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Best Legal Practices for Real Estate Marketing and Advertising

As a real estate business owner, you must comply with the Australian Consumer Law (ACL) when advertising and marketing. The ACL operates nationally and provides general protections to consumers who meet relevant conditions. State and territory laws also regulate your advertising practices. This article will explain your legal obligations as a real estate agent. 

Misleading or Deceptive Conduct in the ACL

When conducting business, a person must not engage in behaviour that is misleading or deceptive or is likely to mislead or deceive. 

Misleading or deceptive conduct can occur by positive representations or omission by silence. Examples of prohibited conduct include:

  • posting false or misleading client testimonials;
  • making false or misleading representations about the selling price; or
  • providing a false impression about the quality of a property.

One way to protect your business from legal liability is to insert a disclaimer into promotional material where appropriate. However, courts will consider factors like text size and font to determine whether your disclaimer is sufficient to alert consumers. 

Unconscionable Conduct in the ACL

Your business must not engage in unconscionable conduct when dealing with consumers. Unconscionable conduct refers to harsh or oppressive behaviour, such as tricking consumers by taking advantage of their vulnerability or lack of understanding.

For example, if someone cannot read English and has misinterpreted your advertisement, it would be unconscionable to take advantage of this. Instead, you should explain the advertisement in simple language and advise them to get advice before proceeding.

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State and Territory Laws

There are also differing state and territory laws that complement the ACL. For example, in Victoria, it is an offence for an estate agent or their representative to mislead or deceive by their conduct or representations. 

It is also an offence to underquote. The ban on underquoting means that you cannot market a property for sale at a price that it is not likely to sell at. For example: 

  • In Victoria, an agent is required to consider the sale prices of three comparable properties when estimating the selling price.
  • In New South Wales, an agent is required to form a “reasonable” estimate of the likely selling price.

Additionally, you should not advertise a property at less than:

  • the seller’s asking price;
  • your estimated selling price based on a market appraisal; or 
  • a price the seller has already rejected (unless the seller is willing to accept a lower price).

Best Practice Examples When Advertising

Your real estate agency can comply with your legal obligations by being honest and performing due diligence before inserting claims into your marketing. We outline a few tips below.

Tip 1: Use Genuine Client Testimonials

Lysander is looking for a real estate agency that will secure a tenant for his townhouse. He visits your agency’s website, where he views endorsements from clients. It is critical to ensure that the client endorsements shown on the website are from real customers who wholeheartedly support your business.

When it comes to settling on a price estimate to use for advertising material, best practice involves conducting an analysis of comparable sales in the area. You should consider the property’s features, such as its size and location. In addition, you should factor in other known valuations or feedback.

While involved in negotiations with potential purchasers, be transparent while protecting your client’s interests. You should not:

  • advertise a property as ‘passed in’ at a greater price than the highest bid at auction; or
  • falsely claim that the seller has rejected offers above what a buyer offers. 

Tip 2: Be Truthful When Discussing Price

Milton engaged you to sell his house by auction. On the day of the auction, the highest bid was $745,000, but Milton rejected this offer as it was too low. When subsequently advertising the property for sale, you should be truthful and inform consumers that the highest bid received was $745,000 (instead of exaggerating).

All information provided to potential buyers, including photographs and verbal statements, should accurately represent the features and location of the property. You should be precise and use recent photos. Avoid using photos of nearby parks and shops unless these views and facilities can be seen from the property.

Tip 3: Be Transparent About a Property’s Characteristics

Ludwig views details about a property on your website. Your advertisement correctly notes that the land area is 2000 square metres. It accurately describes the property as being about 50 metres from the beach. Moreover, the photos used have not been digitally altered in a manner that misrepresents the property.

In all your dealings, you must be transparent about a property’s characteristics. You must not falsely claim additional characteristics that are false to induce someone to buy the property. Otherwise, you risk breaching the ACL.

Consequences of Breaching the ACL

If you fail to comply with the ACL, your customers may be eligible for a refund, compensation or cancellation of the contract. The exact remedy available will depend on whether your failure to comply was minor or significant.

Further, state and territory laws outline varying consequences, including fines. 

Key Takeaways

When running a real estate advertising campaign, you should act honestly, fairly and reasonably in line with the law. Importantly, you should disclose all relevant information about a property. In addition, be aware of specific advertising requirements in the state or territory where you operate. A breach of the law may entitle your customers to a refund, replacement, compensation, or lead to a fine.

For more information on your marking and advertising obligations as a real estate agent, our experienced real estate lawyers can assist you as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

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Sukrit Sabhlok

Sukrit Sabhlok

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