New underquoting laws explained
Explainer: what you need to know about Victoria's underquoting laws
In a hot property market, at a time when housing affordability is a serious problem for many Australians, Victoria has strengthened its underquoting laws to protect home buyers.
In the last year, a number of real estate agents have received hefty monetary penalties after being found to have underquoted.
So what is underquoting? How do the new underquoting laws work? And what can you do if you think a real estate agent has engaged in underquoting?
What is underquoting?
Underquoting can occur if a real estate agent misrepresents the selling price of a residential property by:
- advertising it for sale at an amount that is less than the seller’s asking price or auction reserve price
- giving a prospective buyer a price that is less than the agent’s estimated selling price
- advertising it at a price that is less than one in a written offer which the seller has already rejected.
Why is underquoting a problem?
Underquoting causes significant frustration and disappointment for buyers who have spent time and money inspecting properties they cannot realistically afford.
As Simon Cohen, Director of Consumer Affairs Victoria, explains: “Under the new laws, Victorians looking to buy a property can have confidence that properties for sale will be advertised with prices that are realistic and reasonable.”
What do the new laws require real estate agents to do?
Under the new laws, estate agents must:
- set a price that is reasonable and takes into consideration the three most comparable property sales in the area
- give potential buyers a Statement of Information that has been approved by the Director of Consumer Affairs Victoria. You can find the Statement of Information on the Consumer Affairs Victoria website.
- advertise a property at a single price or a price range of not more than 10 per cent, and to avoid using qualifying words or symbols, such as ‘from’, ‘above’, or ‘+’.
- update all internet advertising within one business day, and other advertising as soon as practicable, if the estimated selling price increases. This includes if a seller rejects a higher written offer.
What are the penalties for breaking the new underquoting laws?
Estate agents and agencies who do not comply with the new laws risk significant penalties of more than $31,000, and may also lose any commissions gained from the sale.
What can you do if you believe a real estate agent is underquoting?
You can find more information about the new laws on the Consumer Affairs Victoria website’s Understanding underquoting page. If you have evidence of underquoting, you can make a report via the Report unfair business practices page.
This information is relevant to the law in Victoria.