Property 101: Understanding NSW estate agent underquoting reforms

Property 101: Understanding NSW estate agent underquoting reforms
Property 101: Understanding NSW estate agent underquoting reforms

The New South Wales Department of Fair Trading has published a list of changes to underquoting laws for residential property that came into effect this year.

The reforms were made to the Property Stock and Business Agents Act 2002 in order to provide greater clarity for buyers, sellers and agents. 

Changes include clearer rules for agents, more effective enforcement and the possibility of fines and lost commissions for breaches of the law by real estate agents.

According to the department, 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," it noted.

The department states the reforms that were made to the Property Stock and Business Agents Act 2002 provide clarity for buyers, sellers and agents and 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.

Prospective buyers, property owners and agents are encouraged to understand the guidelines, according to the department.

"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.

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.

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For the full list of reforms, visit the Fair Trading website here.

 

Tags: 
Underquoting Auctions

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