Underquoting guidance for property professionals

What the underquoting laws are for

The underquoting laws ensure that buyers don’t waste money and time on property inspections, getting reports and attending auctions for properties that will be out of their price range.  

The underquoting guidelines are to inform and help licence holders to comply with their legal requirements. See NSW Fair Trading’s underquoting guidelines.  

Key requirements for residential property agents

As an agent, you must:

• include your reasonable estimate of a property's likely selling price in the agency agreement
• ensure the higher price in a price range does not exceed the lower price by more than 10 percent if the estimate is expressed as a price range. For example, if the lower price is $500,000 the maximum price cannot exceed $550,000.
• provide evidence to the seller or prospective seller of how you estimated the selling price, or revised the estimated selling price. Detailed records should be retained to justify changes in the estimated selling price.
• ensure your estimated selling price remains reasonable
• revise your estimated selling price if there is evidence or circumstances that impact its reasonableness, by: 
  • notifying the seller of the revised price, and 
  • amending the agency agreement with the revised estimate. 
• take all reasonable steps to amend or retract advertisements that have a selling price less than the revised estimate. 
• ensure the supervision guidelines are followed. For example, written procedures are in place to ensure the following factors have been considered when determining the estimated selling price:
  • any sales of comparable properties
  • feedback from potential purchasers
  • any current or relevant valuations provided in respect of the property
  • the characteristics and features of the property
  • the methods used to market the property, and
  • any other available factor that may affect the estimated selling price.
• if required, show that the difference between the estimated selling price and actual selling price was reasonable in the circumstances.

As an agent, you must not:

• provide a selling price (whether written or in person) less than what you have reasonably estimated (as recorded in the agency agreement with the seller). This applies to advertising the property or in any communication with prospective buyers while marketing the property.
• use any statements such as ‘offers above’ or ‘offers over’ an amount, or any symbols or words which could underquote or obscure a property's estimated value such as by adding ‘plus to a particular price (for example, $500,000+).
• make a statement about the last bid accepted at auction if it was a vendor bid (bid by auctioneer on behalf of the seller), where the residential property or rural land was passed in at auction. The exception is where the statement indicates that the bid was a vendor bid.

Marketing multi-unit residential property or multi-lot residential subdivisions

Collective marketing of residential units or lots that includes a price indication should also tell prospective buyers that there are multiple properties, of varying prices, within each category.

Multi-unit residential properties

Any advertising must include the estimated selling prices for

• the lowest and
• the highest priced properties

in each category of unit (e.g. studio, one bedroom, two bedroom etc.).

Advertisements for multi-unit properties must show prices in one of 2 ways: 

1. Give the price ranges for each category. The low end of the range is the estimated selling price of the lowest priced unit in the category and the higher end of the range is the most expensive property in that category. For example:
   • one-bedroom units available - price range: $550K-$700K.
   • $550K is the estimated selling price of the lowest priced one-bedroom unit. $700K is the estimated selling price of the highest priced one-bedroom unit.
   • Note: because this method is for properties you are marketing as a group, it does not breach the rule related to estimated selling prices expressed as a range, which is for single properties.
2. Give the estimated selling price in the agency agreement for each of the lowest and highest priced units in a property category. 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. 

Multi-lot subdivisions

Multi-lot subdivisions need to include the lowest priced lot and the highest priced lot. The price indication should also advise prospective buyers that there are multiple properties within each category, of varying prices within that range.

Updating prices when units or lots are sold

You must update all advertising and marketing to reflect the value of the new lowest price unit or lot available when you sell: 

• the lowest priced unit or lot, or 
• the last of the lowest priced units in the price range for a particular category.

Illegal practices for collective marketing

Be aware that some earlier practices are now illegal, such as:

• a billboard promoting off-the-plan residential property that says: 'From $400,000'. 
• promoting a range such as 'property available from $400K-$2.2M'.

These examples do not show the price ranges for each category of residential units or lots being marketed. 

Not showing a price in advertisements

Agents can ask potential buyers to contact them for further information. Agents must not indicate any price (verbal, written or advertised) for a specific property less than its estimated selling price.

Estimated selling prices for multi-unit property and multi-lot subdivisions

An agent can include a schedule of the:

• lots with their individual prices, or
• properties available with their features and a price for each.

Agents should attach this to the agency agreement. Any prices included in the schedule cannot be less than the estimated selling price for each unit or lot.

You will not be at risk of breaching the underquoting laws if you comply with all the requirements expected of agents under the Act.