NSW Fair Trading has been undertaking a two-week audit of real estate agents in New South Wales as part of a crackdown on underquoting.
Real estate agents could face fines of up to $22,000 and risk losing their commission if they are found to have underquoted since the beginning of the year.
The audit program follows the introduction of new underquoting laws on 1 January 2016. Fair Trading staff have been conducting shopfront inspections and auditing sales records with recent agency agreements entered into to ensure compliance.
Fair Trading has previously also undertaken agent education programs in the region to ensure stakeholders were aware of their new legal obligations, as well as a previous program in January 2016 during which the watchdog reviewed more than 5,000 advertisements.
The new laws require agents to be able to provide documentation proving their estimate was reasonable, up-to-date and evidence-based.
A review of the previous underquoting laws found that clearer requirements for agents selling property would better protect consumers in the NSW property market. The previous arrangements also made it difficult to effectively enforce the laws and penalise agents for underquoting.
NSW Fair Trading has said an unreasonable price estimate was a detriment to the consumer, as prospective buyers can spend money and time investigating properties based on the advertised or stated value.
Real Estate Institute of NSW president John Cunningham said the industry welcomes the audit to see how it is tracking with the new laws, but noted how underquoting hasn't always been deliberate, especially over the past two years as constantly rising prices have made them harder to estimate.
"A lot of it was a stab in the dark, but the market's a lot more stable now," Mr Cunningham said.
In the past, Mr Cunningham has also noted some agents may have used underquoting as a strategy to make sales and were even taught: "quote it low and watch it go".
The first week of the audit program, which started on March 7, targeted agents in Sydney metropolitan locations, while the second week currently underway will focus on major regional centres including Wollongong, Newcastle, Dubbo, Orange, Wagga Wagga, Albury, Tamworth, Armidale, Grafton, Coffs Harbour, Lismore and Ballina.