Huge Underquoting Changes Announced—What Buyers Must Know

This week the NSW Government finally announced some much-needed changes to our underquoting laws. And look—any movement in this space is welcome. But in my view, the proposed reforms stop short of going as far as they need to. They’ll help at the edges, but they won’t fix the core problem that frustrates buyers every single week.

Let’s break it down.

So… what is underquoting in NSW? (Because most buyers get this wrong)

Most people assume underquoting is simply when a property sells far above the price guide. But that’s not what the law defines as underquoting.

In NSW, underquoting occurs “when an agent gives a buyer a property price lower than the agent's estimated selling price in the sales agreement” — that internal written agreement between the agent and the seller.

Here’s the catch (and honestly the crux of the whole issue):

• An agent can put an “estimated selling price” in their sales agreement…

• but the owner is under no obligation to accept an offer anywhere near that range.

• They can set a reserve price as high above the estimate as they like.

That, my friends, is the real problem.

And unfortunately, the proposed reforms don’t touch this.

Where the proposed changes will help

There are some good steps forward:

• More scrutiny on the agent’s estimated selling price
  Agents will need to disclose the actual comparable sales they used to form their estimate, so buyers can make their own assessment of whether those comps are legitimate—or wildly optimistic.

• Mandatory disclosure of price guides
  No more hiding behind “awaiting market feedback.”
  A good sales agent should know their pricing strategy before hitting the market.
  At minimum, this stops buyers wasting time on properties that were never within reach.

• Real penalties with real bite
  Instead of a modest $22,000 fine, agents can now face penalties up to $110,000 or 3× their commission—whichever is greater. That’s a consequence agents will actually feel.

• Full details
  The government has outlined the changes here

These will help… to a point.

But why doesn’t this go far enough?

There’s a house currently for sale in the Inner West:

• It sold in December 2024 for $2,500,000 to a builder/developer.

• The property was liveable but needed work.

• The builder drew up knock-down/rebuild plans but never obtained council approval.

• They’ve now listed it for sale again.

Here’s how the campaign recently unfolded:

• Initial price guide: $2,300,000
  (That’s $200k less than their own purchase price, plus another $120k already spent in stamp duty…)

• Revised guide after 10 days: $2,350,000

• Auction result last week: Passed in at $2,500,000

Under the new proposed laws, the initial guide might have been forced closer to the recent sale price (after all, what’s a better comparable than the property itself?). But the owner is still fully entitled to reject offers or set a reserve wherever they like.

The gap between guide and outcome? Still alive and well.

In summary

I could talk (or rant!) about this topic all day. Hopefully when these reforms pass next year, we do see meaningful improvement. But buyers shouldn’t assume this is a magical fix.

Until the laws also address owners’ ability to set reserves wildly beyond the advertised guide, buyers will still need to approach every campaign with caution, good advice, and a realistic understanding of market value.

And that’s exactly where having someone in your corner makes all the difference.

If you’re unsure how these changes affect your search—or you’re tired of chasing properties that blow out past the guide—I’m here to help you navigate the process with clarity and strategy.