December 2015
Underquoting reforms
New underquoting laws apply to the sale of NSW
residential property from 1 January 2016.
Korean and Vietnamese (for more translated publications
visit our Community language information web page).
The underquoting reforms are designed to stop real
estate agents understating property prices.
Property owners using an agent to sell their property
should refer to our Underquoting information for
sellers page. Sellers should also make sure agents give
them the Agency agreements mandatory document.
An agent is committing an underquoting offence if they
state or publish 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.
This practice of underquoting can cause interested
buyers to waste time and money on inspecting
properties, getting reports and attending auctions based
on misleading estimates of the selling price.
The reforms that were made to the Property Stock and
Business Agents Act 2002 provide clarity for buyers,
sellers and agents. They address underquoting with:
clearer rules for agents. A key requirement is that
agents must not give consumers understated or
vague property prices (eg. promoting a property price
as `offers above $450,000´)
● more effective enforcement. During an inspection
by a Fair Trading officer, agents must be able to
provide appropriate documentation to show that 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.
Understand more about how the underquoting laws affect
you. Refer to our information for buyers, sellers and
agents.
What buyers, sellers and agents need to
know
Agents and consumers should be aware of how the
underquoting laws affect their rights and responsibilities.
Prospective buyers can learn how the new laws help to
protect them by visiting our Making an offer page. Refer
also to the Protect yourself from underquoting flyer. It has
been translated in Arabic, Chinese,
Agents must be familiar with the new Underquoting
guidelines for residential property. They explain agents´
responsibilities and actions that breach them. Real estate
agencies should refer to the guidelines to maintain
proper procedures for agents to comply with the
underquoting laws. For more details, refer to our
Underquoting page for agents.
Be aware that, simply because a property sells for more
than expected, this does not mean underquoting has
occurred. Sometimes competitive buyer behaviour can
result in a much higher sale price than what an agent
could have reasonably estimated. However, the law now
requires an agent to be able to show that their estimate
was reasonable, up-to-date and evidence-based.
Why did the laws change?
Buying a property is the biggest financial investment
most people will ever make. When dealing in the
residential property market, sellers (vendors) and
potential buyers (purchasers) should be able to expect a
real estate agent to market property ethically and
professionally.
Potential buyers can spend money and time investigating
properties based on the advertised or stated value. There
can be significant consumer detriment if that value was
not a reasonable estimate of its likely selling price.
A review of the previous underquoting laws found that
clearer requirements for agents selling property would
better protect consumers in the NSW property market.
The previous arrangements also made it difficult to
effectively enforce the laws and penalise agents for
underquoting. Now, from 1 January 2016, agents face
tougher penalties that apply even if they were not aware
of the law, or did not intend to break the law.
December 2015
The reforms require agents to draw on their skills to
make a reasonable estimate of the likely selling price and
have honest and fair dealings with all buyers and sellers.
The role of the seller's appointed agent to achieve the
highest possible price on the property owner's behalf
does not mean they should manipulate buyer interest
with false price information.
How were the new laws developed?
In shaping these laws, NSW Fair Trading assessed how
underquoting laws operate in different states.
The reforms were developed in close consultation with
stakeholders from the real estate and property sector.
Representatives from real estate industry associations
contributed to the proposals for reform and gave
feedback as the laws were being drafted.
More information
To read the laws in full, access the Act now on the NSW
Legislation website.
Consumers can refer to this page for updates. Agents
should check they are subscribed to our Property Matters
enewsletter so they can receive regular updates.
www.fairtrading.nsw.gov.au
Fair Trading enquiries 13 32 20
TTY 1300 723 404
Language assistance 13 14 50
This fact sheet must not be relied on as
legal advice. For more information about
this topic, refer to the appropriate
legislation.
© State of New South Wales through NSW Fair Trading
You may freely copy, distribute, display or download this information with some important
restrictions. See NSW Fair Trading's copyright policy at www.fairtrading.nsw.gov.au or email
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