Underquoting in Residential Property Sales
Underquoting occurs where an agent understates the estimated selling price of a property. This misleading practice that has been used by real estate agent can lead to individuals wasting time and money on inspection reports and legal advice.
Recent amendments to the Property Stock and Business Agents Act 2002 prohibit real estate agents from engaging in underquoting. An agent will be committing an underquoting offence if they have stated or published a price for a property that would be less than their reasonable estimate selling price in the agency agreement with the vendor.
The effects of these provisions are as follows:
- Agents have a continuous obligation to ensure their estimates are reasonable;
- Evidence must be provided to the prospective property seller not only at the start of the agency agreement but also when it ceases to be reasonable;
- Agents are prohibited from indicating/suggesting a price in their advertisements that is less than that disclosed in the agency agreement;
- If the agent has provided a revised estimate to a customer, then it must also change all marketing material;
- Agents must no longer use phrasing such as “offers over $550,000” or “$500,000+”;
- Agents that provide a quote must keep records of such for a minimum of 3 years, including the address of the property, time stamp and figure that was quoted.
Agents that commit an underquoting offence may be fined up to $22,000 and could lose their commission and fees earned from the sale of the underquoted property.
If you require any further information in relation to underquoting, please do not hesitate to contact our team of lawyers at The Quinn Group on (02) 9223 9166 or submit and online enquiry form today.