Protecting Buyers from Underquoting: How hovr Empowers Smarter Decisions
What Is Underquoting?
Underquoting, often called price baiting, is the practice where real estate agents advertise a property with a price guide far below what the vendor expects and is willing to accept. For instance, a home listed at $1 million may actually sell for more than $1.3 million. This tactic is illegal under Australian consumer law, notably in New South Wales, but continues to be pervasive, especially in Sydney. Agents use this strategy to attract numerous buyers to auctions or open homes, artificially boosting interest and demand. Buyers, particularly those new to the market, are left frustrated after attending auctions for homes far outside their price range based on misleading guides. Many describe the process as demoralizing and exhausting, with wasted time and emotional strain often leading to poor decisions or missed opportunities.
Legal Framework and Enforcement
Australian states have laws to combat underquoting. Typically, agents must not list a property below its estimated selling price, the vendor's asking price, or the price of previously rejected written offers. In New South Wales, penalties for underquoting include fines up to $22,000, loss of commission, and revocation of real estate licenses. The NSW government has recently committed $8.4 million to a new enforcement task force focused on combating underquoting and increasing consumer protections. Victoria and Queensland also have updated regulations, requiring that agents provide buyers with comparable sales statements and more reliable marketing information. However, enforcement struggles allow the practice to persist. Many in the industry admit that competitive pressures and demands from vendors sometimes push agents to circumvent regulations.
Industry Data and Insights
Technology companies such as KoalaData (now Homer) monitor property listing and sale trends. They’ve identified more than 220 selling agents in Australia whose price guides were, on average, over 10 percent lower than actual sale prices. About 60 percent of these were concentrated in NSW. On a given Saturday, half of NSW properties sold for at least 10 percent above their advertised guide price. High-profile examples include homes selling for hundreds of thousands, even millions, above the guide, with many buyers feeling deceived and angry.
Why Underquoting Persists
Several factors contribute to the prevalence of underquoting. Real estate agents earn commission on successful sales, creating an incentive to maximize buyer turnout. Strong market demand and rapid price appreciation complicate accurate forecasts, so agents and vendors often fear that honest guides will drive buyers away. Vendors may pressure agents to underquote, hoping large crowds at auction will ensure higher sale prices.
The Value of Independent Property Valuations
In this volatile market, independent property valuations provide essential protection for buyers. Registered valuers have no stake in the sale outcome and deliver unbiased market value estimates based on current trends and comparable sales. Buyers armed with certified valuations are able to spot misleading price guides, focusing only on properties within their budget. These reports give buyers leverage in negotiations, help avoid emotional overspending, and support confident loan and financial decisions. Independent data serves as a safeguard against the traps of underquoting.
How hovr Protects Buyers
hovr’s valuation marketplace connects buyers directly with qualified, local professionals for impartial market valuations. This transparency helps buyers:
- Assess a property’s true value, separate from agent price guides.
- Make informed bidding and purchasing decisions, saving time and money.
- Avoid the emotional pitfalls of being baited into competitive auctions far above budget.
- Access certified reports that strengthen negotiating positions and support loan applications.
Conclusion
Underquoting remains a pressing issue undermining buyer confidence in Australia’s property market. Government action continues, but independent valuations offer the most robust buyer protection. hovr equips Australians with reliable, data-driven valuations so buyers can avoid overpriced auctions and negotiate from a position of strength. In today’s challenging market, a real valuation from hovr is a crucial safeguard. It prevents costly errors, preserves peace of mind, and puts buyers’ interests front and center.