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Get ready for underquoting laws with our guidelines

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18 December 2015

Fair Trading has released new guidelines to support real estate agents with the new underquoting laws.

The Underquoting guidelines for residential property are for property professionals involved in the sale of residential property in NSW. They give practical guidance on agents’ new responsibilities relating to estimated selling prices. They also explain the record-keeping practices agents need to follow. If investigated by a Fair Trading officer, agents will have to use their written records to demonstrate compliance with the new laws. A checklist to help agents with their new responsibilities has also been included in the guidelines.

Real estate agencies should use the guidelines to review and update their procedures, making sure that their employees don’t risk breaching the new laws.

On-the-spot penalty notices of $2,200 can be issued and penalties of up to $22,000 apply if agents are found guilty of an underquoting offence.

Snapshot of key responsibilities
When marketing a residential property from 1 January 2016, agents should be aware that:
  • an estimated selling price must be provided in the agency agreement and the agent must give the seller evidence of the reasonableness of this estimate
  • the estimated selling price can be represented as either:
    • a single price, or 
    • a range, as long as the upper limit of the range is no greater than 10% of the bottom figure in the range. This means a range of $500K-$550K would be allowed, but not $500K-$600K
  • the estimated selling price must be revised if the current estimate is no longer a reasonable estimate of the likely selling price of the property
  • if an estimated selling price is revised the agent must:
    • notify the seller in writing of the revision
    • provide the seller with evidence for the revision
    • amend the agency agreement with the revised estimate
  • any advertisements must be amended with the new estimate as soon as is practicable
  • agents must not communicate or advertise any price information for a property that is less than their estimated selling price.

A seller may instruct an agent not to reveal the estimated selling price for their property to prospective buyers. If this is the agreed marketing strategy, then the agent should not reveal any price information to buyers (in advertising, in writing or verbally).

To make sure you are familiar with the new requirements, you should also visit our Underquoting reforms page. This page will direct you to information specifically for agents, including Q&As. You can also provide sellers with our Underquoting – information for sellers fact sheet, which explains how properties can be marketed in line with the new laws. Remember that you also need to give them the mandatory Agency agreements fact sheet, which has been updated to accommodate the new laws. 

Use our updated Agency agreements fact sheet
The Agency agreements fact sheet has been updated in line with the new laws. From 1 January 2016 onwards, make sure you provide sellers with either:

Access translated information for buyers
A flyer providing underquoting information for buyers is available in Chinese, Arabic, Vietnamese, Korean. Access them by selecting the relevant language at our Community language information page.

 
fairtrading.nsw.gov.au