Understanding underquoting

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The property market has seen unusual conditions because of the COVID-19 restrictions in 2020. Agents should understand how underquoting laws apply in these different conditions. If there have not been 3 comparable properties sold in the required period, agents must still ensure their estimated selling price is reasonable.

Underquoting

Underquoting can occur when a property is advertised at a price that:

  • is less than the estimated selling price
  • is less than the seller's asking price
  • has already been rejected by the seller.

Under Victoria’s underquoting laws, estate agents and agents' representatives have obligations relating to:

  • the estimated selling price
  • comparable property sales
  • a Statement of Information for prospective buyers, and
  • advertising prices, terms and symbols.

These laws complement the false and misleading representation provisions of the Australian Consumer Law (ACL). For more about the ACL provisions, view our Advertising and representations page.

The underquoting laws apply to residential property sales. They do not apply to the sale of rural, commercial and industrial properties, but agents selling these kinds of property must continue to comply with the ACL. For more information, view our False or misleading representations page.

Statement of Information

Agents must prepare a Statement of Information, in an approved form, for each residential property they are engaged to sell, regardless of whether the property is advertised for sale.

The Statement of Information must be:

  • displayed at all open for inspections
  • included with online advertising
  • given to a prospective buyer within 2 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:
  • the agent’s 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 3 most comparable properties, including the address, date of sale, and sale price. Or, if the agent did not take into account 3 comparable properties when setting the estimated selling price - a statement outlining that they reasonably believe there are fewer than 3 comparable sales within the prescribed period. See comparable properties.
  • the median house or unit price for the suburb. This may be for a period of between 3 and 12 months, and must not be more than 6 months old.

An agent selling vacant land with approval or plans to build a house or unit must 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, they must use the unit median price.

There is more information for agents - including what to do if there is no published median price for a suburb and they are unable to calculate a median price – on our Underquoting fact sheet (Word, 188KB).

Download the Statement of Information forms (revised September 2019):

Download the related resources:

Estimated selling price

An agent's estimated selling price must:

  • be reasonable, and
  • take into account the sale prices of the 3 properties they consider most comparable to the property for sale.

The 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 an estimated selling price changes because it ceases to be reasonable, the agent must:

  • inform the seller in writing
  • update the sales authority, and
  • update the sales advertising.

Comparable properties

To be comparable, a property must be:

  • of a similar standard or condition to the property for sale
  • sold in the last 6 months and be within 2 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 5 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, the agent must take into account:

Agents must use all data and information they have about recently sold properties, including the details of undisclosed property sales, to select the 3 most comparable property sales.

Agents cannot avoid their obligations to select and provide the 3 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 them from using or disclosing information about the sale of a property.

Agents are not required to take comparable property sales into account when determining the estimated selling price, if they reasonably believe that there are fewer than 3 comparable sales within the prescribed period outlined above. The estimated selling price must still be reasonable.

Advertising prices, terms and symbols

When marketing a property for sale, the agent may advertise the price as a single figure or a range of up to 10 per cent.

Agents must not use any words or symbols to qualify a price, such as:

  • 'offers above'
  • 'from'
  • '+'.

The price at which an agent advertises or advises that a property is for sale must not be less than:

  • their 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, the agent 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, the agent cannot advertise the property at a price below the agent's estimated selling price.

If the agent's estimated selling price changes, or the seller rejects a higher written offer, the agent must remove or update:

  • online advertising within 1 business day, and
  • all other advertising as soon as practicable.

Pre-auction offers

Agents must provide all verbal and written offers to the seller, unless the seller has instructed the agent otherwise in writing.

If the seller has given the agent written instructions not to advise them of pre-auction offers, the agent must inform prospective buyers that their offer will not be submitted to the seller.

What is a written offer?

A written offer is not just an offer that is contained in a contract of sale.

It is an offer in any written format which, at a minimum, states the price being offered by the prospective buyer, and any other terms being proposed.

If the seller rejects a written offer

If the seller rejects a written offer because it is too low, the agent must update:

  • the indicative selling price
  • any advertised price that is lower than the rejected written offer.

Agents do not have to update anything if the seller rejects a written offer for another reason, like the terms of the offer being unacceptable.

Enforcement and penalties

If we decide to investigate an agent's conduct, we may ask them to justify any pricing information that they gave to a seller or buyer, such as:

Agents who do not comply with underquoting laws risk a penalty of more than $31,000 (200 penalty units). For more information, view:

For more serious offences - such as setting an unreasonable estimated selling price, or advertising a property below the estimated selling price - agents may also lose any commission received for selling the property.

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.

Sales authorities signed before 1 May 2017

These underquoting laws came into effect on 1 May 2017. If a sales authority was signed before 1 May 2017, the agent is not required to prepare a Statement of Information for the property, but any price advertised on or after 1 May must adhere to the new advertising requirements. 

Information for buyers and sellers

Buyers and sellers can get more information about property price advertising, including reserve prices, on our Understanding property prices page.

Still have questions?

Download our Underquoting fact sheet (Word, 188 KB).

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