The rules that apply to the buying and selling of Real Estate in New South Wales are subjected to the interpretation of the "Property, Stock and Business Agents Act "of 2002. It is noticeable that practically no prosecutions have occurred in recent times, despite the Sydney market far outstripping the rest of Australia with price increased for housing stock.
One of the practices that have become common is to advertise a property on the basis of " Offers over "a nominated price. This is considered misleading and the revised act will require a firm estimate in dollar terms. There is also a tendency to mislead the seller with an over generous appraisal of the expected selling price. If several agents are seeking a contract to manage the sale the one offering to attain the highest return for the owner will obviously have an advantage.
The amended act will make it an offence if the price quoted in the agent's agreement is higher than the price the agent advertises the property. Agents are required to nominate the price they expect the property to bring when they negotiate the selling agreement which is the basis of the contract for sale.
This revision of the act is aimed at fair play for both buyers and sellers. Home seekers complain that they are often seriously out of pocket because they have paid for preliminary property searches prior to an auction, only to find that the actual price achieved has been way above their price range - and way above the price range the agent has led them to believe the property would fetch.
To some extent, Real Estate agents may be unfairly blamed because the red hot Sydney property market has been delivering unexpected results. There are indications that another drop in interest rates is likely and if so there is every chance that it will tempt a new surge of buyers to try and join the home owning bandwagon. It would take a brave soul to even try and estimate what the median price for a home in Sydney may be a decade from now.
Some people may be disappointed that the scale of commissions for selling a home has not been brought into line with the huge increase in home pricing. A quarter century ago the average home price was a tiny fraction of what it is today, and the scale of commission was much more realistic. That same scale has been constant despite rising prices and is now out of kilter with the actual costs involved, but it is negotiable - if the seller realises that it is not a fixed cost and seeks a contract of sale on terms in the sellers favour.
Buying houses is also subjected to the usual risks of market variance. What rises in price - can also decrease in price - as we saw when the 2008 recession hit the economy. That same warning applies to interest rates. Over a period of time they tend to range through a cycle, and at the moment we are at a low point in that cycle, but if the world economy picks up it will carry interest rates higher as part of that cycle.
Cleaning up the rules that apply to Real Estate is timely. It is a highly competitive market - and very volatile. Both buyers and sellers will appreciate firm rules that govern how properties are presented when it comes to expected prices. Bidding at auction will still be a lottery and no doubt there will be many occasions where the reserve will be massively exceeded. Such is the law of supply and demand !
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