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Real estate advertising and pricing must not be misleading or deceptive
It is illegal for a seller or agent to misrepresent a property in any way when advertising or marketing that property, whether verbally or in writing.
However, when it comes to an advertised price, you should use it as a guide only – because it can change while the property is on the market.
It is illegal for an agent to advertise or advise you of a price that is less than:
- the seller's auction reserve price or asking price
- a price in a written offer already rejected by the seller on the basis it is too low, or
- the agent's current estimated selling price.
Agents must update the price information they provide to buyers if any of these things change during the sales campaign.
If an agent does not comply with the above, then they are engaging in underquoting.
When a property sells for more than the price for which it was initially advertised, this does not always mean that underquoting has taken place. Sometimes a property will sell for more than initially indicated. This can happen when a number of interested buyers compete against each other to buy a property, and in doing so push up the sale price of the property.
Please read through the information below to understand how property prices are set and how to report underquoting if you suspect it has occurred.
Agent’s price estimate for the seller
When a seller is first engaging an agent, they need to have discussions about price.
The seller does not need to make any decisions about price at this time, but the agent must provide a document to the seller called the agent's sales authority, which will contain the agent’s estimated selling price.
The agent’s estimated selling price must be reasonable and based on research into comparable properties. It will form the basis of information provided for potential buyers and may change while the property is on the market
Price information provided for buyers
When the property is on the market, the agent:
- may advertise a price or price range for the property
- must provide a selling price in the Statement of Information for the property.
If a property advertisement includes a price, it must be listed as a single figure or a range of up to 10 per cent. The price cannot use any qualifying words or symbols, such as 'from', 'offers above', or '+'.
The property must not be advertised at a price that is less than the agent's estimated selling price.
You can ask an agent to explain how they developed any price information they provide or advertise and if it has changed.
Statement of Information
It is a legal requirement for all residential properties advertised for sale in Victoria by an estate agent to have a Statement of Information. It contains important price information to assist home buyers. It is the first thing you should check once you have found a property you like.
It must include:
- a selling price or price range for the property of up to 10 percent
- details of the 3 most comparable property sales - including the address, date of sale, and sale price, if available
- the median house or unit price for the suburb.
You can get a Statement of Information:
- at the property's open for inspection
- by checking online advertising - agents often include it with the property listing as a 'Statement of Information' tab or a PDF you can download
- from the agent - they must give it to you within 2 business days of your request.
Seller's reserve or asking price
The lowest price a seller is prepared to accept for their property is called the:
- reserve price for an auction, or
- asking price for a private sale.
This price may be different from the agent’s estimated selling price for the property if the seller has chosen not to accept their agent’s advice on price.
A seller can choose not to tell their agent their asking or reserve price during the marketing campaign.
The seller's reserve price is usually set on the day of the auction. It may be higher than the advertised price.
If a seller tells the agent of their asking or reserve price during the marketing campaign, the agent cannot advertise the property below that price.
Do your research on property prices
- Research the market value of property in your preferred areas by searching the internet, attending auctions, speaking with a variety of estate agents and monitoring auction results. This will give you a realistic idea of the suburbs and types of properties you can afford. For more information and resources, view Property data
- Use any price that is advertised as a guide only. The agent represents the seller but must be fair and honest with buyers.
- Ask the agent to justify price information they provide. They should have knowledge of the market in the area to support their estimate.
- If no selling price is advertised, use the selling price and the 3 comparable property sales found in the Statement of Information as a price guide.
- The seller is unlikely to set their auction reserve price until the day of the auction. The reserve price decided on the day might be above the selling price that has been advertised.
- Do not allow emotion to cloud your judgment and be realistic about the price the property is likely to sell for.
If you believe underquoting has occurred and want to report it to Consumer Affairs Victoria, you will need to provide the following information:
- property address
- your contact details
- details of the real estate agent
- screen shots of the property advertisement
- Statement of Information
- written representations made about the property (if relevant)
- explain the problem - for example, why you think the property advertising is misleading
- any other documents that you think may help us.
We do not respond to every report we receive, but we keep all information for our intelligence purposes and use it to inform our compliance and enforcement activities.
Enforcing real estate pricing laws
We regularly inspect real estate agencies and conduct reviews of agency documentation to ensure estate agents are complying with the law.
We use a range of compliance tools against agents who underquote, including warning letters, enforceable undertakings, injunctions and prosecutions.
The action we take depends on the impact on a buyer and the seriousness of the breach. Our focus is to help consumers who are at most risk of harm and to act on issues that have the potential to cause widespread detriment to Victorians.
For more information, view our Regulatory approach and compliance policy.
Video: Understanding property prices