As you would be aware NSW Fair Trading under directive from Minister for Innovation and Better Regulation, Victor Dominello, this year has, with support of Estate Agents Co-operative and other industry bodies, been working on new laws to reduce the amount of instances of underquoting.
NSW Fair Trading has now released a new set of guidelines regarding the updated laws which come into place on 1st January 2016. Fair Trading has also released an updated Agency Agreement fact sheet to cover what changes need to be made to agency agreements.
EAC has kept you up-to-date throughout the year on the changes to the laws, which include:
- An agent must include their true estimate of a property’s likely selling price in the vendor signed agency agreement.
- Any advertising of this property that includes a price guide must ensure that the price guide is not lower than the price estimate included in the agency agreement.
- Ban of phrases or terms like “offers above” or “offers over” when stating or publishing the estimated selling price as a price range.
- While a property is being marketed, changes in the residential property market or feedback from potential buyers may indicate that the advertised selling price is no longer a reasonable estimate of the likely selling price. In such circumstances, real estate agents must revise the estimated selling price. Further to this, Once the estimated selling price is revised an agent must take all reasonable steps, as soon as is practical, to change or withdraw any advertisement displaying a selling price that is less than the revised estimated selling price.
Prior to January 1st, EAC recommends that you:
- Update any advertisements that include a price range that is below the estimated selling price in the agency agreement.
- Update any advertisements that include a price range that does not comply with the 10% differential.
- Update any advertisements that use “offers above” or like terms.
Please see below for your reference a checklist to ensure that you comply with the new laws.
Checklist to avoid underquoting:
This checklist is provided by NSW Fair Trading as general guidance to assist real estate agents in avoiding underquoting when they are marketing a residential property.
- The estimated selling price is a reasonable estimate of the likely selling price for the property, having considered comparable sales, market conditions, the property’s features, and other relevant information.
- The estimated selling price is either a single price (such as $800,000) or in a price range where the highest number does not exceed the lowest number by more than 10% (such as $800,000 to $880,000).
- The real estate agency can provide evidence to the potential seller of how the selling price was estimated.
- Marketing material shows the selling price as a single price or a price range that is not lower than the estimated selling price.
- Any statement on the likely selling price of the property quotes a price that is not less than the estimated selling price.
- The real estate agency has written records of any statements made to potential buyers about the likely selling price of the property.
- The estimated selling price has been revised if it no longer reflects a reasonable estimate of the likely selling price.
- The seller has been notified about the revised price in writing and the agency agreement has been amended with the revised estimated selling price.
- Advertisements have been withdrawn or changed (where possible) if the estimated selling price has been revised.
EAC Members also have FREE access to our Agency Practice Helpline. Please call 1300 137 161, for the best expert advice on issues affecting day-to-day agency practice, including compliance.