So, you finally found the perfect place – congrats! But before you high-five the agent, they hit you with a bombshell: “Multiple offers! We’ve got a bidding war brewing!” Now, this can make anyone panic and scramble to throw more money at the situation to win the highest bid. But before you do, is the agent being totally upfront, or can a real estate agent lie about other offers in Australia?
Here’s the deal: in Australia, real estate agents have to play fair. Lying about offers is a big no-no. Let’s break it down. We’ll crack open the legalese and see what your rights are as a buyer.
Today, we’ll uncover the truth behind those so-called bidding wars and make sure you’re not getting played.
Can Agents Lie in Australian Real Estate?
The real estate industry operates under a framework that strictly prohibits misleading or deceptive conduct.
Despite this, stories of agents telling “white lies” about a higher offer from another buyer or the existence of a fictitious purchaser to pressure buyers into making a quicker, higher bid are not unheard of.
But what’s the truth behind these practices, and are agents really allowed to lie?
Property Occupations Act and Code of Conduct for Agents
In Queensland, the Property Occupations Act regulates the real estate industry. As an agent, you must adhere to a stringent Code of Conduct that requires honesty and integrity in all transactions. Key requirements include:
- Clear communication about the property
- Transparent handling of offers and negotiations
Agents in New South Wales (NSW) also operate under a legal structure that penalizes misleading actions. The Real Estate Institute of New South Wales provides guidance to ensure compliance with these laws.
Consequences of Misleading or Deceiving Buyers
If an agent misleads or deceives you regarding other offers on a property, they may face serious legal consequences. For example:
- In NSW, legal measures can include penalties, and the agent might be compelled to undergo additional training.
- In Queensland, breaching the Code of Conduct can result in fines or licensing sanctions imposed by the Real Estate Institute of Queensland.
Agents strive to maintain a reputable status within the industry as legal repercussions can significantly impact their career and the trust of buyers like you.
Misleading conduct by dodgy real estate agents can distort the purchaser’s perception of the property’s worth, potentially leading to an inflated or deflated selling price.
First home buyers, in particular, might feel pressured into accepting a lower offer for fear of losing out, or they may end up making a significantly higher offer than necessary. It’s crucial for buyers to never feel pressured into making a decision and to request a callback or more time if they’re unsure.
How Offers Are Managed By Agents
When you’re navigating the purchase of a property, understanding how your offers are managed can be crucial. Your offers are subject to specific protocols and ethical standards which real estate agents must adhere to.
Multiple Offer Situation and Real Estate Agents’ Obligations
In a multiple offer situation, real estate agents have a clear set of obligations. They must:
- Be transparent with all parties involved.
- Inform buyers there are multiple interested buyers without making false claims about the offers.
Agents are bound by law and a stringent code of ethics which is enforced by Fair Trading. This includes the requirement for agents to act in the best interests of the seller while also treating buyers fairly.
Requirements for Submitting and Acknowledging Offers
When making an offer, you should be aware of the process:
- All offers must be in writing.
- Upon submitting your offer, you should receive written acknowledgement from the agent.
Agents are legally required to submit all offers to the seller up until the point of acceptance and cannot exclude any offer from consideration. As a buyer, ensure that your final offer is clear and communicated effectively to increase your chances in a potential auction scenario.
Ethics and Professional Standards
When you engage with the real estate industry in Australia, ethical conduct and adherence to professional standards are paramount for agents. The industry expects that all interaction, especially when formulating offers, is grounded in honesty and integrity.
Industry Expectations for Honest Communication
The real estate industry operates under a presumption that all agents will engage in honest communication with their clients. This is underpinned by:
- A strict Code of Conduct which outlines that a real estate agent must not engage in misleading or deceptive conduct. For more information on conduct expectations, you can review the Real Estate Institute of New South Wales Code of Practice.
- Agents have a duty to accurately represent the state of the market and the interest in properties, including any offers made.
Transparency and High Pressure Tactics
It is crucial for agents to maintain transparency:
- Conflict of Interest and Commission Structures should be disclosed, ensuring that all potential buyers understand how the agent is compensated.
- High Pressure Tactics, such as creating a sense of urgency by indicating competitive bids, are discouraged unless they reflect genuine market conditions. Agents and potential buyers can refer to the Australian Property Institute’s Code of Ethics for guidance on professional behavior.
Advice for Property Sellers and Buyers
Making informed decisions for both buyers and sellers is critical, which includes understanding the significance of building inspections, arranging finance, and seeking legal counsel on property contracts.
Importance of Building Inspections and Finance
For Sellers:
- Ensure you organize a comprehensive building inspection before listing to identify any potential issues which could affect the sale price or prompt negotiations from buyers.
- Finance: Be prepared to provide appropriate documentation and information to prospective buyers to assist with their loan approvals, which may include building inspection reports or proof of repairs.
For Buyers:
- Conducting a thorough building inspection is a step you cannot afford to skip. It will inform you of any structural issues or needed repairs that may influence your offer or willingness to proceed.
- Securing finance should be among your initial steps. A pre-approved loan gives you the power to negotiate and move quickly when you find the right property, showing sellers you’re a serious buyer.
Consulting Legal Advice Regarding Property Contracts
For Seller Clients:
- Have a solicitor or conveyancer review the contracts of sale for your property. This ensures you’re meeting all legal obligations. It also ensures the contract terms are favourable to you, including stipulations about the deposit and achieving the highest possible price.
- Legal advice can help you understand your rights and any potential liabilities as the owner. It can also explain what might happen if a buyer defaults on their contract.
For Prospective Buyers:
- Seek legal advice before signing any contracts of sale. An expert can highlight any unusual terms, explain your obligations regarding the deposit, and ensure you are protected.
- Legal counsel can also advise on the right clauses to include in a contract to protect your interests. This is especially important for finance and building inspection contingencies.
Exploring the Market
For those interested in further exploring the market or considering making a purchase, understanding what to offer on a house with a price range and how to buy real estate in Australia can provide valuable insights into navigating this complex landscape.
Suggested reading: Looking for a one-stop resource? Our detailed article on how to buy a house in Australia is just what you need!
FAQ Section on ‘Can a Real Estate Agent Lie About Other Offers’
Can an estate agent lie about offers?
No, it’s illegal for real estate agents to mislead consumers about offers, whether intentionally or not. Misrepresentation of offers or potential buyers is against the law.
What is the most common complaint filed against realtors?
The most common complaints involve issues such as septic systems, solar leases, failure to disclose and Seller’s Property Disclosures, water rights, miscommunication, agent-owned property, additional supervision, multiple offers, and unpermitted work.
Can real estate agents tell you other offers South Australia?
Real estate agents must inform the seller about an offer within 48 hours but are not required to disclose other offers to potential buyers. The seller can accept a higher offer without providing an opportunity for negotiation, and a holding deposit of up to $100 may be requested.
What not to say to a real estate agent?
Avoid disclosing information such as your opinion on the home’s value, urgency to sell, plans for upgrades before selling, non-mandatory legal information about your property, acceptance of dual agency, and your lowest acceptable selling price.
