REINSW: THERE ARE MAJOR FLAWS IN THE NSW GOVERNMENT’S PRICE DISCLOSURE REFORMS

The Real Estate Institute of NSW (REINSW) says the NSW Government must amend the coming price disclosure reforms because of the risks they pose to buyers and vendors.

In developing the reforms, Government has forgotten that vendors are consumers too, REINSW CEO Tim McKibbin says.

Set to commence this month, the reforms include restrictions on agents advertising a price for a vendor’s property below a written offer which the vendor has previously rejected solely on price.

This will penalise vendors who genuinely revise their expectations over the course of a campaign and, in doing so, will prevent buyers from being able to compete for properties they may otherwise be able to afford.

“For Government’s reforms to work, one of the many requirements is for home prices to always be rapidly growing. In other words, the opposite of the current market,” says Mr McKibbin.

“This is a further example of Government’s market ignorance, unwillingness to genuinely engage with industry, and prioritising misguided populist politics over the consumer’s best interests.”

Of major concern is the failure for the reforms to account for a vendor’s need to adjust their expectations due to unforeseen circumstances.

A vendor may need to sell their property urgently and therefore be willing to accept a lower price due to unforeseen circumstances, like an illness, the need to move quickly, a sudden change in financial circumstances, or countless other reasons.

However, because of an earlier pricing decision, the agent will be prevented from advertising a price which responds to the vendor’s change in circumstances.

In another practical misfire, confusion remains as to whether a vendor will be able to provide a revised price directly to a prospective buyer, even though the agent cannot.

Mr McKibbin says the reforms must be amended so as not to place buyers and vendors at risk.

“The advertising restrictions at the centre of the price disclosure reforms miss the practical mark. They unreasonably punish vendors without improving transparency for buyers,” Mr McKibbin says.

“Unless amended, agents will be required to advertise their vendor’s property for a price above that which that vendor is willing to accept. In effect, they will be forced to make a price representation which no longer reflects the vendor’s position or the market.

“This is what happens when Government refuses to meaningfully engage with industry.

“It is imperative for Government to acknowledge that vendors are consumers too. When their circumstances change, they should be free to adjust their expectations to reflect those changed circumstances.

“Preventing vendors from doing so unreasonably punishes them and it also discourages buyers from competing for a property that, on the basis of a revised price expectation, they may actually be in a position to make an offer for.

“In this common scenario, the reforms fail everyone. They must be reconsidered prior to implementation,” Mr McKibbin says.