‘I’ve got a paper trail on this’: Hundreds of allegations of brazen underquoting

Fresh action to tackle underquoting is under consideration as thousands of online complaints have flooded Victoria’s consumer watchdog, claiming agents are brazenly advertising homes below the expected sale price.

Almost 3500 online complaints were received by Consumer Affairs Victoria’s underquoting taskforce in the past two years, featuring hundreds of alleged examples of the illegal practice, data exclusively obtained by this masthead shows.

More than 1400 complaints claim agents knew how much the owner was willing to sell for, but persisted in advertising the property at a lower price.

Another 452 submissions allege that agents rejected an offer for being too low, but then continued to promote the home at a price below the declined offer.

The new data was released after The Age’s Bidding Blind investigation revealed most properties sell above the top of their advertised price, prompting the real estate industry to initiate its own reforms.

Having previously stood by its existing rules, the Victorian government this week said it was now consulting the industry and community on what new steps it could take.

“We know there’s more work to do, and we are considering ways to further crack down on this illegal practice,” Consumer Affairs Minister Nick Staikos said.

“Buying a home is one of the biggest emotional and financial investments, and among the most emotional decisions Victorians will ever make – they deserve honesty and transparency, not misleading price estimates that add unnecessary stress.”

In an indication of heightened frustration about underquoting in Victoria, almost a third of the reports in the Consumer Affairs data came from fellow agents, angry with the actions of their peers.

When Shelley Lask, who has complained to the taskforce, was looking to buy her first home in Werribee in Melbourne’s outer west, she found that the illegal practice was so baked into the market that she was forced to adjust her search to factor in an extra 10 per cent, or $50,000, over the top of the price guide.

Still, Lask, 41, an online personal trainer, said she was surprised when she saw a house that she had already made an unconditional offer on being advertised at the same price as her bid, which was rejected for being too low.

“I was like, ‘Oh, wow. I’ve got a paper trail on this, I know for sure this is underquoted’,” she said.

While Lask said she understood some auctions just go “nuts”, that did not explain maddening scenarios where properties were not placed on the market despite bidding going past the advertised range.

This rubbery relationship between a price range and a property’s reserve was also a chief frustration for prospective buyers who complained to Consumer Affairs.

More than 1110 instances were reported to the underquoting taskforce of the reserve price at auction being higher than the top end of the advertised range. This scenario isn’t necessarily illegal because owners are not required to disclose or set a reserve before the day of the auction.

Of the 9460 people who responded to this masthead’s online survey about misleading price guides, 92 per cent said they would support the publication of reserve prices before an auction.

This idea has the conditional support of the Real Estate Institute of Victoria, which is developing its own blueprint for price guides.

Craig Knudsen, an experienced property marketer and vendor advocate, said he generally asked clients if his researched price guide was in the “ballpark” of what they were comfortable with, and if not, he would be prepared not to take a client’s property to market.

He suspects many Melbourne agents would rather not know the reserve price of the home they are selling, and will tell their clients as much.

“They say, ‘Look I don’t want to hear it. Let’s keep an open mind’,” he said.

This approach leads to scenarios where properties are listed for well below what the owner is prepared to sell it for, and passing in despite bids above the top end of the advertised price range.

Still, Knudsen, from Vendor Marketing, said he believed Victoria had one of the most ethical auction markets in Australia.

“It’s sometimes hard to control prices going well above the guide, because it depends on how much qualified interest has been generated, and market sentiment can also move very quickly,” he said.

The thousands of complaints to the underquoting taskforce contrast with a much smaller number of fines given to agents. Last financial year, the taskforce issued 48 infringement notices off the back of 1647 online complaints.

When asked why only a small proportion of the complaints resulted in fines, a government spokesperson noted that the complaints were not proven breaches.

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