‘Offers over’ price tag should represent the vendor’s minimum selling price
The Office of Fair Trading (OFT) has received a number of complaints recently from consumers about the listing of properties using an “offers over” pricing strategy.
The problem arises when the potential buyer makes an offer over the indicated price but the offer is refused. This leaves the buyer annoyed as their time has been wasted and they may have become emotionally invested in a house that was always out of their price range.
The problem is compounded if they have missed other opportunities to view and purchase properties that are actually in their price range It is the OFT’s view that the “offers over” price tag should be the minimum amount the vendor is willing to accept for the property.
If you stipulate an offers over price knowing that it is lower than the vendor will accept, then that is bait advertising.
The vendor’s minimum selling price is the price listed on the Appointment to Act form. (Form 6).
Bait advertising is an offence under the Australian Consumer Law and carries a maximum penalty of up to $500,000 per breach for an individual and up to $10 million per breach for a corporation.
Bait advertising is prohibited because it gives buyers a false impression about the price a seller is willing to accept for a property.
As agents know, they must not engage in misleading or deceptive conduct or make false or misleading representations about a property to prospective buyers or sellers.
In a market where a few thousand dollars can make the difference between ‘affordable’ and ‘out of my price range’ for buyers, it’s important those buyers are able to have confidence in the price representations that are made.
While some agents argue that they can negotiate potential buyers up to the list price, the reality is that by advertising a property at a price lower than the vendor is prepared to accept, they are doing their client a disservice by not marketing to the right price bracket of buyers.
Additionally, if a vendor is encouraged to stipulate on the appointment Form 6 that they want an ‘offers over’ advertising strategy which would amount to bait advertising, then this would also be considered illegal.
It is important that the agent makes the vendor aware of the law. Although agents are required to act in accordance with a client’s instructions, they must not follow those instructions if it is unlawful to do so.
The OFT will be conducting checks on ‘offers over’ advertising against Form 6’s throughout 2020 and will not hesitate to take action if agents are found to be noncompliant.
More information on regulations in the real estate industry can be found at https://www.qld.gov.au/fair-trading.
You can contact the OFT by phone on 13 QGOV (13 74 68) or email at BrisbaneOFT@justice.qld.gov.au