New underquoting laws have been passed in NSW parliament and will come into effect on January 1, 2016. The bill, which was passed on Tuesday, will help clarify how agents should market properties, according to the Real Estate Institute of NSW.
"The reforms bring clarity and surety to the real estate industry," said REINSW President Malcolm Gunning. "We support this legislation that will require agents to be much more accountable in the determination of current market value and provides transparency to those seeking to make a purchase.
"These reforms are a step forward for the real estate industry and are in line with our goal of stamping out poor agency practice. We are working with NSW Fair Trading to prepare real estate agents for the new laws and information sessions across the state commenced today," Gunning said.
Under amendments to the Property Stock and Business Agents Act 2002 agents will be required to provide written evidence of their estimated selling price to the vendor and this estimate must be stated in the agency agreement. When marketing a property an agent must not quote a figure less than their estimated selling price provided in the agency agreement. The estimated selling price can be a single figure or a price range. If a price range is used, the highest price must not be more than 10 per cent higher than the lowest price.
Advertisements and representations that say "offers over" or "offers above" or any similar statement are not allowed. Agents will also be required to keep a written record of every statement of price they make to buyers, prospective buyers, vendors and prospective vendors. Agents found guilty of underquoting will now be liable to forfeiture of any commission or fees from the sale in addition to the existing penalty of $22,000.
"There have been no successful prosecutions related to underquoting made under this Act in 13 years, so this reform is long overdue,"said Minister for Innovation and Better Regulation Victor Dominello.