How we revealed the truth about property auction guides

It started as a simple concept: track online property price listings, compare them with sales results and figure out the gap.

The idea was to try to get some handle on the underquoting problem in Australia’s two biggest cities. Underquoting is an illegal practice in which real estate agents advertise a property at a price below its expected sale price.

The gap between advertised prices and sales results does not necessarily indicate underquoting, which has specific and slightly different definitions in NSW and Victoria.

But it does illuminate the frequent frustration that home buyers face when trying to match real estate website prices against the bidding action at an auction.

Using screen-scraping software, we collected more than 200,000 property ads from NSW and Victoria across 18 months.

In Melbourne, we distilled that to almost 26,000 auction-listed properties for which we had both a price guide and published sale price. We had to monitor more than 100,000 sales listings to get them.

In Sydney, we compiled 10,800 listings with a guide and a sale price. There were 37,929 auctions in the city over that period, Domain data shows.

Unlike Melbourne, in Sydney there are no rules to force auction guide prices to be published; “contact agent” is a common refrain. In both cities, if a guide price is published before the auction, it does not have to remain online afterwards, and it often disappears.

In both states, prices do not have to be disclosed after a property sale.

We also asked readers about their underquoting experiences and were stampeded by more than 7000 angry buyers and sellers expressing frustration at the smoke-and-mirrors show that many agents play on both sides of a sale.

Once we had the data, it wasn’t easy to decipher. Some agents change prices or sales lines on property ads up to 17 times.

When this happened, we used the guide price closest to the auction date.

Thousands of properties were listed twice or more at different web links, weeks or months apart.

Sometimes this was due to an agent change or a fresh listing, but most dead links were the original auction ad, changed to a for-sale price after an unsuccessful auction.

Some of those new for-sale ads were more than $1 million above the previously listed auction guide.

Auction clearance rates include all pre-auction sales, so as clearances fell below 70 per cent, almost one in three auctions disappeared, or ended in a private treaty sale, usually on a different webpage at a higher price.

To further complicate matters, some homes sold more than three times over the period, while others were listed as sold, but then did not settle and were either relisted or taken off the market. These properties were either dumped from our data or tagged and followed on their new path to a sale.

Dozens of sales were credited to the wrong agencies because an agent had moved to a new role at a different office.

Sold properties were not listed as sold on some websites. Different agents were listed as sellers simultaneously, depending on where the data was from.

Both the for-sale and sold prices also shifted over time and could be wildly inaccurate due to human entry errors, such as decimal points moving left and right.

Hundreds of three- and four-bedroom houses were classified as units or apartments.

In NSW, the NSW Valuer General’s Property Sales Information portal publishes data weekly. It is published as 126 data files that correspond to each council area.

The data is not easily analysed, and sales are posted only after the sales contract is settled, sometimes months after an auction.

To ensure the dataset was as accurate as possible, website data was cross-checked against the NSW Valuer General data and property analytics platforms.

Despite all these issues, our investigation exposed significant informational problems in Australia’s multitrillion-dollar property market.

There is no single source of truth, no government agency consistently monitoring or publishing property price guides and sold prices, and there is limited access to sales data.

This all adds up to a property market in which information is stacked in the real estate agents’ favour.