What laws do real estate agents have to abide by?

You've probably heard the stories. A buyer gets gazumped after thinking they had a deal locked in, or a seller quietly loses faith in their agent and starts second-guessing every piece of advice.

None of this needs to happen, because real estate agents actually operate within a fairly tight legal framework, and once you understand it, most of the confusion and mistrust disappears.

In this article, I want to walk you through exactly what agents are and aren't allowed to do, so you can go into your next property transaction, whether you're buying or selling, with your eyes open and your confidence intact.

How strict are the rules for real estate agents?

There's a common perception that agents can get away with almost anything.

That's far from the truth, as real estate is one of the more heavily regulated industries in Australia.

Agents are subject to ATO audits, may be secretly monitored by Fair Trading inspectors at auctions, may face disciplinary action from their state's civil and administrative tribunal, such as NCAT in NSW, VCAT in Victoria, or QCAT in Queensland, may be reviewed by their Real Estate Institute over professional conduct, and may be fined by state Fair Trading or Consumer Affairs bodies for issues such as underquoting or misleading advertising under the Australian Consumer Law.

And on top of all that, they can be sued.

Being an estate agent is a highly exposed position, with multiple regulators keeping a close eye on the industry. Property is something almost every Australian has an opinion on, making agents an easy and popular target for regulators and journalists alike.

The truth is that making an example of a dodgy agent generates good publicity for a regulator and reassures the public that someone is watching.

I’ve found that most agents act in their clients' best interests, but a few operators are always out there taking advantage of sellers. Understanding the law is your best defence against ending up with one of them.

So let's start with the question I get asked most often.

Do real estate agents have to present all offers?

Yes. Agents are legally obliged to present every offer to the seller right up until the contract of sale has been finalised.

The one exception is if the seller has specifically instructed the agent not to submit offers below a certain figure. Beyond that, agents also have a statutory duty to try to achieve the best possible price for their client, the seller, not the buyer.

What is an agent's obligation to the purchaser?

Agents also have to be open and honest with buyers, not just the seller who's paying them.

As Fair Trading explains in its misrepresentation guidelines, if an agent knows something about a property that a reasonable buyer would want to know and that the buyer wouldn't otherwise be able to find out, they can't conceal or suppress it.

This covers things like council approvals, disputes, body corporate issues, and the history of the property, including anything as serious as a murder or suicide having taken place there. Staying silent about anything that could reasonably affect a buyer's decision simply isn't allowed.

Can a real estate agent sell their own property?

This is a question I get asked a lot, and the answer might surprise you. Unlike many professions, there's no rule preventing an agent from selling their own home, though they are required to disclose their ownership.

Some people assume an agent will pocket a bigger profit selling their own place than selling a client's, but that's usually a misreading of what's really going on. If there is a difference, it tends to come down to the agent simply making sharper, faster decisions because they know the market so well.

An experienced agent is unlikely to overprice their own property. If it doesn't attract interest in the first week or two, they'll drop the price quickly rather than wait and hope. A vendor relying on an agent's advice often takes longer to reach the same conclusion, and by then some of that early buyer interest has already moved on.

What are agents constantly worried about?

Most agents simply want to do their job well without being sued, fined or hauled before a disciplinary panel. That pressure underlies the whole industry, even though it rarely gets talked about openly.

Every new rule or regulation brings more paperwork, which is why agents increasingly rely on emails, text messages and detailed diary notes just to protect themselves if a dispute arises.

It's something of a double-edged sword, because buyers and sellers want transactions done cheaper, faster and with less friction, yet the growing compliance burden often pulls in the opposite direction.

This environment has pushed many agents to hold firm on their fees rather than cut corners to save time. One shortcut to watch for is an agent advertising a property before they have signed authority to sell it, which is illegal. If an agent doesn't have authority from the owner, they have no legal right to market that property at all.

What is gazumping in real estate?

Gazumping occurs when you've reached a verbal agreement with an agent or seller to buy a property at an agreed price, only for the seller to sell to someone else, usually because a higher offer has been received.

It's a genuine frustration for buyers, though it usually comes down to a misunderstanding of how contract signing actually works rather than any wrongdoing by the agent. The buyer feels hard done by and often blames the agent, which is exactly why agents keep such thorough records of conversations and offers.

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In a hot market, agents will often go back to a buyer multiple times to ensure they've put forward their genuine best and final offer, precisely so nobody can later claim they weren't given a fair chance.

Even so, some buyers who miss out will insist they would have paid more if only they'd been asked, which is easy to say once the property has been sold and the disappointment has set in.

The real lesson here is not to celebrate until the seller has actually signed and dated the contract, because without that signature and date, nothing is binding. Writing a 10% deposit cheque doesn't mean you own the property either.

There are even sales strategies where an agent collects three signed contracts from different buyers and shows the vendor each one from lowest to highest, simply to help the vendor land on the best possible price.

Is gazumping legal?

Yes, it is. Across Australia, if a buyer and seller reach an agreement on price, that agreement isn't locked in until both parties exchange signed contracts of sale.

Until that exchange happens, the seller retains the right to accept a better offer if one comes along. Agents are still obliged to pass on any new offer to the seller right up until the contract has been finalised, which is exactly why this situation can arise.

There's a real difference between genuinely being gazumped and simply facing competition when you put in an offer, and that distinction is part of why gazumping remains perfectly legal here.

How to avoid being gazumped

If you want to reduce your risk as a buyer, make your offer as attractive as possible, and remember that price isn't the only lever you can pull. Flexible settlement terms or a rent-back arrangement for the seller can be just as important as the number on the page.

I'd also encourage you to stay in regular contact with the selling agent after you've made an offer. You've already shown your interest, so there's no downside to checking in. Every now and then, an agent will let slip a piece of information that works in your favour.

Can you ask for proof of another offer on a house?

You can, and Fair Trading NSW actually recommends asking for it in writing. Agents aren't obligated to provide it that way, though most will if you ask.

Not knowing where you stand is genuinely uncomfortable, so it's worth calling the agent's bluff to make sure you're not caught up in what's known as a Dutch auction. That's where an agent negotiates privately with multiple buyers and keeps disclosing competing offers to push everyone into leapfrogging each other.

The simplest way to test this is to ask whether the competing offer is backed by a signed contract of sale. If the answer is no, you're up against a verbal proposal at best, or possibly nothing at all.

Don't let yourself be cornered. Agents might get a little defensive when you press this point, but it's a completely fair question to ask in any negotiation.

If you're genuinely committed to the property, be ready to increase your offer. Just keep in mind that a seller isn't obliged to sell to any particular buyer and can change their mind at any time before contracts are exchanged. They also won't always accept the highest offer on the table.

How common is gazumping in Australia?

It really depends on the market you're in. It's never been especially common, but it's also been part of property buying and selling for as long as people have been doing both.

You'll see it more often in a hot market where prices are climbing on strong demand, and far less often when the market is cooling and that competitive pressure eases off.

Why do sellers lose money by not trusting their agent

Getting along with your agent matters more than people realise, because distrust can genuinely cost you thousands of dollars. Once you sign an agency agreement with a licensed agent, you're in a legally binding relationship in which they're required to act in your best interests and work to secure the best possible price for you.

That's a fiduciary duty, and it's illegal for an agent to work against you. Every selling agent carries that obligation in the back of their mind while they try to balance a good relationship with the buyer against securing the best outcome for their client, the seller.

Agency agreements are regularly audited to check for collusion with buyers, non-disclosure, secret commissions or a mispriced valuation, and agents who cross that line tend to get caught fairly quickly. You don't need to like your agent, but you do need to trust them, because the law leaves them little choice but to work in your interest.

However, here's a real pattern that costs sellers ten to twenty thousand dollars, sometimes more. Most sellers feel an emotional attachment to their home and genuinely believe it's worth more than the market does, which leads them to list at an inflated price.

That overpricing kills enquiries during the most important window of the entire campaign, the first week or two of advertising, which is when interest naturally peaks. More interested buyers competing against each other is what drives a price up, while an overpriced listing just drives enquiries away.

It helps to remember that the advertised price isn't your asking price, it's simply a piece of marketing backed by comparable sales, and your actual selling price is a different thing entirely.

Many sellers struggle to accept this when emotion is driving the decision, but if you can look at your own property through a buyer's eyes for a moment, you'll often end up with a stronger result than the advertised figure suggests. Ultimately, a sale price isn't set by what's advertised; it's set by what buyers are prepared to pay when they're competing against each other, which is what agents call the market price.

I'd encourage you to look into the specific rules, laws and regulations that agents in your state are subject to. The more you understand them, the more confidence you'll bring to your next property transaction, whether you're buying or selling.

Fair Trading NSW  and REINSW  are both useful starting points, and every other state has its own equivalent Fair Trading or Consumer Affairs body worth bookmarking.