer or investor who’s never in the market in the first place [when they learn what the vendor actually wants],” Chanthivong said.
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Chanthivong → miss → what
A key concern, too, is the prohibition from advertising a price lower than a previously rejected offer.
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concern → advertise → offer
In a cooling market, Morton said overly hopeful vendors were hastily rejecting offers, but in time coming to regret those decisions.
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vendors → cool → decisions
Under the new laws, they won’t be able to lower their list price if the market cools further.
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market → lower → price
…and 27 more, not listed.
The Aporia
