UPDATE: New South Wales is set to impose fines of up to $110,000 on real estate agents engaging in underquoting practices during property auctions. This urgent move follows the NSW government’s announcement of legislation aimed at curbing misleading price estimates, a tactic that has been criticized for creating unfair competition in the property market.
The proposed laws come as auction activity in NSW surges, with 3,245 homes expected to go under the hammer this week, marking it as one of the busiest auction weeks since the pre-Easter rush last year. In Sydney alone, 1,332 homes are slated for auction this weekend, a significant increase from last week’s 1,186 and 1,098 homes offered a year ago, according to data from CoreLogic.
Underquoting—where agents advertise properties below the owner’s asking price—has been a contentious issue, leading to a competitive and often stressful environment for buyers. Australian buyer’s agent Dion Marsden emphasized the emotional toll this practice can take, stating, “It builds confidence and momentum for the competition,” leaving many potential buyers overwhelmed in what is often their biggest financial decision.
The NSW government has started consultations with the property sector to finalize these legislative changes, which are expected to go to parliament next year. This initiative aims to restore trust in the property market by mandating clear price guides on all property listings, ensuring buyers do not waste time on properties outside their budget. Anoulack Chanthivong, NSW Minister for Better Regulation and Fair Trading, stated, “The proposed laws will ensure meaningful action against misleading conduct in property advertising and transactions.”
The move comes on the heels of disciplinary actions taken against real estate agents found guilty of underquoting. Notably, Sydney agent Joshua Tesolin faced license suspension over serious breaches involving more than 100 residential properties. The NSW Fair Trading’s Strata and Property Taskforce, established last year, has been pivotal in uncovering these violations.
Moreover, the legislation will enhance the powers of NSW Fair Trading, allowing the publication of details on underquoting breaches, and introducing a standalone offence for agents who fail to meet continuing professional development requirements.
The government is modeling these new laws on Victoria’s successful underquoting regulations implemented in 2016, which have seen positive acceptance within the real estate industry. Recently, Victoria has further tightened its rules, requiring agents to utilize the most relevant comparable properties when pricing homes for auction.
Marsden urges buyers to approach auctions strategically, warning against emotional decisions that can lead to overbidding. He advises bidders to maintain a strict budget and avoid giving away their limits during the auction process. “If you set a strict budget… you know that you’re not going to go above that,” he explained, emphasizing the importance of staying disciplined to avoid paying more than intended.
As the auction season heats up in NSW, the urgency for buyers to remain informed and cautious is paramount. With new fines on the horizon, agents and buyers alike are poised for significant changes in the competitive landscape of property auctions.
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