New Legislation tackles Underquoting in Real Estate Transactions

From January 1, 2016 the reforms to the Property Stock and Business Agents Act 2002 provide clarity for buyers, sellers and agents.

2016 will see all marketing advertisements for a Private Treaty campaign changed to a fixed asking price or an auction campaign. The reforms to the Property Stock and Business Agents Act 2002 address underquoting in the NSW property market and provide clarity for buyers, agents and vendors. They are designed to prevent properties being underquoted - that is, marketed at a price less than the agent's true estimate of the selling price.

The now illegal practice of under quoting 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 are now in effect provide:

• Clearer rules for agents. Essentially real estate agents must not give consumers understated or vague property prices.  For example, promoting a property price as ‘offers above $450,000’ will be deemed unacceptable.
• More effective enforcement. 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 that is specified in the agency agreement with the seller. If an agent is inspected by the office of Fair Trading, they must be able to provide appropriate documentation to show they have complied with the new laws.  Agents who commit an underquoting offence risk being fined up to $22,000 and could lose their commission and fees earned from the sale of the ‘ underquoted property’.

For more details on the change to this property legislation read the full details from the Department of Fair Trading.