Minister for Innovation and Better Regulation Victor Dominello told the NSW Parliament that agents will face new compliance obligations if lawmakers approve the Property, Stock and Business Agents Amendment (Underquoting Prohibition) Bill 2015.
Under the proposed reforms, agents will have to provide evidence of their valuation to the vendor, include this estimate in the agency agreement and then quote this figure during the marketing campaign – something Mr Dominello said would be monitored by the regulator.
“To enable effective compliance monitoring for the new measures, the changes will introduce strict liability – that is, NSW Fair Trading will not have to show that the agent intended to underquote,” he said.
“It will simply be a matter of comparing the price in the agency agreement to that in any advertisement or given verbally to prospective clients. This will remove the difficulties with pursuing prosecution for an offence under the current provisions.”
Mr Dominello said agents will need to keep written records of any verbal price estimates given to potential sellers or buyers, providing clear evidence of any estimates offered.
If agents want to revise their valuation during a campaign, they will have to update the vendor agreement and take “all reasonable steps” to update any marketing material.
“This obligation is a crucial element of the package. It provides the impetus to ensure that the estimated selling price remains accurate,” Mr Dominello said.
“Reasonable grounds for revising the estimated selling price would be, for example, if sales or auction results for similar properties in a certain area have increased since marketing a property.”
However, Mr Dominello stressed the reforms aren't designed to stop agents getting bumper results in the booming Sydney market.
“In a hot property market, properties will often be sold for prices that exceed the best estimate of the selling price that the agent could possibly have foreseen. These reforms will not and should not try to curtail the market,” he said.
“Fundamentally, the new underquoting laws are about transparency, accountability and disclosure of accurate information. They are also about creating a fair and level playing field for everyone.”
The government plans to introduce these new rules at the beginning of 2016.