New underquoting reforms have been introduced to apply to the sale of NSW residential property.
Commencing on 1 January 2016, new underquoting laws are designed to stop real estate agents understating property prices. Changes were made to the Property Stock and Business Agents Act (NSW) 2002 to reflect the expectation that an agent should market property ethically and professionally.
An underquoting offence is committed by an agent if they disclose or publish a price of a property that is less than their reasonable estimate of the property’s likely selling price contained in the agency agreement with the Vendor.
Pursuant to these reforms, an agent must not provide consumers understated or vague property prices and cannot use phrases such as “offers above” when stating or publishing the estimated selling price. The estimated sale price must be represented as either a single price or within a 10% range, such as “$500K-$550K”. Agents must ensure their estimated sale price is reasonable, up-to-date and evidence-based. The agent must ensure their estimated sale price remains reasonable by revising their estimate based on changing circumstances and factors.
The reforms provide more effective enforcement as agents must demonstrate their compliance with the new laws upon inspection by a Fair Trading officer. In the event an agent is found to be in breach of the new laws, Fair Trading can issue a penalty infringement notice of $2,200.00. If the matter is prosecuted and an agent is found guilty of underquoting, they may be fined up to $22,000.00. In addition, agents could also lose their commission and fees earned from the sale of an underquoted property.
If you have any queries in relation to the reforms and how they may affect you, contact us on 02 9728 3366 to speak with one of our solicitors or email [email protected]
