As the market bounces back after a challenging year in 2020, it’s timely for sales agents to remind themselves of their obligations when it comes to underquoting. Here’s a quick guide of the top five things you need to know.
1. Determine the estimated selling price
Under the Property and Stock Agents Act 2002 (NSW), you’re 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 as either 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.
What is a reasonable estimate will depend on the particular circumstances of each property. It should only be determined after careful consideration of the unique factors that will affect the selling price of the property, 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 estimated selling price for the property. You must also record and keep on file any and all relevant information that shows how you determined the estimated selling price to be reasonable.
Remember to keep file notes on things such as comparable sales, market conditions, the property’s features and any other relevant information. This is important because your file notes may be used by NSW Fair Trading to substantiate your estimated selling price.
3. Regularly revise the estimated selling price
Based on market changes or feedback from potential buyers, it may become clear that the estimated selling price is no longer a reasonable estimate of the likely selling price. If this is the case, you must revise the estimated selling price. NSW Fair Trading advise that you should review your estimated selling price on a weekly basis and consider if the estimate is still reasonable.
If you do revise the estimated selling price, you must give written notice to the seller of the revised estimated selling price (whether that be a single price or price range) and provide them with evidence to support the reasonableness of your revised estimate. You’ll also need to amend the agency agreement to reflect this.
To assist you to comply with your new obligations, REINSW has prepared a Notice of Revised Estimated Selling Price, which is available via REI Forms Live and at reinsw.com.au. If you complete the notice correctly and serve it at the correct time, then you will have satisfied your obligations.
And don’t forget, you’ll need to take all reasonable steps, as soon as practicable, to change or withdraw any ads or marketing material with a price that’s different to the revised estimated selling price.
4. Use the right terminology
The Property and Stock Agents Act 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’, as long as your published or stated price or price range complies with the Act’s other requirements.
5. Record selling price statements
You must keep a written record of any and all prices you have quoted in relation to the property. These written records will help you to demonstrate that you have not quoted a price that is lower than your estimated selling price.
At an open house, you’re likely to be speaking to a number of potential buyers and may provide the same information to everyone attending the inspection. In such cases, you can simply make a single record of the uniform information provided. However, if you have conversations with an individual over the phone or face to face, then you must make an individual written record of the information conveyed.
Underquoting Guidelines
You can download a copy of NSW Fair Trading’s Underquoting Guidelines for Residential Property (dated March 2020) at fairtrading.nsw.gov.au