You might have noticed recently a slight change in the way properties are being marketed. It comes on the back of NSW legislative reforms that came into effect on January 1st and I think it’s important people understand what they mean.
Under the new legislation properties can no longer be marketed with a guide price using wording such as ‘offers over’ which many of you will recognise has been a common way of promoting a property in when market conditions are strong.
Now properties must be advertised with a specific sale price or a guide offering two distinct dollar figures. And the new reforms require that price guide to be no greater than 10% above the documented and validated Estimated Selling Price.
Under the new reforms those are two very key words: documented and validated. Agents must provide written evidence of our estimated price guide to a vendor. That estimate must be stated in the agency agreement and amended in writing and in all marketing if the agent receives any information that changes their initial estimate.
It means you will no longer see properties marketed with a price guide of ‘Offers over $1 million’. Instead for a property where the agent has determined the estimated selling price to be $1 million, you will see a price guide of $1 million – $1,1 million.
If a vendor doesn’t want to present a guide within those limitations then an agent must advertise the property without a price. That’s where you may now see an increasing use of ‘Price on Application’.
The reforms have been introduced to ensure buyers are given a clear and true indication of the value of the property. It is the legislative response to eliminate any perception of underquoting which has come on the back of the extraordinary auction market that existed throughout 2015 particularly in the metropolitan markets.
Of course above reserve auction results predominantly occur because of a good, honest marketing campaign driving strong demand but these reforms should give buyers additional peace of mind.