December 2015
Underquoting
Information for agents
Underquoting laws start from 1 January 2016. They
apply to all residential properties for sale on or after 1
January 2016.
You should also read about the key requirements and
refer to the questions and answers sections below to
help you understand how the new laws apply to agents.
An agent is underquoting the selling price of a property if
they make or publish a statement about its price that is
less than their reasonable estimate of the property´s
likely selling price that is contained in the agency
agreement.
Key requirements
An agent should never state or publish an estimated
selling price that is less than what is in the agency
agreement.
This is an offence under the Property, Stock and
Business Agents Act 2002 (the Act). Agents face fines of
up to $22,000 for failing to comply with the law. Agents
may also lose their commission and fees earned from the
sale of an underquoted property. These commissions and
fee payments will go towards the Property Services
Compensation Fund, which supports consumers who
have experienced financial loss as a result of property
agent misconduct.
An estimated price communicated to sellers and potential
buyers must represent what an agent reasonably
believes a property is likely to sell for. An agent and seller
can choose not to publish or make any statement about
the likely selling price of the property. However, if they do
publish or make any statements about price, they must
comply with the new requirements.
Know your responsibilities - read the Underquoting
guidelines
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Agents should make sure they are carrying out their new
obligations by downloading Fair Trading´s Underquoting
guidelines for residential property.
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As an agent, you must:
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include your reasonable estimate of a property's
likely selling price in the agency agreement (also
called the sales agreement)
provide evidence to the seller of how you
estimated the selling price
ensure the highest price in a price range does
not exceed the lower price by more than 10% (for
example, $500,000-$550,000)
record in writing statements made about the
price while a property is marketed
ensure your estimated selling price remains
reasonable by:
○ revising it as soon as you know (or should be
aware) of evidence or circumstances that
changes it
○ notifying the seller of the revised price
○ amending the agency agreement with the
revised estimate
take all reasonable steps as soon as is practical to
update any marketing of the property with the
revised estimated selling price.
December 2015
You must not:
provide any price estimate less than what you
have reasonably estimated that a property is worth
(as recorded in the agency agreement with the seller)
- this applies to advertising the property or in any
communication with prospective buyers about the
property's likely selling price
● use any statements such as "offers above" or
"offers over" an amount, or "plus" a particular price
(for example, $500,000+), which could underquote or
obscure a property's estimated value.
●
Questions and answers about
underquoting
Do the laws apply to properties sold before 1
January 2016?
No. The underquoting requirements apply to all
residential properties for sale on 1 January 2016 and into
the future. However, if you have already entered into an
agency agreement with a seller before 1 January 2016
and the agreement is still operating, then you will not
have to comply with the requirement to update your
estimated selling price, however you may wish to do this
as a matter of good practice.
You must still comply with all other requirements for
advertising and making statements about your estimated
selling price as it currently appears in the agency
agreement, as well as all the new record keeping
requirements. That means that if you have properties
advertised for sale at a price that is less than the
estimated selling price in your agency agreement, then
you must take all reasonable steps, as soon as is
practical, to change or withdraw those advertisements.
This includes flyers and any other printed material and all
online material.
All agency agreements entered into on or after 1 January
2016 must comply with all the new requirements.
I used to advertise ‘offers over $890K’ for a
property when my estimated selling price was
$900,000-$990,000. Can’t I do this?
No. Statements such as `offers over $890K´ and other
statements like `offers above´ or `$890K plus´ do not
provide buyers with enough information to determine
whether the property is within their price range. At worst,
such statements can mislead buyers by indicating that a
property could likely sell for the minimum offer advertised
when the property will likely sell for much higher.
Remember that from 1 January 2016, you must not:
do any advertising that includes such references (for
example `offers above $900,000´, `offers over
$900,000´ or `$900,000+´)
● indicate a selling price that is any lower than the
reasonable estimated selling price as recorded in the
agency agreement.
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The requirements make sure consumers don´t waste
money and time on property inspections by banning any
price information that underquotes an agent´s estimated
selling price.
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 obligations to never 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 may wish to direct the seller you represent to the
Fair Trading website or supply them with Fair Trading
information on the underquoting reforms (visit our
Underquoting information for sellers page). This should
help them to understand the purpose of the underquoting
laws and the consequences if you illegally underquote a
property.
You must also take the time to explain how you arrived at
the estimated selling price for their property and provide
December 2015
evidence for why this is a reasonable estimate of the
likely selling price.
What should I consider a reliable offer, and when
should it influence the estimated selling price?
What if the seller wants more than I think is 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 revise your estimated
selling price. Be sure to amend the agency agreement
and advise the seller in writing, providing them with the
evidence of the reasonableness of your revised price
estimate.
If the seller wants to sell the property for more than your
estimated selling price, you may choose to:
advertise at a higher price that meets the seller´s
instructions.
or
● decide not to disclose any price.
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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 the following
pricing statements may be considered false or
misleading under the Australian Consumer Law:
quoting the estimated selling price where the seller
has advised that they will only sell for a higher price
or
● advertising a property at a price that is less than a
previously rejected offer (unless the seller is now
prepared to accept a lower offer).
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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?
The laws recognise the dynamic market forces in the real
estate sector and require agents to review and amend
their estimate in line with market feedback and other
relevant factors impacting a property's likely selling price.
Agents must not continue to market a property at an
estimated selling price that they know, or should know, is
no longer a reasonable estimate. Agents must: notify the
seller if they revise their estimated selling price, provide
evidence of the reasonableness of the revised estimate,
amend the agency agreement (the seller´s consent is not
required to do this) and take all reasonable steps to
update their marketing materials as soon as is practical.
The local newspaper has gone to print with my
previous estimated selling price. Am I breaching
the laws?
Certain updates may not be possible but you must be
able to demonstrate that you have made reasonable
attempts to update any marketing material that no longer
shows your reasonable estimated selling price.
It may not be practical to retract published newspaper
advertising. However, if you have the opportunity to
update price information before it is printed, or can
update any online marketing for the property, you must
do so as soon as is practical.
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 you do 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 do this in two ways:
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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.
December 2015
●
or
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 that 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.
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Be aware that some previous practices are now illegal,
such as a billboard promoting off-the-plan residential
property that states: 'From $400,000'.
cannot give any price indication (verbal, written or
advertised) for a property that is LESS than that specific
property´s evidence-based 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 may
include a schedule of the lots with their individual prices,
or properties available with their features (primarily
bedroom numbers) and a price for each. Any prices
included in the schedule cannot be less than the
estimated selling price for each unit/lot.
How can I learn more about how to avoid
underquoting?
As a licensed agent, you should make sure that you are
subscribed to our Property matters email updates - this is
to help you understand and comply with your
requirements as a licence-holder in the property industry.
NSW Fair Trading also conducts information seminars for
agents across the state. Sessions will be listed on our
Events register.
You should also download the Underquoting guidelines
for residential property for more details on agents´
responsibilities and guidance on how to avoid
underquoting.
You can also refer to our related information for agents
and consumers on the Fair Trading website.
What if I am unfairly accused of underquoting?
To help consumers understand what underquoting is, you
can direct them to the Underquoting reforms web page
on the Fair Trading website. This will give them an
overview of the new laws and point them to the
information relevant to them.
Also, it would be 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.
Consumers can also speak to a Fair Trading officer on 13
32 20.
Can I choose not to reveal a price when
collectively marketing multi-unit residential
property or multi-lot subdivisions?
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.
Yes. Potential buyers can simply be advised to contact
the agent for further information. Remember that agents
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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 and you are found guilty of underquoting, you
will pay a fine of up to $22,000. You may also lose the full
commission and any fees for the property or properties
you have underquoted.
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:
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the address of the property concerned
the price or price range
the date and time of the statement.
Download the Underquoting guidelines for residential
property for guidance about your record keeping
requirements.
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
[email protected]