Australia: New NSW property laws for a New Year! Real estate agents who underquote are the target

Last Updated: 24 February 2016
Article by Daniel Kentwell


If you're a buyer in the market for property, changes to the law could mean a happier new year ahead in 2016.

In NSW, on 1 January 2016, the provisions of the Property, Stock and Business Agents Amendment (Underquoting Prohibition) Act 2015, No 31 came into effect.

The amendment intends to prevent selling agents from underquoting the estimated selling price of a property during the property marketing campaign.

This is another boost to consumer protection laws, another layer of support for property buyers in NSW (see here).

The problem

Underquoting has become an unflavoured practice, presumably adopted to attract interest in the property, which is similar in effect to "bait and switch" advertising.

Buying a home is the biggest financial investment that many people will make in their lifetime. When a property is advertised as being within a particular price range, and that price range falls within the budget of potential buyers, the potential buyers can spend significant amounts of time and money attending property inspections, undertaking pest and building reports and engaging lawyers to review the sale contract – only to find that the property sells for an amount substantially more than that quoted by the selling agent during the marketing campaign.

Complaints relating to underquoting have spiked in recent times, no doubt buoyed by the hot property market in NSW. The Department of Fair Trading has noted the previous arrangements with respect to underquoting by selling agents made it difficult to effectively enforce the laws and penalise agents who engage in underquoting, and that clearer requirements for selling agents would better protect consumers in the NSW property market.

The new amendment introduces tougher requirements relating to:

  • price estimates contained in agency agreements between a seller and the selling agent;
  • underquoting in advertising (ie, in marketing material);
  • underquoting in representations (ie, when communicating with a potential buyer); and
  • record keeping requirements of quotes made by a selling agent.

Agency agreements

An agency agreement is an agreement between the seller of a property and the selling agent under which the seller engages the agent to market the property in order to find a buyer.

When a seller enters into an agency agreement with a selling agent, the agent must now include in the agreement the estimated selling price of the property, which must, at all times be a reasonable estimate. If the estimate ceases to be reasonable, the agent must vary the estimate by notifying the seller in writing and amending the agency agreement.

The estimate can be a price range however, the higher range cannot exceed the minimum range by more than 10% (for example, if the lower range is $500,000, the higher range cannot exceed $550,000).

The selling agent must, when specifying the original estimate or when revising the estimate, provide the seller with evidence of why that estimate is reasonable.

Underquoting in advertising

A selling agent is prohibited from publishing or causing to be published advertisements for the sale of residential property which indicate or suggest the selling price is less than the estimated selling price noted in the agency agreement (see "Agency agreements" above).

If an agent varies a price estimate, the agent must, as soon as practicable after the variation, take all reasonable steps to amend or retract any advertisements which contain the original estimate.

Further, and perhaps the most significant change in terms of advertising prohibitions, an agent must not use phrases such as "offers above" or "offers over" or words or symbols with similar effect when advertising the reasonable estimated sale price of a property.

Underquoting in representations

The amendment also affects agent/buyer communication.

When acting for a seller under an agency agreement, an agent, or an employee of the agent must not, during the course of marketing the property, make a statement to a buyer (which presumably would be written or verbal) which indicates that a property is likely to be sold for less than the estimated selling price noted in the agency agreement. If the agent breaches this particular prohibition, a court can order the agent to forfeit part or all of the commission earned on the sale of the property concerned.

Record keeping requirements

An agent is now required to make and keep a written record for three years of any statements made to a seller or a buyer that a property is likely to be sold for a specified price or within a specified price range. The written record must contain the address of the property concerned, the price or price range quoted, the date and time of the representation and be kept at the agent's principal place of business. Regulations may, in future, prescribe further particulars which agents will also be required to record.


In addition to the separate penalty noted under "Underquoting in representations", if a selling agent breaches any of the prohibitions contained in the amendment, they can be liable for up to 200 penalty units which, at the date of this article, equates to $22,000.

This amendment intends to introduce not only tougher obligations on selling agents when it comes to underquoting, but also severe penalties for contravention of the prohibitions. Fair Trading NSW notes:

"the reforms require agents to draw on their skills to make a reasonable estimate of the likely selling price and have honest and fair dealings with all buyers and sellers. The role of the seller's appointed agent to achieve the highest possible price on the property owner's behalf does not mean they should manipulate buyer interest with false price information."

Only time will tell whether these amendments have any impact on the unflavoured practice of underquoting which has developed into a recognised issue for property buyers in the Sydney market.

For more information, please contact:

Mary Digiglio, Managing Partner
Phone: +61 2 9233 5544

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.