Most Australians deal with a real estate agent only a handful of times in their life. That makes the truth about real estate industry structure hard to learn from experience alone. Agents are not villains, and they are not neutral helpers either.
They are licensed professionals paid to do a specific job, for a specific client, and understanding that one fact changes how you should read every conversation you have with one.
This article is not about whether to trust agents as people. Most are hardworking and follow the law closely. It is about the structure they operate in: who pays them, who they legally answer to, and what protections exist for everyone else in the transaction.
Once you understand the structure, you can make calmer, better-informed decisions, whether you are buying, selling, or simply curious.
The Truth About Real Estate Industry: Who the Agent Actually Works For
Here is the part many buyers do not realise until they are deep into a purchase. When you walk into an open home and chat with the friendly agent, that agent almost always works for the seller, not for you.
The Australian Government’s MoneySmart service puts it plainly: the seller of a property prepares the contract of sale, and a buyer should inspect the property, talk to the agent, then get a solicitor or conveyancer to review the contract before signing.
The agent’s job is to market the property and negotiate the best possible outcome for the person who appointed them, the vendor. This is called a fiduciary duty, and it means the agent must put the seller’s interests first in that transaction.
This is not a criticism of agents. It is simply how the role is designed. A seller’s agent can still be honest, professional, and pleasant to deal with. But “helpful” and “working for you” are two different things. If you are buying, nothing stops you from engaging your own representative, known as a buyer’s agent, who is paid by you and owes their duty to you alone.
Many buyers never consider this option because they assume the agent they are speaking with already represents their interests.
Sellers are on the other side of this same coin. If you are selling, understanding that your agent’s duty is to you can help you ask sharper questions: how they set the price, how they report offers, and how they are paid.
How Agents Are Paid, and Why It Matters
Agent commission in Australia is not fixed by government regulation. Each agency sets its own rate, and rates can be negotiated. This means two agents in the same suburb can legally charge different amounts for a similar level of service.
Commission is usually charged as a percentage of the final sale price, sometimes with a fixed fee instead, or a tiered structure that changes at different price points. Because the fee is a percentage, an agent’s income rises and falls with the final sale price. In theory, this lines up the agent’s interest with the seller’s interest: a higher sale price means a bigger commission for the agent too.
In practice, the alignment is not perfect. An agent choosing between accepting a solid offer this week or holding out for a slightly better one next month faces a trade-off. A small percentage gain in sale price may not be worth much extra commission to the agent personally, even though it matters a great deal to the seller.
This does not make agents dishonest. It is simply a reason sellers should ask direct questions about strategy, rather than assume every incentive is automatically aligned.
realCLEAR does not take commission from a transaction either way, which is part of why our advice through our Sell and Manage services stays focused on what actually suits you, not on pushing a listing forward.
Underquoting: A Well-Known Problem the Law Keeps Adjusting
One of the most persistent frustrations buyers raise about the real estate industry is underquoting. This happens when an agent advertises or states a likely selling price that is lower than what they privately expect the property to sell for, drawing in more interested buyers than the true price range would attract.
Underquoting is not a grey area. It is specifically prohibited under state law in most Australian jurisdictions, and regulators have been tightening the rules in response to ongoing complaints during a period of strong buyer demand.
A Closer Look at New South Wales
Property law and licensing rules differ by state, so this section describes New South Wales specifically. Readers in other states should confirm current requirements with their own state’s fair trading or consumer affairs body, since the detail below does not apply automatically outside NSW.
In NSW, underquoting has been regulated since 2016 under the Property and Stock Agents Act 2002 and the Secretary’s guidelines for the proper supervision of the business of a licensee. Agents are required to include a reasonable estimate of a property’s likely selling price in the agency agreement, and if that estimate is expressed as a range, the top of the range cannot exceed the bottom by more than 10 percent. Agents also have to keep records showing how they arrived at that estimate.
In mid-2026, NSW Parliament passed the Property and Stock Agents Amendment (Underquoting and Other Agent Conduct) Act 2026, raising penalties for underquoting from $22,000 to $110,000, or three times the agent’s commission, whichever is greater.
The reforms also doubled penalties for dummy bidding at auctions, from $55,000 to $110,000, and gave NSW Fair Trading expanded powers, including the ability to compel agents to publicly disclose breaches and to require independent valuer checks on listed properties.
Some parts of this Act had not yet formally commenced at the time of writing, so buyers and sellers in NSW should check the current status on the NSW Fair Trading underquoting guidance page before relying on specific figures.
This example shows something worth remembering everywhere in Australia: rules against underquoting exist because the practice has been common enough to need regulation. That is useful context for buyers everywhere, even outside NSW, though the exact penalties and mechanisms will differ by state.
Cooling-Off Periods: A Safety Net That Varies by State
A cooling-off period is a short window after signing a private treaty contract during which a buyer can withdraw, usually for a small financial penalty rather than losing the whole deposit. It does not apply to auction purchases in most states, and it is not designed as a way to renegotiate price after the fact.
In New South Wales specifically, the cooling-off period is 5 business days after exchange of contracts, starting as soon as contracts are exchanged and ending at 5pm on the fifth business day. This is confirmed directly on the NSW Government’s own housing and property pages.
Rules differ from state to state, and the general pattern reported by consumer and legal sources is set out below as a guide only. Always confirm the current period with your own state’s consumer affairs authority before relying on it for a real transaction.
| State or territory | Typical cooling-off period | Applies to auctions? |
|---|---|---|
| New South Wales | 5 business days | No |
| Australian Capital Territory | 5 business days | No |
| Queensland | 5 business days | No |
| Northern Territory | Around 4 business days | No |
| Victoria | 3 clear business days | No |
| South Australia | 2 business days | No |
| Western Australia | No statutory cooling-off period | Not applicable |
| Tasmania | No statutory cooling-off period | Not applicable |
A cooling-off period is a useful safety net, but it is not a substitute for doing your homework before you sign. Building and pest reports, a finance pre-approval, and a solicitor’s review of the contract are all things worth arranging before exchange wherever possible, not after.
How Big Is the Industry, and Why the Numbers Matter
It helps to understand the scale of what you are dealing with. The Australian Bureau of Statistics estimated the total value of residential dwellings in Australia at $12,772.6 billion in the March 2026 quarter, with the mean price of a residential dwelling sitting at $1,111,100.
Housing is also a significant driver of everyday cost of living. In the 12 months to June 2026, new dwelling prices rose 5.8 percent, and housing was one of the largest contributors to annual inflation, alongside electricity and rents.
The industry that sits between buyers, sellers, and this enormous asset class is large too. The Real Estate Institute of Australia‘s member institutes across the states and territories represent about 85 percent of Australian real estate businesses and agents.
Separately, the REIA notes that rent collected by agents runs to around $49 billion a year, and the property industry contributes roughly $300 billion to Australia’s GDP.
None of this is a reason for alarm. It is a reason to treat a real estate transaction with the same seriousness you would give any decision involving hundreds of thousands, or millions, of dollars. That is true whether you are working with an agent, a buyer’s agent, or a service like realCLEAR that is not paid by commission on a sale either way.
A Worked Example: Understanding a Typical Transaction
The following scenario is illustrative only. It is not a guaranteed outcome and should not be read as advice for any specific property or buyer.
Imagine a Sydney apartment listed with a price guide of $780,000 to $830,000. Under NSW underquoting rules, the agent’s estimated selling price in the agency agreement cannot legally sit outside that 10 percent spread, and the agent must have evidence, such as comparable recent sales, to support it.
If the property eventually sells for $920,000 after a strong auction, that alone does not prove underquoting. Genuine competition at auction can lift a price well above the original guide. What would raise a concern is if the agent’s internal estimate, recorded in the agency agreement, was already close to $920,000 at the time the public guide was set at $780,000 to $830,000. That gap is exactly what the NSW reforms and record-keeping requirements are designed to catch.
For a buyer, the practical lesson is the same regardless of the outcome: treat a price guide as a starting point for research, not a promise, and budget with your own ceiling in mind rather than the advertised range alone.
Getting Independent Advice: The Professionals Who Work for You
A real estate agent is one part of a property transaction, not the whole team. A solicitor or licensed conveyancer reviews the contract and protects your legal position. A mortgage broker or lender assesses your finance. A building and pest inspector checks the physical condition of the property. None of these professionals are paid by the same commission structure as the selling agent, and their job is specifically to represent you.
If you are considering buying, selling, or renting out a property, it is worth having a plain conversation with someone who is not trying to win a listing from you. That is the basis of realCLEAR’s Sell, Rent, and Manage services: advice first, transaction second.
Frequently Asked Questions About the Real Estate Industry
- Does a real estate agent work for the buyer or the seller?
- In almost all cases, a selling agent is engaged and paid by the seller, and their fiduciary duty is to the seller. Buyers who want their own representation can engage a separate buyer’s agent.
- Is real estate commission the same everywhere in Australia?
- No. Commission rates are not set by government regulation and are negotiated individually between the agent and the seller, so they vary by agency, location, and property.
- What is underquoting?
- Underquoting is when an agent states or advertises a price that is lower than their own reasonable estimate of the likely selling price. It is against the law in NSW under the Property and Stock Agents Act 2002, and similar laws exist in other states.
- Has underquoting law recently changed in NSW?
- Yes. In 2026, NSW Parliament passed reforms increasing maximum penalties for underquoting to $110,000 or three times the agent’s commission, whichever is greater, and giving NSW Fair Trading expanded enforcement powers. Some provisions were still being progressively implemented at the time of writing, so it is worth checking the current status with NSW Fair Trading.
- How long is the cooling-off period when buying a home?
- It depends on the state. In NSW it is 5 business days after exchange of contracts. Other states range from 2 to 5 business days, and Western Australia and Tasmania have no statutory cooling-off period at all. Always confirm the current rule with your state authority.
- Does the cooling-off period apply if I buy at auction?
- Generally no. Most states remove cooling-off rights for auction purchases, which is one reason it pays to complete your due diligence before bidding, not after.
- Should I get my own buyer’s agent?
- It depends on your situation. A buyer’s agent works exclusively for you and can be valuable in a competitive or unfamiliar market. Whether the fee is worth it depends on your budget, your experience, and how much time you have. This is a personal decision, and a professional adviser can help you weigh it up for your circumstances.
- Are real estate agents legally required to disclose everything about a property?
- Agents and sellers have disclosure obligations that vary by state and by what a reasonable person would consider a material fact. If you are unsure what has or has not been disclosed, ask directly and, where it matters financially, confirm in writing.
- Is it true that agents are only interested in a quick sale?
- Not universally, and it depends on the individual agent and agency. Because commission is usually a small percentage of the final price, the financial incentive to push for speed over a slightly higher price can exist, which is why sellers benefit from asking direct questions about strategy and timeline rather than assuming intentions either way.
- Where can I check current real estate rules for my state?
- Each state and territory has its own fair trading or consumer affairs authority. In NSW this is NSW Fair Trading, part of the NSW Government. Other states run comparable but different systems, so always check with your own state’s authority rather than assuming NSW rules apply nationally.
Wrapping Up
The truth about the real estate industry is less dramatic than headlines sometimes suggest, and more structural. Agents are licensed professionals working within rules that differ by state, paid through a commission model that is not always perfectly aligned with every seller’s or buyer’s individual interest.
None of that means you should distrust every agent you meet. It means you should understand whose side the structure puts them on, and build your own team of independent professionals around that fact.
realCLEAR was built on a simple idea: we would rather lose a listing than give bad advice. If you are weighing up whether to sell, buy, rent out a property, or simply do nothing for now, book a free, no-obligation conversation through our Contact Us page. We will give you our honest read on your situation, even if that honest read is to wait.
Disclaimer: This article is general information only and does not constitute legal, financial, or personal advice. Property laws, penalties, and cooling-off rules vary by state and change over time. Always confirm current requirements with the relevant state authority, and seek independent legal or financial advice for your specific circumstances.
Sources referenced in this article:
- Australian Bureau of Statistics, Total Value of Dwellings: https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/total-value-dwellings/latest-release
- Australian Bureau of Statistics, Consumer Price Index, Australia: https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release
- Real Estate Institute of Australia, About REIA: https://reia.com.au/the-institute/about-reia/
- Real Estate Institute of Australia, About: https://reia.asn.au/about/
- NSW Government, Underquoting guidance for property professionals: https://www.nsw.gov.au/housing-and-construction/property-professionals/working-as-an-agent/underquoting-guidance
- NSW Government, Contracts and deposits when buying property in NSW: https://www.nsw.gov.au/housing-and-construction/buying-and-selling-property/buying-property-nsw/contracts-and-deposits
- Moneysmart.gov.au, Buying a house: https://moneysmart.gov.au/buying-a-house
- Law Society Journal, New laws crack down on underquoting in NSW: https://lsj.com.au/articles/new-laws-crack-down-on-underquoting-in-nsw/
- NSW Legislation, Property and Stock Agents Act 2002: https://legislation.nsw.gov.au/view/html/inforce/current/act-2002-066
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