In the hot Sydney real estate market, it has been common practice for selling agents to give low price estimates to attract bidders to property auctions and offers, on the theory that a larger pool of buyers will increase bidding tension, even though many of them will not be able to afford the auction price.

What real estate agents see as robust marketing, the regulator sees as misleading statements when the advertising states "offers above". The regulator, NSW Fair Trading, has had enough! After 13 years of trying, it has not had even one successful prosecution for underquoting under the old law!

So, the NSW Government has decided it's time to strengthen the law by introducing the Property, Stock and Business Agents Amendment (Underquoting Prohibition) Bill 2015 to ban low price guides. It takes effect in early 2016.

The new law will require the agent to set and stick to an estimated sale price, which is to say, the market price, when advertising the property for sale. No more "offers above", "offers over", or $X+. "Price guide" is still allowable as long as it is the estimated selling price.

At auctions, the "starting bid" called by the auctioneer must be the estimated selling price (or higher). The vendor will still be free to set the reserve price. Non-compliance can bring a penalty of $22,000 per breach and forfeiture of the selling fee / commission.

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