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Underquoting can occur when a property is advertised at a price that is less than the estimated selling price, the seller's asking price, or at a price already rejected by the seller.
On 1 May 2017, changes to the Estate Agents Act 1980 came into effect to strengthen laws against underquoting in Victoria.
These laws apply to residential property sales and complement the false and misleading representation provisions of the Australian Consumer Law (ACL). They do not apply to the sale of rural, commercial and industrial properties. If you are selling these types of properties, you must continue to comply with the ACL provisions. For more information, view our False or misleading representations page.
Under the underquoting laws, all Victorian estate agents and agents' representatives have additional obligations relating to:
- the estimated selling price
- comparable property sales
- Statement of Information for prospective buyers, and
- advertising prices, terms and symbols.
There are also new penalties for estate agents and agents' representatives who do not comply with underquoting laws.
These laws only apply to sales authorities signed on or after 1 May 2017. If your sales authority was signed before 1 May 2017, you are not required to prepare a Statement of Information for the property, but any price you advertise on or after 1 May must adhere to the new advertising requirements.
Estimated selling price
Your estimated selling price must:
- be reasonable, and
- take into account the sale prices of the three properties that you consider most comparable to the property for sale.
Your estimated selling price must be included in the sales authority, in the approved form, and may be a:
- single price - for example, $500,000, or
- range of up to 10 per cent - for example, $500,000 to $550,000.
Download our Approved form for use in agency authority - estimated selling price (Word, 73 KB).
If your estimated selling price changes because it ceases to be reasonable, you must:
- inform the seller in writing
- update the sales authority, and
- update the sales advertising.
To be comparable, a property must be:
- of a similar standard or condition to the property for sale
- sold in the last six months and be within two kilometres of the property for sale (if the property for sale is in the Melbourne metropolitan area)
- sold in the last 18 months and be within five kilometres of the property for sale (if the property for sale is outside the Melbourne metropolitan area).
Download our Determination of Melbourne metropolitan area (Word, 101KB) or Determination of Melbourne metropolitan area (PDF, 29KB).
When selecting the most comparable properties, you must take into account:
You must use all data and information you have about recently sold properties, including the details of undisclosed property sales, to select the three most comparable property sales. You cannot avoid your obligations to select and provide the three most comparable property sales in a Statement of Information by entering into or relying on any confidentiality agreement (verbal or written) with a seller or buyer that restricts you from using or disclosing information about the sale of a property.
You are not required to take into account comparable property sales to determine your estimated selling price, if you reasonably believe that there are less than three comparable sales within the prescribed period outlined above.
Statement of Information
You must prepare a Statement of Information, in an approved form, for each residential property you are engaged to sell, regardless of whether you advertise the property for sale.
The Statement of Information must be:
- displayed at all open for inspections
- included with online advertising
- given to a prospective buyer within two business days of a request
- updated if there is a change in the indicative selling price.
The Statement of Information must include:
- an indicative selling price for the property. This may be a single price or a price range of up to 10 per cent. It must not be less than:
- your estimated selling price
- the seller's asking price
- a price in a written offer that has already been rejected by the seller.
- details of the three most comparable properties, including the address, date of sale, and sale price; or - if you did not take into account three comparable properties when setting the estimated selling price - a statement outlining that you reasonably believe there are less than three comparable sales within the prescribed period
- the median house or unit price for the suburb. This may be for a period of between three and 12 months, and must not be more than six months old.
If you are selling vacant land with approval or plans to build a house or unit, complete the Statement of Information in the normal way and, if the land has approval for a house, use the suburb median price for a house; if it has approval for a unit, use the unit median price.
For more information - including what to do if there is no published median price for a suburb and you are unable to calculate a median price - download our Underquoting fact sheet (Word, 247 KB).
Download the five Statement of Information forms here:
Advertising prices, terms and symbols
When marketing a property for sale, you may advertise the price as a single figure or a range of up to 10 per cent. You must not use any words or symbols to qualify the price, such as 'offers above', 'from', or '+'.
The price at which you advertise or advise that a property is for sale must not be less than:
- your estimated selling price
- the seller's asking price, if one was provided, or
- a price in a written offer that was rejected by the seller.
The seller can choose to provide an asking price in writing at the time of signing the sales authority, or they may indicate the price they are willing to consider by rejecting an offer.
If the seller indicates an asking price, you cannot advertise the property at:
- a price below the seller's asking price, or
- any price in a written offer that the seller has rejected.
If the seller does not indicate an asking price, you cannot advertise the property at a price below your estimated selling price.
If your estimated selling price changes, or the seller rejects a higher written offer, you must remove or update:
- online advertising within one business day, and
- all other advertising as soon as practicable.
Enforcement and penalties
If we decide to investigate your conduct, we may ask you to justify any pricing information that you gave to a seller or buyer, such as:
- your estimated selling price
- the indicative selling price, or
- the comparable property sales you selected.
If you do not comply with the new laws, you risk a penalty of more than $31,000 (200 penalty units).
For more serious offences - such as setting an unreasonable estimated selling price, or advertising a property below the estimated selling price - you may also lose any commission you received for the property sale.
We regularly inspect businesses to check that they are complying with our laws, or to investigate when there are signs that a business may not be doing so. For more information, view our About inspections page.
For more information on the principles we adopt in achieving business compliance with our laws and undertaking enforcement action in the industries we regulate, view our Regulatory approach and compliance policy section.