For many, the dream of homeownership in New South Wales has become a journey of frustration and financial strain, marked by a practice many critics label systemic deception. A major real estate conglomerate now finds itself at the centre of a landmark class-action lawsuit, accused of 'underquoting'—a tactic where properties are advertised at prices far below what vendors are willing to accept. This legal challenge brings to light the deep-seated tension between aggressive marketing strategies and fundamental consumer rights, questioning the very ethics of property sales in a super-heated market.
This lawsuit is a critical examination of where the line between persuasive salesmanship and illegal conduct lies. It probes the legal framework designed to protect consumers. It scrutinizes the digital advertising methods that have allowed misleading information to proliferate. As the case unfolds, it threatens significant financial and reputational damage to one of Australia's largest real estate groups. It could set a powerful new precedent for advertising standards nationwide. The outcome could reshape how properties are marketed, forcing an industry-wide reckoning with transparency and accountability in the digital age.
The Legal Battleground: Deceptive Practices Under Scrutiny
At the heart of the class-action lawsuit is the allegation of misleading and deceptive conduct, a breach of Australian Consumer Law and NSW-specific property legislation. Underquoting involves real estate agents knowingly advertising a property for a price that is less than their reasonable estimate of its likely selling price, the seller's asking price, or an offer already rejected by the seller. This practice creates a false impression of affordability, luring a larger pool of potential buyers into a competitive frenzy.
Last year alone, NSW Fair Trading issued approximately 100 penalty notices related to underquoting, amounting to $221,000 in fines. This figure underscores the scale of a problem that has left countless prospective buyers feeling betrayed, indicating a persistent and growing issue for homebuyers. The practice often leads to buyers wasting thousands of dollars on non-refundable building and pest inspection reports for properties they were never realistically in the running for.
The legal foundation for the plaintiffs' case rests heavily on the Property and Stock Agents Act 2002 (NSW), which explicitly prohibits underquoting and requires agents to provide and keep records of a reasonable estimated selling price. Proving deliberate deception remains a significant challenge for the plaintiffs' legal team. A recent high-profile example saw a Sydney unit sell for $2.32 million at auction, more than $1 million above the price guide provided by the agent, Christophe Serrao of Raine and Horne Double Bay. While such a discrepancy raises serious questions, the agent denied underquoting, stating he could only "facilitate offers to come through to the vendors." This defense highlights the difficulty in distinguishing between a volatile market and a calculated strategy to mislead. This distinction will be fiercely debated in court.
Digital Advertising's Role in Widespread Underquoting
The proliferation of digital platforms has changed how real estate is marketed and has amplified the impact of underquoting in many ways. Online property portals and targeted social media campaigns can instantly disseminate an attractive but misleading price guide to many potential buyers. This digital reach generates massive initial interest, artificially inflating perceived demand and contributing to the auction-day pressure that drives prices well above the advertised guide. This strategy preys on the psychological effect of a bargain, drawing in hopeful buyers who are ultimately used to create a more competitive bidding environment. The widespread nature of this issue is not confined to sales, with the NSW Tenants Union recently calling for a nationwide crackdown on digitally altered rental ads that hide faults or add non-existent features.
Establishing ethical digital marketing practices in this environment is more critical than ever. The focus must shift from simply generating the maximum number of clicks to attracting qualified, genuinely interested buyers through transparency. While some exploit digital tools for questionable gains, industry leaders like Searcht demonstrate how platforms like Google Ads for real estate can be used to build trust and ensure compliance. By focusing on highly relevant keywords, creating transparent ad copy, and directing users to landing pages with clear and accurate information, agencies can connect with serious buyers without resorting to deceptive tactics. This approach respects consumer protection laws and fosters a more sustainable business model based on reputation and integrity.
"Ethical digital marketing in real estate isn't just about compliance; it's about building trust," says Quentin, a digital strategist at Searcht.au. "Effective Google Ads for real estate campaigns focus on transparency, targeting users with genuine intent, and providing clear, accurate information on the landing page. This approach respects consumer protection laws and builds a stronger, more reputable brand for the agent in the long run."
According to data from Smart Insights, the real estate sector already sees a high average click-through rate of 7.75% on search ads, indicating that users are actively interested and responsive when the advertising is relevant. Using this interest ethically, agents can achieve their goals without misleading the public.
The Government's Response: A Regulatory 'Name and Shame' Campaign
In response to growing public outrage, the NSW government has intensified its efforts to curb deceptive practices in the real estate market. Anoulack Chanthivong, the NSW Minister for Better Regulation and Fair Trading, has signaled a "name and shame" crackdown and is considering legislative changes to make pricing disclosure rules clearer and more enforceable. This proactive stance follows numerous reports highlighting the emotional and financial toll underquoting takes on homebuyers. The government's recent introduction of the Residential Tenancies (Protection of Personal Information) Amendment Bill 2025 further reflects a broader commitment to enhancing transparency in property advertising. This bill proposes fines of up to $22,000 for businesses that use digitally altered images in rental ads without disclosure.
These regulatory moves are part of a larger trend aimed at holding the industry to a higher standard of accountability. The proposed penalties for misleading rental advertisements, which include fines of $5,500 for individuals, signal a low tolerance for any form of misrepresentation. While these new laws currently target the rental sector, they establish a clear principle that deceptive digital modifications are unacceptable. This standard could be extended to sales listings. The government's actions, combined with the ongoing class-action lawsuit, send a powerful message to the industry: the era of lax oversight is ending, and agents who fail to adapt to these higher standards of transparency do so at their own peril.
Precedent or Passing Storm? The Future of Real Estate Advertising
This landmark class-action lawsuit against a major real estate group could be a watershed moment for the Australian property market. The potential financial and reputational damages extend far beyond a single company, placing the entire industry on notice. A victory for the plaintiffs would result in significant compensation and a powerful legal precedent, making it easier for future consumers to challenge misleading advertising. The case forces a critical conversation about the responsibilities of real estate agents in a market where aggressive tactics have often been rewarded over ethical conduct. It exposes the vulnerability of consumers who, as the Financial Rights Legal Centre noted in a different context regarding flood settlements, can be pressured into poor financial decisions by powerful industry players.
The defense will likely argue that price guides are estimates in a dynamic market and that final auction prices are dictated by bidder competition, not the agent's initial guidance. They will contend that predicting an auction's emotional and competitive nature is impossible. Therefore, a large gap between the guide and the final price is not de facto evidence of deliberate deception. However, the plaintiffs will counter that a consistent pattern of properties selling far above their guides points to a systematic business practice designed to mislead. This legal battle will ultimately determine whether the industry's long-standing practices are viewed as shrewd salesmanship or a violation of consumer trust, potentially reshaping the rules of engagement for property sales across Australia for years to come.
