New underquoting laws that apply to the sale of NSW residential property started on 1 January 2016.
The underquoting reforms are designed to stop real estate agents understating property prices. The 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. The updates make:
- 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 NSW 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 can be fined up to $22,000 and could lose their commission and fees earned from the sale of an underquoted property.
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. We’ve also developed a protect yourself from underquoting flyer (PDF, 65.34 KB) that has been translated in Arabic, Chinese, Korean and Vietnamese. Go to our <community language information page> for more information.
- 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 mandatory agency agreements document.
- Agents must be familiar with the new Underquoting guidelines for residential property. They explain agents’ responsibilities and actions that breach them. Go to our underquoting page for agents page for more 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.
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.
Need more information?
Go to the NSW Legislation website to read the laws in full.
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