Costly Mistakes and Official Sources
Underquoting, price guides and cooling-off periods by state: what they cost you
How underquoting laws work in NSW and Victoria, what misleading price guides cost buyers, and the buyer cooling-off period and termination fee in each Australian state.
Underquoting, advertising a home at a price below the seller's expectations or the agent's own estimate, is illegal in New South Wales and Victoria under their agent laws, and misleading price advertising can breach the Australian Consumer Law everywhere. For buyers, the cost of underquoting is wasted money on building reports, strata searches and legal reviews for homes they could never afford. Separately, buyers in most states have a cooling-off period after signing a private treaty contract, but pulling out usually costs a fee of 0.2% to 0.25% of the price, and there is no cooling-off at auction in the states that have one.
This guide is part of costly mistakes when selling a house. For the agent's estimate in the agency agreement, see agency agreement traps.
How underquoting rules work
Victoria (Estate Agents Act 1980): the agent's estimated selling price must be reasonable, based on comparable sales, and cannot be lower than the seller's asking price or a rejected offer. The agent must prepare a statement of information for buyers showing an indicative price and three comparable sales, and update it if the estimate changes. Advertising a price below the estimate, or using phrases like "offers over" that suggest a lower price, is prohibited.
New South Wales (Property and Stock Agents Act 2002): the agent's estimate must be reasonable and in the agency agreement, supported by evidence, and the agent must not advertise or tell buyers a price lower than the estimate. If the agent's estimate changes, or the seller rejects a written offer above the quoted price, the agent must update the agreement and stop quoting the lower price.
Other states: specific underquoting provisions are less detailed, but agents must not engage in misleading or deceptive conduct under state agent laws and the Australian Consumer Law. Some states, such as Queensland, restrict agents from stating a price at auction campaigns.
Regulators in both NSW and Victoria run compliance programs and can issue fines and disciplinary action. Report suspected underquoting to the regulator with the advertisement, the price guide and the final sale price.
What underquoting costs buyers
Illustrative example: a buyer chases three homes advertised at $780,000 to $820,000 that each sell above $900,000.
| Cost per home | Amount |
|---|---|
| Building and pest inspection | $600 |
| Contract review by conveyancer | $250 |
| Strata report (one unit) | $300 |
| Three homes | $2,550 to $2,850 |
Add time off work and, at auction, the risk of bidding with finance approved for the wrong price.
How to protect yourself:
- Ask the agent for the statement of information (Victoria) or the price estimate and the comparable sales used.
- Check recent sales yourself; if the guide is well below comparable sales, treat it with caution.
- Inspect and order reports only once you are confident the price is within reach, or within the cooling-off period.
Cooling-off periods by state
For private treaty residential sales. Auctions generally have no cooling-off where a scheme exists.
| State | Cooling-off period | Cost of pulling out |
|---|---|---|
| New South Wales | 5 business days after exchange (10 business days for off-the-plan contracts) | 0.25% of the price is forfeited |
| Victoria | 3 clear business days after signing | Greater of $100 or 0.2% of the price |
| Queensland | 5 business days | Up to 0.25% of the price |
| South Australia | 2 clear business days after receiving the Form 1 or signing, whichever is later | Up to $100 |
| ACT | 5 business days | 0.25% of the price |
| Northern Territory | 4 business days | Check the contract |
| Western Australia | No statutory cooling-off | Only as negotiated in the contract |
| Tasmania | No statutory cooling-off | Only as negotiated in the contract |
These are the general rules; exceptions apply, for example where the buyer waives cooling-off with a lawyer's certificate, or for purchases by companies or at auction. Confirm the current rule with your conveyancer.
Worked example: pulling out within cooling-off
A buyer signs a contract for an $850,000 house and then finds a structural defect.
- NSW: 0.25% x $850,000 = $2,125 forfeited
- Victoria: 0.2% x $850,000 = $1,700 (greater than $100)
- Queensland: up to $2,125
- South Australia: up to $100
That fee is the price of flexibility. If you exchange without cooling-off, for example at auction, a defect discovered afterwards may leave you bound to buy or forfeiting a 10% deposit of $85,000.
Seller view: cooling-off risks
For sellers, a contract that is still in cooling-off is not a sale. Agents sometimes advise holding back-up buyers until cooling-off ends. If you are buying another home, avoid committing to it unconditionally until your sale is unconditional.
Frequently asked questions
Is "price on application" underquoting?
Not by itself. In Victoria and NSW, the agent must still have a reasonable estimate and must not tell buyers a lower figure.
Can a seller refuse an offer above the price guide?
Yes. The seller is never obliged to accept an offer. In Victoria and NSW, rejecting a written offer above the guide can require the agent to update the guide.
Can I waive cooling-off to make my offer stronger?
In NSW, Victoria, Queensland and the ACT, cooling-off can be waived or shortened, often with a solicitor's certificate in NSW and the ACT. You lose the right to withdraw, so get your inspections done first.
What can I do if I think a home was underquoted?
Report it to NSW Fair Trading or Consumer Affairs Victoria with screenshots of the advertising and the sale result. Other states: report to the fair trading regulator. The steps are in complaints about agents and conveyancers.
Official sources
- Consumer Affairs Victoria — underquoting, statement of information and cooling-off
- NSW Fair Trading — underquoting and cooling-off in NSW
- Queensland Office of Fair Trading — buying property and cooling-off in Queensland
- Consumer and Business Services SA — cooling-off and Form 1
- Australian Competition and Consumer Commission — misleading price advertising
