28th April 2017: 2017 Legislative Changes

From 1 May, the way that residential real estate can be marketed changes considerably in Victoria. The changes to the Estate Agents Act 1980 put in place several new requirements that real estate agents must adhere to when engaged to sell residential property in Victoria.

What changes can you expect?

1) Sellers must be given an estimated selling price

Before you sign an authority to engage a real estate agent to sell your property, your agent must provide you with an estimated selling price. This can either be expressed as a single figure, or a price range (where the difference between the upper and lower limits of the range does not exceed 10% of the amount of the lower limit of the range).

For example: a single figure of $700,000 OR a range of $700,000 – $770,000.

2) The way agents can determine their Estimate has changed

Your agent must take into account the sale prices of three properties that they reasonably consider to be most comparable, that have been:

♠ sold within the preceding six months and within a 2km radius (if Melbourne metro); or

♠ sold within the preceding 18 months and within a 5km radius (if non-metro).

In addition, they also must have regard to the:

♠ standard and condition of the properties;

♠ the location of the properties;

♠ the dates on which the properties were sold; and

any guidelines issued by the Director of Consumer Affairs.

3) What price can a property be advertised at?

The legislation no longer allows for an agent to state as a selling price or likely selling price a figure or range that is modified by words or symbols, e.g. 'from', 'over', 'starting at', 'plus/+'. 'in excess of', 'price on application' or 'vicinity of'.

The price that the agent advertises OR advises that a property is for sale at must not be less than:

♠ the agent's estimated selling price; or

♠ the seller's asking price, if one was provided; or

♠ a price in a written offer that was rejected by you as the seller, because it was too low.

In other words, it is illegal for your agent to quote or advertise a figure that is less than their estimate in the sales authority or your asking price/reserve if you have provided one.

If an offer to purchase your property is made during your campaign and you reject it because the price is too low, the agent cannot advertise the property for less than the price proposed in the rejected offer. This will not be the case if you rejected the offer for another reason, like the terms or condition of the offer.

4) What is a Statement of Information?

This is a document that the agent must prepare when they are engaged to sell property and must include:

♠ an indicative selling price for the property, which must not be less than the agent's estimated selling price, the seller's asking price or a price in a written offer that has already been rejected by the seller;

♠ details of the three most comparable properties, including the address, date of sale and sale price; and

♠ the median house or unit price for the suburb.

If the agent reasonably believes that there are less than three comparables, they are not required to take comparable properties into account when setting the Estimated Selling Price or include the details of comparable properties in the Statement of Information.

The Statement of Information must be displayed at all open for inspections, included with online advertising, given to prospective buyers within two business days of a request and updated if there is a change in the indicative selling price.

We certainly welcome these changes as the desired outcome is to ensure that all agents across the state are complying with current legislation, to give potential home buyers confidence and help maintain the integrity of the industry.