New Underquoting Laws — What Buyers & Sellers Need To Know
The NSW Government has made changes to property legislation to address the issue of real estate agents underquoting the expected sale price of property. The new underquoting laws apply to the sale of NSW residential property from 1 January 2016. These new laws significantly impact the way real estate agents can market a property, and it’s important that vendors and buyers, as well as agents, understand these changes.
Over the past year, there has been a lot of public debate about underquoting – what it is, the impact of underquoting on potential buyers, and what buyers can do about it – and a few high profile prosecutions. This debate led to the Government reviewing and updating the Property Stock and Business Agents Act 2002 to clarify what underquoting means, provide specific guidelines on agents providing price estimates to potential buyers, and increase accountability and fines.
Under the new legislation, an agent is committing an underquoting offence if they state or publish (in print or online) a price for a property that is less than their reasonable estimate of the property’s likely selling price contained in the agency agreement with the seller. Specifically, agents must not give consumers understated or vague property prices (eg. promoting a property price as ‘offers above $450,000’, ‘bidding from’ or ‘$450,000 plus’). Either a single price or a price range must be provided, as long as the upper limit of the range is no greater than 10% of the bottom figure. if the estimated and quoted selling price is no longer a reasonable estimate of the actual selling price (e.g. if the vendor has refused an offer at or above this amount), then the agent must notify the seller in writing of the revised price and all marketing must be amended with the new estimate. Agents must also be able to provide appropriate documentation to a Fair Trading officer to show they have complied with the new laws. Agents who commit an underquoting offence may be fined up to $22,000 and could lose their commission and fees earned from the sale of an underquoted property.
Information about what these reforms mean to you as a buyer or seller can be found at:
