Enhancing Transparency in Real Estate: Proposed Reforms to Underquoting Laws

The Minns Labor Government plans to revamp the state's underquoting regulations, initiating consultations on proposed reforms to enhance professional standards in the real estate industry, increase transparency in property listings, and bolster buyer confidence. 

The proposed changes aim to address misleading price estimates in property listings, known as underquoting, which cause buyers to waste time and money on homes beyond their reach. 

The proposed reforms, pending consultation, include:

• Substantially raising penalties for underquoting from the current $22,000 to $110,000 or three times the agent’s commission, whichever is higher.

• Requiring all advertisements to include a price or price guide to prevent prospective buyers from wasting time on properties outside their budget.

• Mandating agents to publish a Statement of Information (SOI) to help buyers understand how the selling price was determined, including comparable sales and suburb median prices.

• Requiring real estate agents to calculate and update the estimated selling price of a property according to new, clearer guidelines to be issued by the NSW Fair Trading Commissioner.

• Strengthening advertising rules to ensure price guides are published, accurate, and promptly updated, preventing representations of a selling price lower than a rejected offer or bid on a property.

• Enhancing record-keeping obligations, including maintaining evidence of market feedback, offers made and refused, and consideration of changing market conditions, to aid Fair Trading in enforcing the new laws.

• Increasing disciplinary actions against agents by NSW Fair Trading, such as publicizing any underquoting breaches, requiring independent valuers to certify the estimated selling price (at no cost to the vendor), or suspending property sales activities under a license.

• Creating a standalone offense for failing to meet continuing professional development requirements for agents.  

  

In 2024, NSW Fair Trading issued over 100 penalty notices for underquoting offenses, a key part of the Strata and Property Services Taskforce’s efforts to strengthen compliance and enforcement in the rental market. 

The proposed changes are modeled on Victorian laws introduced in 2016, which have resulted in millions in fines and are now widely accepted by the industry. 

Legislation to implement the changes is expected to be introduced to Parliament next year.  

For more information on underquoting laws: Price estimation and underquoting when selling a property.

Quote courtesy of nsw.gov.au :

NSW Strata and Property Services Commissioner Angus Abadee said: 

“These proposed reforms are designed to bring greater transparency to property sales and ensure buyers are not misled by inaccurate price guides.”  

“By outlining our vision for clearer documentation and stronger penalties, we’re making it easier to hold agents accountable for underquoting.

“The proposed Statement of Information and advertising rules will help buyers make informed decisions and reduce wasted time and money – a win for consumers already struggling with cost of living pressures.”