Laing+Simmons CEO and former REIA President Leanne Pilkington has called on NSW Fair Trading to address what she describes as practical loopholes in the state’s incoming price disclosure reforms, warning they could penalise vendors who genuinely revise their price expectations during a campaign.
The reforms are intended to stop agents deliberately underquoting. But Leanne argues they don’t adequately account for genuine price reductions, which she says are common during real estate campaigns.
“Buyers deserve accurate information and agents who deliberately underquote should be held accountable,” Leanne said.
“However, the coming reforms fail to account for genuine price reductions which are not an uncommon feature of real estate sales campaigns, particularly in today’s market.”
At issue is a restriction on advertising a property below a written offer that’s previously been rejected solely on price.
Leanne said a rejected offer only reflects what a seller was unwilling to accept at a particular moment, not what they’ll accept for the rest of the campaign.
She said strong offers often arrive early, before a seller has fully absorbed the market’s appetite for the property, and despite an agent’s advice, sellers may initially reject an offer.
“Subsequently, the seller may recognise that their expectations were too high. In a falling market, the price achievable several weeks later may be lower still,” she said.
She gave a worked example: a seller rejects a written offer of $1.5 million, then six weeks later, after further market feedback and comparable sales, adjusts their expectations and is prepared to accept $1.4 million. Under the coming reforms, the property still can’t be advertised below $1.5 million.
“The consequences can become more serious when circumstances change during a campaign,” Leanne said.
“An interest rate rise may affect borrowing capacity and demand. A seller may lose their job, become seriously ill or face financial pressure that makes a sale urgent.
“In such cases, it is unreasonable for a seller to be prevented from responding to changed circumstances because of an earlier pricing decision becoming an enduring barrier to selling their home. An unrealistically high advertised price might deter the very buyers who may now be able to afford the property.”
Leanne also pointed to a gap around agent changeovers. If a seller switches agents mid-campaign, she asked how an incoming agent would verify a previously rejected offer – and warned that if changing agents allowed a lower price to be advertised, the reforms would create an incentive to switch agents without any added consumer protection.
To close the gaps, Leanne is urging the NSW Government to build in an express mechanism for genuine, documented price revisions, supported by written confirmation of a seller’s revised price expectations, an updated evidence-based estimate of the likely selling price, records explaining the reduction, and clear obligations when a property transfers between agents.
Leanne said these practical solutions would prevent unfairness and confusion that would otherwise occur once the reforms are introduced.
“Protecting buyers and empowering sellers to adjust their prices to market conditions are compatible objectives. The reforms should achieve both. And they can, with some important adjustments prior to the reforms going live,” she said.