Real Estate Agents

Acting as a real estate agent is a massive responsibility


You want to ensure that you’re compliant with the current legislation.


Being involved in transactions that represent large amounts of money naturally leads to a number of legal claims.

We surveyed 20 Real Estate Agents for the questions THEY wanted answers to. Here they are:

What is the biggest legal pitfall for Real Estate Agents?

Misrepresentation is by far the lawsuit that agents face the most.


The most common misrepresentations involve the building structure, property boundaries, the roof, and termite problems.


Remaining silent or only telling half the story where there is a reasonable expectation of disclosure means you are breaking the law.


Agents must be open and honest with clients and customers. If information is known to the agent they must not conceal or suppress information about a property. Even if you don’t intend to hide the information, if you do NOT disclose it, you open up yourself to a potential lawsuit.

What is under quoting?

Under-quoting is when an agent advertises properties for a price that was less than the vendor’s reserve price, or well under the likely sale price. This creates an illusion of a ‘bargain.’

Can I get in trouble for under quoting?

Yes, you can.


Consumer Affairs Victoria has launched legal action in the Federal Court against two real estate agencies over allegations of underquoting in Melbourne.


As housing prices increase, the number of complaints in relation to underquoting has also increased.


Fines have been handed out to agenceies for over $400,000.

What is my duty of care as a real estate agent?

A real estate agent has a duty to act in his or her clients’ best interests. This requires the agent to represent the client even if doing so would result in a lower fee for themselves.


A claim for breach of duty may arise when the agent fails to disclose important information to the client, such as an ongoing feud with a neighbor or a known encumbrance on the property.

If I have a property listing, can my friends or family purchase that property?

Be extremely cautious in these situations. The best test to use for this is common sense. If you have not tricked your client into taking a lower price than what the client could’ve gotten for their property – then you have fulfilled your duty to your client. We advise that you tell your clients that you know the purchaser in another capacity i.e. they are your friends or related to you.

When does a contract become legally binding?

A contract to sell a property becomes binding when the buyer and seller each sign a copy of the contract for sale and exchange them.


At exchange, the buyer also usually hands over a deposit (often 10%).


At an auction, exchange happens immediately after the winning bid is accepted.


For private treaty sales, exchange usually means that you will deliver your signed contract to the seller’s agent and pick up the seller’s signed copy.


Sometimes a seller will be happy to exchange contracts by mail, in which case the seller’s signed contract will be delivered to your solicitor.

What about if the property is off the plan?

This is relatively the same, however, bare in mind that any assurances that you make may put you at risk.


For instance, recently a Sydney investor bought an apartment ‘off the plan’ after the agent promised 180-degree water views. When the complex was finished the buyer found a wall obstructed his view. He argued that the contract for sale was void and asked for his deposit back.


The builders refused. The buyer took his case all the way to the NSW Court of Appeal, which ruled in his favour. It found that he had relied on the agent’s misrepresentation when deciding to buy, so the contract was void. It ordered the builders to return the buyer’s deposit.

What is included in the sale of property?

Unless the contract specifically says otherwise the property will be sold ‘in the state you find it’. That also means any ‘fixtures’ are automatically included.


A fixture is anything that can’t easily be taken away without doing damage to the property. For instance, stoves are usually fixtures because they’re wired in, whereas fridges aren’t because they only need to be unplugged.

When can I start advertising for a property?

You can only start advertising a property once you have received the contract of sale for that property.

What are my confidentiality obligations to my clients?

An agent must not disclose any confidential information obtained while acting on behalf of a client, unless the client authorises the disclosure.

Am I allowed to place a dummy bidder at an auction?

There are severe penalties for those found guilty of dummy bidding.

You can still be found guilty of dummy bidding on behalf of the seller even though the seller did not request the bid, or have any knowledge of the bid.

For a simple overview of the conveyancing process, we have created this information sheet for you and your clients. Download now for free!


Conveyancing Survivial Guide


Conveyancing Survival Guide

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I don’t trust words. I trust action.

Just try us. We guarantee you’ll know straight away.