Consumer News

John Cunningham - REINSW President

January 1st saw the introduction of new underquoting laws in NSW.  There are now a set of new rules about how a real estate agent is allowed to quote a property price. Frankly, some of it can be confusing for agent and consumer alike.

An agent must supply a seller with their estimated selling price, and document this in the agency agreement between the agent and seller. Thereafter, whenever the agent is quoting or advertising a price to the consumer it must comply with this estimate (unless that property is sized over 2.5 hectares, as these properties are exempt).

The agent can revise their estimated selling price in line with new information such as feedback from prospective buyers, but this must be notified to the seller in writing and the price within the agency agreement must be amended.

Here is how these price rules are applied in the two most popular methods of sale, public auction and private treaty.

A public auction can either have no price guide at all or have a published price guide, which must be in line with the estimated selling price.

The private treaty method has five options:

1. Publish the asking price
2. By negotiation, with no price guide published 
3. By negotiation, with a published price guide
4. Tender, a method mostly used for Government, commercial & Industrial property where a document setting out the price offered and terms of sale is submitted for unconditional sale by a set date.
5. Expressions of Interest. This is where a non-binding submission is presented by the interested parties by a set date for consideration by the seller. Further negotiations are common when seller expectations are not met.

These new laws have not really changed the methodology of the sales process.  What they have done is improve the terminology, to provide more clarity for the potential buyer.