Sydney property sellers to be forced to advertise price guides

Sydney property sellers to be forced to advertise price guides

The government is pushing ahead with reforms it signalled after an investigation by The Sydney Morning Herald and The Age, which revealed almost half of all property sales at auction in Sydney sell above the guide by more than 10 per cent, leaving buyers wasting time and money chasing properties they cannot afford.

NSW Better Regulation and Fair Trading Minister Anoulack Chanthivong said the reforms would protect home buyers from “unscrupulous real estate agents” and that the government was focusing on “a fair property market that works for everyone”.

“By significantly increasing penalties for underquoting, we are ensuring misconduct can no longer be written off as a cost of doing business, but as a meaningful deterrent,” he said.

“The changes will also empower NSW Fair Trading to tackle misrepresentations of property prices through stronger disciplinary action, better enforcement tools and improvements to mandatory education and professional standards.”

In NSW, properties can be listed for sale with no advertised price guide, leaving it to buyers to contact agents for details. In Victoria, price guides were made mandatory in 2017, and agents must provide a statement of information that includes comparable sales.

At present, NSW agents must make reasonable estimates of selling prices and never publish a price lower than those estimates. They must revise their estimated selling price if they become aware that it has ceased to be a reasonable estimate.

Under the proposed laws, NSW agents will have to include a price or price guide on all advertising, and publish a statement of information with comparable sales and the suburb’s median sale price. Agents will have to calculate the estimated selling price in line with new, clearer guidelines, the government said.

This masthead’s Bidding Blind investigation tracked 10,772 sales across Sydney and found that almost half of all sales tracked in NSW (48 per cent) sold above the guide by more than 10 per cent. Of these, 16 per cent of all sales tracked sold above the guide by 20 per cent or more.

However, the reforms do not make it compulsory for a vendor’s reserve – the lowest price at which they will sell their property – to be in line with the price guide that is advertised on the listing.

Previous analysis by this masthead tracked 319 auctions attended or contacted over the course of 2024 and found at least 172 Sydney home sellers set their reserve price higher than the top of the quoted price range. Some sellers wanted hundreds of thousands of dollars, or even as much as $2 million, more than the advertised price.

It is not illegal to do so, but critics say the practice creates false hope for buyers.

In contrast, the practice is set to be outlawed in Victoria. After the Bidding Blind investigation was published, the Victorian government proposed laws forcing real estate agents to disclose a home’s reserve price at least seven days before auction day or fixed-date sale.

The NSW crackdown will increase penalties for underquoting from $22,000 to $110,000 or three times the agent’s commission, whichever is greater. The government says the change will remove the financial incentive to break the law.

Given a 2 per cent commission, the penalty for underquoting on a $2 million house could be $120,000.

The new laws will stop agents from advertising a sale price lower than a previously rejected written offer or the highest unsuccessful bid at an auction.

Penalties for dummy bidding at auctions will be doubled from $55,000 to $110,000 under the new laws.

Fair Trading’s powers will be expanded to respond to serious breaches and require agents to publicly admit their misconduct or have a valuer independently verify their price estimates.

Professional development obligations will be in focus, as penalties will be introduced for agents who fail to undertake required training, and Fair Trading will get powers to approve training providers and training courses.

This masthead previously asked readers to share their auction experiences. Among more than 9100 respondents, 6344 people reported they had spent time and money investigating the purchase of properties they were ultimately unable to afford.

Real estate industry leaders have backed previous calls for more transparency and tougher regulation of price guides, though some shied away from the idea of published reserves.

Elizabeth Redman, smh.com.au