Real estate agents are telling prospective renters they'll have a better chance if they offer more. Here's why that's ... - ABC News | Canada News Media
Sophie* and her partner are relieved to have a roof over their heads after a nightmare experience looking for a rental in inner Brisbane.
With their lease coming to an end, Sophie turned all her attention to finding a new place.
A two-bedroom unit within 10 kilometres to Brisbane’s CBD was the goal — somewhere close to both their workplaces.
Struggling to find a place within their price range in decent condition, Sophie stopped working in her job as an e-commerce manager to focus her days on looking for a place to live.
For two months she would wake up, check websites for new listings, contact agents, get on inspection lists, schedule inspections and, from 11am to 6pm drive around to inspections.
What she encountered was shocking.
“It was like a nightmare that we had to live every day,” she said.
In Queensland it’s legal for tenants to offer more, but illegal for agents to ask. (ABC News: Nic MacBean)
Most of all, Sophie was disheartened by the more than 10 agents who encouraged her to offer more for the property.
Some were more blatant than others, though all of them would only address Sophie when they were not within earshot of other prospective tenants.
Sophie said one of the more popular ways of encouraging bids was for agents to say “you could offer what you think the property is worth”.
Others were more up front, saying “if you offer more you’ll get the place” or simply “you can offer more”.
Some agents told Sophie “you can offer what you think the property is worth”.(ABC News: Christopher Gillette)
Sophie said she never did bid higher because she feared it would normalise the behaviour, and make it more difficult for others to secure rentals.
“The best advice that I can give to people is just to try and stay positive,” she said.
“Looking for a house in Brisbane right now beats you down to your last reserves.”
The Rental Affordability Index (RAI), published by National Shelter, Community Sector Banking, Brotherhood St Laurence and SGS Economics & Planning, is a price index for rental markets.
The rental squeeze is also borne out in figures published by the Real Estate Institute Queensland (REIQ).
The statewide vacancy rate was sitting at 0.8 per cent at the close of last year, well below the 2.6 per cent figure the institute considers a healthy market.
Rental affordability has declined in the past two years. The average-income rental household now pays 27 per cent of their wage if renting at the median rate.
Rent bidding is a murky practice
In Queensland the Residential Tenancies and Rooming Accommodation Act governs the relationship between tenants and lessors, as well as the way property managers conduct tenancy relationships.
Under the law, rent bidding is prohibited.
But REIQ CEO Antonia Mercorella said it could end up being a bit of a grey area.
REIQ CEO Antonia Mercorella.(Supplied: Antonia Mercorella)
In Queensland, similar to New South Wales, tenants are able to offer more than the advertised price.
But the rental must be advertised at a fixed price, and agents are not able to advertise with a rent range, conduct a rental auction or proactively tell rental applicants to offer over the advertised rental price and encourage them to outbid each other.
“The law doesn’t prevent a tenant from offering more … where it gets tricky is where certain kinds of behaviour is encouraging rent bidding,” Ms Mercorella said.
Tenants trying to gazump each other is behaviour Godwin Beach property owner Annie Pastars has seen first hand.
She rents a self-contained two-bedroom studio at the rear of her house, and is “inundated” by offers when she lists it.
“I’ve been offered up to $200 more a week, which I wouldn’t accept because I think its unethical and it’s just adding to the whole situation,” she said.
Godwin Beach home owner Annie Pastars.(ABC News: Jake Lapham)
Ms Mercorella conceded not all landlords were so principled.
“If an owner or a property manager were to start encouraging tenants to apply and offer above the asking price, potentially, then that may constitute a breach of the act,” she said.
“We’ve been encouraging the property management sector to act with the appropriate level of emotional intelligence, professionalism and showing care, and obviously understanding how stressful the current environment is for tenants.”
What can you do if an agent encourages you to bid?
There are avenues renters can take in response to an agent soliciting rental bids, even though it may not be practical in helping a tenant secure a rental.
A renter could report the potential breach to the Residential Tenancies Authority, which can take action against the offending party.
A tenant could also complain to the Office of Fair Trading, which is the licensing authority for real estate agents.
And there is always the (more costly) option of seeking independent legal advice.
Ms Mercorella said legislative guidelines could help clear up what exactly constitutes rental bidding.
She said it would be hard to determine whether the law needed strengthening to match states like Victoria, where tenants are prohibited from offering more than the advertised price.
“It’s always a delicate balancing act, making sure that the laws provide adequate protection for tenants and also that the laws allow a certain amount of flexibility and freedom to property owners to ensure that they’re prepared to keep providing private rental.”
Greens MP for South Brisbane, Amy McMahon. (ABC News: Jake Lapham)
In 2021, Greens’ MP Amy McMahon introduced legislation that would, among other reforms, ban rent bidding.
The Queensland government’s response came a month later in Housing Legislation Amendment Bill, which failed to include it.
“I don’t think the Queensland government have any idea about what everyday Queenslanders are going through,” she said.
“What we need to see in terms of rent bidding is not just a ban on real estate agents soliciting increasing rent, but for property investors and real estate agents to not be able to accept higher rents than what’s advertised.”
Housing Minister Leeanne Enoch was contacted for comment.
Where the law stands on rent bidding in Australia
State
Status
NSW
Legal for tenants to offer more than the advertised price but illegal for agents to ask renters to bid higher.
Queensland
Legal for tenants to offer more than the advertised price but illegal for agents to ask renters to bid higher.
Victoria
Illegal for tenants to offer more than the advertised price and illegal for agents to ask renters to bid higher.
Tasmania
Illegal for tenants to offer more than the advertised price and illegal for agents to ask renters to bid higher.
ACT
Legal, with the territory government considering rental reforms to prohibit rent bidding, though tenants will still be allowed to offer rental amounts above the advertised price.
South Australia
Legal, with the state government considering reforms to the state’s residential tenancies laws, including a crackdown on the practice of rend bidding.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
