The amendments to the Property Stock and Business Agents Act 2002 are designed to stop potential buyers being misled about the price they can expect to pay for a property.

Consumers will receive greater protection when purchasing a property.

Agents will be required to provide evidence of their estimated selling price to the vendor and this estimate must be stated in the agency agreement.

When marketing a property an agent must only use the estimated selling price - a single figure or a price range -  provided in the agency agreement.

If a price range is used, the highest price must not be more than 10 per cent higher than the lowest price.

The amendments will also prohibit the use of the phrases "offers over" or "offers above" in any advertisements.

NSW Fair Trading and the Real Estate Institute of NSW are working in partnership to prepare real estate agents for the new laws, which take effect on January 1, 2016.

Agents will be required to keep a register of prices quoted on a property whether these prices are provided to the vendor or prospective purchasers.

NSW Minister for Innovation and Better Regulation, Victor Dominello, said underquoting is illegal and there will be penalties for those who continue the practice.

"In addition to the existing penalty of $22,000, agents found guilty of underquoting could forfeit any commission or fees from the sale of a property.

“There have been no successful prosecutions related to underquoting made under this Act in 13 years, so this reform is long overdue,” Mr Dominello said.