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Following the surge of interest in the Australian property market, agents and sellers have been warned to uphold transparent sale tactics or risk severe legal and financial consequences.
As Australia’s property market tightens, a law firm has warned agents to review their tactics, with growing scrutiny over questionable sales practices and potential legal breaches.
Earlier last month, an agent came under fire following his claims on “phantom offers” as he disclosed using imaginary buyers to accelerate the sale process and nudge prices up.
According to Gold Coast law firm RedeMont, the recent spotlight on aggressive sales tactics has raised questions about how far some agents are prepared to push the limits to close a deal.
Ryan Solomons, dispute resolution partner at RedeMont, urged agents and sellers to review their sale strategies to ensure they stay within the legal framework, not to mislead potential buyers.
“Real estate agents are required to act honestly and fairly under Australian Consumer Law.”
“Using fabricated bids to pressure buyers breaches these obligations and can expose agents and sellers to regulatory action, civil claims and financial penalties,” Solomons said.
Under Australian Consumer Law, real estate agents are prohibited from misleading or deceiving buyers and sellers during the transaction process, including but not limited to underquoting, false price guides, price baiting, making dummy offers or bids, and rejecting offers without the seller’s consent.
The law firm said the regulations have been implemented to protect prospective buyers from omissions that could influence their decision making.
“Misleading conduct isn’t limited to false statements. It can also involve omissions or silence to mislead a buyer,” Solomons said.
“In real estate, bypassing critical information that may affect the use or occupation of a property can have equally devastating consequences.”
If found guilty of engaging in deceptive contact, real estate agents can face disciplinary action by Fair Trading or fines by the Australian Competition and Consumer Commission (ACCC).
Solomons said that to avoid any legal consequences, agents must remain lawful at all times and engage in transparent behaviour.
“Practices that inflate property prices with false bids or misrepresent offers are illegal and can result in severe penalties.”
He encouraged agents to follow the profession’s best practices by maintaining records of all offers and communications with both the seller and potential buyers.
“Don’t lie to people. Don’t mislead them. Engage fairly, as required by law. Agents must be transparent,” Solomons said.
While agents are the first to come under scrutiny, the law firm warned that sellers who knowingly engage in or allow questionable sales tactics may also face legal penalties.
To minimise risk, Solomons advised sellers to include explicit contract provisions that hold agents accountable for complying with all relevant laws and regulations.
“Every contract is different, and many include clauses that could potentially create legal exposure.”
“It is essential for sellers to ensure their contract requires the agent to comply with all laws and regulations,” he said.
Buyers are also encouraged to be aware of the law and seek independent legal advice before signing any contract.
“Buying a home is one of the largest financial commitments many people make, and without expert guidance, buyers can find themselves vulnerable to mispricing and other issues,” Solomons said.
“The key to avoiding legal risks is ensuring both buyers and sellers have proper legal and financial support.
“Requesting your lawyer review the contract and obtaining an independent property valuation can prevent future disputes and financial strain,” Solomons said.
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