An agent is underquoting the selling price of a residential property if they make a statement or publish an advertisement about its price that is less than their reasonable estimate of the property’s likely selling price. The Property and Stock Agents Act 2002 (the Act) and the Secretary’s Guidelines for the Proper Supervision of the Business of a Licensee (the Supervision Guidelines), issued under section 32 of the Act, set out the legal requirements on licence holders when making representations about the selling price of residential properties.
The underquoting laws are designed to ensure that buyers don’t waste money and time on property inspections, getting reports and attending auctions for properties that will likely be out of their price range.
NSW Fair Trading has also developed guidelines to help agents understand the law relating to underquoting. The guidelines are for informational purposes and aim to assist licence holders in complying with their legal requirements. See Fair Trading’s Underquoting Guidelines.
Key requirements
As an agent, you must:
- include your reasonable estimate of a property's likely selling price in the agency agreement.
- if the estimate is expressed as a price range, ensure the highest price in a price range does not exceed the lower price by more than 10 percent (for example, if the lowest price is $500,000 the maximum price cannot exceed $550,000).
- provide evidence to the seller or prospective seller of how you estimated the selling price, or revised selling price.
- ensure your estimated selling price remains reasonable.
- revise your estimated selling price if there is evidence or circumstances that impact its reasonableness, by:
- notifying the seller of the revised price, and
- amending the agency agreement with the revised estimate.
- take all reasonable steps to amend or retract advertisements that have a selling price less than the revised estimate.
- maintain written records of any statements made about the price while a property is marketed.
- ensure the Supervision Guidelines are complied with. For example:
- written procedures are in place to ensure the following factors have been considered when determining the estimated selling price:
- any sales of comparable properties
- feedback from potential purchasers
- any current or relevant valuations provided in respect of the property
- the characteristics and features of the property
- the methods used to market the property, and
- any other available factor that may affect the estimated selling price.
- if required, demonstrate that the difference between the estimated selling price and actual selling price was reasonable in the circumstances.
- written procedures are in place to ensure the following factors have been considered when determining the estimated selling price:
You must not:
- provide a selling price (whether written or in person) less than what you have reasonably estimated (as recorded in the agency agreement with the seller). This applies to advertising the property or in any communication with prospective buyers while marketing the property.
- use any statements such as ‘offers above’ or ‘offers over’ an amount, or any symbols or words which could underquote or obscure a property's estimated value such as by adding ‘plus to a particular price (for example, $500,000+).
- make a statement about the last bid accepted at auction if it was a vendor bid (bid by auctioneer on behalf of the seller), where the residential property or rural land was passed in at auction. The exception is where the statement clearly indicates that the bid was a vendor bid.
Underquoting is an offence under the Act. Agents can face fines of up to $22,000 for failing to comply. Agents may also lose their commission and fees gained from selling an underquoted property.
Frequently asked questions
When did the underquoting laws commence?
1st January 2016. The underquoting requirements apply to all residential properties for sale from 1st January 2016.
I used to advertise ‘offers over $890K’ for a property when my estimated selling price was $900,000-$990,000. Can I do this?
No. You must not conduct any advertising that includes such references, for example 'offers above $900,000', 'offers over $900,000' or '$900,000+'.
Statements such as ‘offers over $890K’ and other statements like ‘offers above’ or ‘$890K+’ do not provide buyers with enough information to determine whether the property is within their price range. Such statements can mislead buyers by indicating that a property is likely to sell for the minimum offer advertised when it is more likely the property will be sold for more than that.
The seller wants me to advertise a lower price than the estimated selling price to attract market interest. What should I do?
You should make sure that the seller is aware of your legal obligation not to indicate a selling price lower than your estimated selling price. Your role is to get the seller the highest possible price for the property through fair, effective marketing and enabling competition between buyers for whom the property is likely to be affordable.
You can direct the seller to our underquoting information for seller's page.
What if the seller wants more than I think is the estimated selling price?
If the seller wants to sell the property for more than your estimated selling price, you can advertise at a higher price that meets the seller’s instructions.
As long as you do not advertise or disclose any price that is less than the estimated selling price in the agency agreement, then underquoting has not occurred.
You should also let the seller know that quoting the estimated selling price where the seller has advised that they will only sell for a higher price may be considered false or misleading under the Australian Consumer Law.
You can find out more about your requirements under the Australian Consumer Law in the Underquoting guidelines for residential property and on the Australian Consumer and Competition Commission real estate web page.
Why does the estimated selling price need to be up-to-date?
Agents are required to review and amend their estimate in line with market feedback and other relevant factors that might impact a property's selling price. They are not allowed to continue to market a property at an estimated selling price that they know, or should know, is no longer a reasonable estimate.
What should I consider a reliable offer, and when should it influence the estimated selling price?
You should request all offers in writing. If you consider that any offer or offers received changes the likely selling price of the property, you should update the estimated selling price.
The local newspaper has gone to print with my previous estimated selling price. Am I breaching the laws?
It may not be practical to retract published newspaper advertising. You must be able to demonstrate that you have made reasonable attempts to update any advertising material that no longer shows your reasonable estimated selling price.
What about when I talk to a potential purchaser on the phone or at an open house?
If you make a statement about a residential property’s likely selling price in marketing that property to a buyer, potential buyer, seller or potential seller, you must make a written record of the statement.
The record of the statement must contain:
- the address of the property concerned
- the price or price range, and
- the date and time of the statement.
Download the Underquoting guidelines for residential property (PDF, 2915.79 KB) for guidance about your record keeping requirements.
How can I market multi-unit residential property or multi-lot residential subdivisions?
If you give any price indication about the properties’ likely selling prices, any advertising must include the following: the estimated selling prices for the lowest and highest priced properties in each category of unit (eg. studio, one bedroom, two bedroom etc.).
Advertisements for multi-unit property marketed collectively can be done in one of two ways:
- Giving the price ranges for each category, with the low end of the range being the estimated selling price of the lowest priced unit in the category and the higher end of the range being the most expensive property in that category. For example: one bedroom units available - price range: $550K-$700K. In this example, $550K represents the estimated selling price of the lowest priced one bedroom unit and $700K is the estimated selling price of the highest priced one-bedroom unit. This would need to be done for each category.
- Stating the estimated selling price in the agency agreement of the lowest and highest priced units for each property category (instead of using the ‘range method’ above). For example: one bedroom units available - the lowest priced unit is $550K, the highest priced unit is $700K; two bedroom units available - the lowest priced unit is $700K, the highest priced unit is $900K.
Note: The range advertising method described above is for properties being marketed collectively. Therefore, it does not breach the requirement related to estimated selling prices expressed as a range, which is for single properties.
Multi-lot subdivisions would need to include the lowest priced lot and the highest priced lot.
Any collective marketing of residential units/lots that includes a price indication should also advise prospective buyers that there are multiple properties within each category, of varying prices within that range.
To avoid underquoting, all advertising and marketing must be updated to reflect the value of the new lowest price unit/lot available when:
- the lowest priced unit/lot is sold, or
- the last of the lowest priced units in the price range for a particular category is sold.
Be aware that some previous practices are now illegal, such as a billboard promoting off-the-plan residential property that states: 'From $400,000'.
Also, it’s against the law to promote a range such as 'property available from $400K-$2.2M'. This does not give a meaningful indication of the price ranges for each category of residential units/lots being collectively marketed.
Can I choose not to reveal a price when collectively marketing multi-unit residential property or multi-lot subdivisions?
Yes. Potential buyers can simply be advised to contact the agent for further information. Remember that agents cannot give any price indication (verbal, written or advertised) for a property that is less than that specific property’s estimated selling price.
How should I record estimated selling prices for multi-unit property and multi-lot subdivisions?
Attached to the agency agreement, the agent can include a schedule of the lots with their individual prices, or properties available with their features and a price for each. Any prices included in the schedule cannot be less than the estimated selling price for each unit/lot.
Where can I learn more to avoid underquoting?
Download the Underquoting guidelines for residential property (PDF, 2915.79 KB) for more details on agents’ responsibilities and guidance on how to avoid underquoting.
As a licensed agent, you should subscribe to our property matters email updates. These emails will help you understand and comply with your requirements as a licence-holder in the property industry. We also hold information seminars for agents across the state. Sessions are listed on our events register.
What if I am unfairly accused of underquoting?
To help consumers understand what underquoting is, you can direct them to the Protect yourself from underquoting checklist.
Consumers can also speak to a Fair Trading officer on 13 32 20.
If you have complied with all the requirements expected of agents under the Act, then you will not be at risk of breaching the underquoting laws.
What will happen if Fair Trading determines that I have underquoted?
Fair Trading can issue you with a penalty infringement notice of $2,200. Depending on the circumstances, it could also be grounds for Fair Trading to take further disciplinary action on your licence. If the matter is prosecuted in court and you are found guilty of underquoting, you may face a fine of up to $22,000. You could also lose the full commission and any fees for the property or properties you have underquoted.