Underquoting has long been a controversial issue in the New South Wales property market, particularly in competitive cities such as Sydney. The practice occurs when a property is advertised with a price guide significantly below the amount the agent or seller expects it to sell for. This can attract more buyers to inspections and auctions, but it also creates frustration and distrust when the final sale price sits well above the advertised range.
The New South Wales Government has recently announced a significant tightening of penalties aimed at discouraging the practice. The proposed changes include much higher fines for agents and agencies that breach pricing laws, signalling a renewed push to increase transparency in the property market.
Stronger penalties for misleading price guides
The crackdown targets agents who deliberately provide misleading price estimates in marketing or during buyer enquiries. Under the new framework, fines for underquoting could reach up to $110,000 for corporations, with additional penalties for individuals involved in the breach.
These changes build on existing rules enforced by NSW Fair Trading under the state’s property legislation. Agents are already required to base advertised price guides on reasonable evidence, such as comparable recent sales and the seller’s expectations. The new penalties increase the financial consequences for failing to comply.
The move reflects growing concern that underquoting undermines buyer confidence in the market and places genuine purchasers at a disadvantage.
The proposed laws will:
- Remove the financial incentive to break the law by significantly increasing penalties for underquoting from $22,000 to $110,000 or three times the agent’s commission, whichever is greater.
- Double penalties for dummy bidding at auctions from $55,000 to $110,000.
- Mandate a price or price guide on all advertising, so prospective buyers don’t waste their time on properties that are outside of their budget.
- Require agents to publish a Statement of Information (SOI) to help buyers understand how the selling price was calculated, including comparable sales and the suburb’s median sale price.
- Require agents to calculate and revise the estimated selling price of a property in accordance with new, clearer guidelines.
- Prohibit agents from advertising a sale price lower than a previously rejected written offer or the highest unsuccessful bid at an auction.
Why underquoting happens
Sydney’s auction-driven market has historically created conditions where underquoting can occur. Properties are often launched with a price guide designed to attract interest and generate competition. When the guide sits too far below realistic market value, buyers may attend inspections and auctions only to discover the expected price is far higher.
This situation can be particularly frustrating for first-time buyers who invest time and money into building inspections, legal reviews, and financing preparation before an auction.
While most agents operate within the rules, regulators have argued that stronger enforcement is needed to ensure consistent compliance across the industry.
What buyers should look for
For buyers navigating the Sydney market, the crackdown highlights the importance of looking beyond the advertised price guide. Several factors can help determine a property’s likely selling range:
Recent comparable sales in the same suburb often provide a more reliable benchmark than the guide alone. Auction results, similar property sizes, land values, and renovation level all contribute to a realistic estimate of value.
Buyers may also request the agent’s Statement of Information, which outlines the comparable sales used to support the advertised range. This document is intended to provide transparency and reduce confusion about how the guide was determined.
In competitive suburbs across Sydney, final prices frequently exceed guides due to strong demand and limited supply, particularly in tightly held neighbourhoods.
What it means for sellers
For sellers, the changes reinforce the importance of accurate pricing strategies from the outset of a campaign. A realistic guide can help attract genuine buyers who are financially capable of participating in the sale process.
While a lower guide may generate higher initial enquiry, it can also create negative sentiment if buyers feel misled. Stronger regulation is expected to encourage agents and vendors to rely more heavily on verified comparable sales when setting price expectations.
A transparent pricing strategy can also lead to more productive auctions, where bidders feel confident participating because the guide aligns more closely with market value.
Greater transparency across the industry
The new enforcement approach from NSW Fair Trading reflects a broader effort to improve transparency across the property sector. Regulators have indicated that both random audits and complaint-based investigations will continue to be used to monitor compliance.
For buyers, this may gradually lead to clearer price guides and fewer situations where auction outcomes significantly exceed the advertised range. For agents and agencies, it reinforces the importance of maintaining accurate records that justify the pricing used in marketing campaigns.
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Navigating the property market in Sydney requires a clear understanding of pricing strategies, regulations and local market dynamics. At Murray Property, our team works closely with buyers and sellers to provide transparent guidance backed by current sales evidence and detailed market knowledge. Whether preparing a property for sale or evaluating opportunities to purchase, our approach focuses on accurate pricing, clear communication and informed decision-making throughout the entire process.