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Real estate agent misconduct – red flags you should look out for


Many of us have been impacted in some way by the housing affordability crisis thanks to rising house prices, interest rate increases and the shortage in vacant rental properties.

Due to these circumstances, buyers and renters are under pressure to move quickly and compete with a number of other people to secure the property. This means they may not have a lot of time to conduct the proper due diligence; forcing them to place significant trust in the real estate agent to be forthcoming with information about the vulnerabilities of a property.

So what are a real estate agent’s responsibilities? Here we unpack professional negligence in the real estate industry and what defines real estate agent misconduct.

What does professional negligence mean in real estate?

Professionals, such as real estate agents, have a legal duty to do their jobs to a minimum standard of competence. If they don’t meet this duty of care and you are financially disadvantaged by their actions or advice, you may be able to claim compensation for the loss you suffer as a result of their negligence.

Australian law protects buyers, sellers and renters; Under Australian laws for buyers, sellers and renters, it is unlawful for real estate agents to:

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Give you a false impression; or
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Intentionally mislead you; or
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Make incorrect or inaccurate claims or lead you to a wrong understanding; or
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Withhold or cover up important information (this also includes using fine print disclaimers).

What is real estate agent misconduct?

In simple terms, real estate agent misconduct is when the real estate agent acts in a way to benefit themselves rather than in the best interest of their client (otherwise known as breaching their fiduciary duty).

This could be in a variety of ways, depending whether you are buying, selling or renting.

Breaches of this duty includes the real estate agent:

Receiving secret profits or not disclosing fees to their client;

Accepting or declining an offer without their client’s approval;

Acting as the agent for both the buyer and seller of a property without the parties’ knowledge;

Not informing the seller of offers (including if an offer has already been accepted); and/or

Switching second bidders to another listing of theirs if buyers have been hard to find.

Failing to disclose information

Providing information to buyers and renters is another significant responsibility of a real estate agent. You may have a claim for professional negligence if the real estate agent fails to disclose:

  • The history of the property and any material information (including dangerous conditions);
  • Information on how natural disasters have affected the property;
  • Council approvals (or lack thereof);
  • Ongoing disputes about fences, trees etc; and/or
  • Body corporate matters.

How do you prove a real estate agent's unconscionable conduct?

A real estate agent’s obligations are clearly defined and strictly enforced. According to the Australian Competitor & Consumer Commission (ACCC) “it makes no difference whether the agent meant to mislead you or deceive you – it is how you perceived the conduct that matters.”

There are a number of ways real estate agents can minimise the chance of misleading a buyer, seller or renter, so if you have followed their advice and suffered financially as a result you may be able to claim for professional negligence compensation.

Shine Lawyers are professional negligence experts.

Our Professional Negligence team are experts in this area of law and have experience bringing compensation claims across a broad range of industries including real estate.

We have a proven track record and are dedicated to delivering justice to our clients who have suffered a financial loss as a result of negligent professionals.

We will help you to understand your rights and access your full entitlements, ensuring you receive the very best outcome for your situation.

To get started, click on the enquire now button below or speak to one of our experts over the phone for a no-obligation chat.

Written by Shine Lawyers. Last modified: July 20, 2022.

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