In January last year, NSW Fair Trading introduced a number of new regulations and penalties in relation underquoting. Since the introduction of these laws Fair Trading has received 266 complaints in relation to underquoting. This is an increase of over 10% compared to the year before but almost double the year before that. This increase may be related to the fact that consumers are more aware of the legal requirements in relation to underquoting as Fair Trading released these changes with some public fanfare.
Out of these 266 complaints, 26 resulted in $2200 penalties to agents for each infringement. Most of these were related to using incorrect terminology in their marketing and advertising of the property for sale. These ones were lucky as they could have faced fines of up to $22,000 and possible losses of commission.
Underquoting continues to be an issue and there are still agents using the illegal wording and price advertising tactics so here is a checklist which is provided by NSW Fair Trading which you should use to make sure you comply with the law:
- 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- Advertisements have been withdrawn or changed (where possible) if the estimated selling price has been revised.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.