NSW Fair Trading’s focus on underquoting means agents must have a detailed understanding of underquoting laws.
The top five things you need to know
1. Determine the estimated selling price
Under the Property, Stock and Business Agents Act 2002, you are required to include an estimated selling price in your agency agreements. This must be your reasonable estimate of the likely selling price for the property and may be expressed either as a single price or a price range. If you use a price range, the highest price in the price range cannot exceed the lowest price by more than 10 per cent. A reasonable estimate should only be determined after careful consideration of the property’s unique features and based on your knowledge, experience and professional skills.
2. Evidence the estimated selling price
You must provide the seller with evidence of how you reached the property’s estimated selling price. You must also record and keep all relevant information that shows how you determined the estimated selling price to be reasonable, for example comparable sales, market conditions and the property’s features.
3. Use the right terminology
The Act now bans the use of phrases such as ‘offers above’ and ‘offers over’ when stating or publishing the estimated selling price. It also bans the use of any similar words or symbols. However, you can use phrases such as ‘price guide’, auction guide’, ‘bidding guide’ or ‘price estimate’, if your published or stated price, or price range, is compliant with the Act.
4. Regularly revise the estimated selling price
Based on market changes or feedback from potential buyers, you may need to revise your estimated selling price. To do this, you must give written notice of the revised price to the seller and provide substantiating evidence.
5. Record selling price statements
You must keep a written record of all prices you have quoted in relation to a property to prove you haven’t quoted lower than your estimated selling price. At an open home, you’re likely to give the same information to many potential buyers. In such cases, you can simply make a single record of the uniform information provided. However, if you have a conversation with an individual over the phone or face-to-face, you must make an individual written record of the information conveyed.