As a real estate agent, effective advertising is critical for establishing your business and ensuring its long-term success. However, in the real estate industry, you must be aware of the relevant laws and ensure your advertising strategy complies with these rules. Real estate businesses are captured by specific laws in each state and territory and by the general obligations under the Australian Consumer Law. In this article, we will explore these obligations so that your business can flourish through effective and legally compliant advertising.
Australian Consumer Law
Advertising in every sector must comply with the Australian Consumer Law (ACL). The ACL prohibits a person or business from engaging in misleading or deceptive conduct.
The prohibition applies both to intentional and unintentional acts or statements. The key consideration when deciding if conduct is misleading or deceptive, or likely to mislead or deceive, is whether the overall impression created by your conduct is false or inaccurate.
Specifically, in the real estate context, you must avoid making false or misleading representations in your property advertisements regarding the:
- nature of the interest in the land;
- price payable for the land;
- location of the land;
- characteristics of the land;
- use to which the land is capable of being put or may lawfully be put; or
- existence or availability of facilities associated with the land.
Furthermore, you must ensure that any claims made about any property or land characteristics in any photos and advertising are accurate and do not give prospective buyers the wrong impression. Any statements paired with photographs of the views and facilities available in a local area also must not be false or misleading. For example, you cannot advertise the property as having five bedrooms when it only has four bedrooms. Similarly, you cannot claim a property is ‘move-in ready’ when it needs repairs.
Professional Obligations
Real estate agents, as implied by the name, act as agents for clients. This means that they act on behalf of their clients and have the power to act as though they are the client. Since this gives them a lot of influence, they are heavily regulated under specific state and territory laws.
Under this framework, real estate agents must comply with a series of specific professional conduct standards. Let us explore these in further detail below.
Truthful and Honest
Agents have a fundamental obligation to be truthful and honest in their work. This obligation extends to advertising and includes accurately representing the features, condition and price of a property. Visual representations, including photographs and floor plans, must accurately represent the property. Furthermore, any digital manipulation or enhancement should not distort the property’s actual features.
When using photographs as part of the property advertisement strategy, you must not use photos that provide a false impression. This also aligns with your obligations under the Australian Consumer Law. Exaggerating a property’s size, concealing defects, or using deceptive language to describe a property breaches your professional obligations and the law.
Conflicts of Interest
Agents have a fundamental duty to be ethical. Suppose you have a relevant interest in the sale of property. In that case, you must not publish any advertisement relating to the proposed sale unless you disclose the relevant interest in the advertisement itself.
A relevant interest can include:
- ownership interests, such as if you or your family have a direct ownership interest in the property for sale; or
- financial interests, such as if you have a business relationship with a third party who has a relevant interest in the property.
Testimonials
Any testimonials published on the agent’s website or which form the agent’s marketing materials must be genuine. False testimonials may constitute misleading information. You also cannot pay anybody or offer them any other benefits for a testimonial.
Continue reading this article below the formDisclosure of Material Facts
Agents must disclose material facts when advertising a property. A material fact refers to important information that would influence a reasonable person’s decision to proceed with a property transaction. It includes facts that are significant enough to affect the decision to buy, sell or rent a property, and could impact the market value of a property.
Examples of material facts would be information pertaining to the following:
- flooding;
- health or safety risks;
- asbestos insulation;
- crime history;
- drug-related activities; and
- the presence of combustible cladding.
Failure to disclose any of these facts will amount to a breach of the agent’s professional obligations. Importantly, an agent could still be in breach of the law for failing to disclose a fact even though they were not aware of it.
Agents should make reasonable inquiries with property owners to determine if any material facts apply to a property. It is essential to include a clause in the agency agreement relating to material facts whereby the property owner confirms that they have disclosed all material facts to the agent.
Representations as to Selling Price
An agent must avoid deceptive pricing practices, such as pricing a property below market value to attract buyers. This is known as underquoting. For example, you cannot advertise a property for $800,000 if you know the seller is only willing to accept offers starting at $1 million. Likewise, you cannot claim the property is “price reduced” when you have never listed the property for sale at a higher price.
In addition, an agent cannot publish an advertisement in relation to the sale of residential property that indicates or suggests a selling price for the property that is less than the estimated selling price of the property. Furthermore, an agent cannot publish a selling price that is less than the price proposed in any written offer rejected by the property owner.
Where the estimated selling price for a property is amended, an agent must take all reasonable steps to amend or retract any advertisement published in relation to the property. In some states and territories, you must do this within one business day.
This fact sheet outlines the changes to data and privacy protection in 2023.
Anti-Discrimination Laws
Real estate agents must also ensure that their advertising practices comply with anti-discrimination laws. This means avoiding any language, images, or statements in property listings and advertisements that could be seen as discriminatory or exclusionary.
Agents should promote properties to a diverse range of potential buyers or renters. Additionally, where possible, agents should ensure that any open homes are accessible and open to all.
Details of the Agent
Your advertisements must include the relevant licensee’s name. If you are incorporated as a corporation, you must also include the corporation name. Further, all advertisements must include details sufficient to identify the agent, such as:
- the agent’s full name;
- contact details; and
- the business for which the agent works.
This helps consumers verify the legitimacy of the agent.
Key Takeaways
Advertising is key to having a successful and growing business. However, as a real estate agent, you must balance your advertising and sales tactics against your legal obligations. These obligations include complying with the Australian Consumer Law and meeting your own professional obligations as an agent. In addition, you must disclose all material facts about the property, avoid misleading information regarding pricing and comply with anti-discrimination laws.
If you need help meeting your obligations, our experienced real estate lawyers can assist 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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