Underquoting is a marketing tactic estate agents use to drum up interest.
There are laws against intentional underquoting in New South Wales and Victoria.
If you suspect an agent is underquoting you need to speak up and report them.
What is real estate underquoting?
Although the majority of Australian real estate agents act in good faith, you may come across a sneaky tactic called underquoting.
Sometimes referred to as "bait pricing", underquoting occurs where a real estate agent markets a property for less than the genuine sale price in order to attract greater interest from potential buyers.
According to a recent investigation, 30% of properties at auction were sold for 10% or more than the quoted price between October 2023 and July 2024.
However, this can also happen naturally due to high competition. Real estate agents are only deemed to have broken the law if they intentionally underquote.
Why do real estate agents underquote?
By attracting a larger number of buyers these estate agents believe it will create a greater sense of competition for the property. When the property is sold for a higher price, they expect buyers will think it is due to a heated property market and the competitive nature of auctions.
However, some argue that agents would be better off by quoting accurately to attract buyers who have the financial means to buy the property rather than those who are unable to afford the price range that the vendor desires.
Underquoting methods
Step-quoting. Some of the agents who use this tactic will originally advertise a property at a low price to attract potential buyers and then gradually increase the price up until auction day or the proposed sale date. This is known as step-quoting.
Removing prices. Some real estate agents will also remove estimated sale prices from online advertisements and only provide a verbal guide to potential buyers, while others may claim they cannot forecast what a buyer will be prepared to pay on the day.
Why is underquoting bad?
The practice of underquoting is misleading and unethical because the advertised price must be one that the vendor is willing to consider and the price must reflect market conditions.
NSW Fair Trading says its rules around underquoting are to prevent buyers spending time and money on inspections and property reports for properties out of their price range.
Beyond that, underquoting creates frustration amongst buyers who anticipate paying a certain price for a property only to be outbid or disappointed at auction.
It also leads to mistrust between buyers and agents as many buyers are unwilling to trust the agent's quoted price prior to the sale.
Expert insight: Why underquoting is becoming less common
"Underquoting can certainly happen - particularly when the real estate market is struggling for direction and agents are having difficulty selling properties. In these circumstances agents may use deliberate underquoting as a method of trying to draw in more interested parties to a listing. However underquoting is becoming less and less of a problem for two main reasons. Firstly, when a market is relatively strong and competitive, inaccurate prices that may initially appear to be underquoting may in fact be actually just a product of a higher-level of competition. Secondly, these days there's an app or website for just about everything, including finding out the realistic price of a property."
When it comes to buying in a competitive market, it pays to do your homework. Here are some ways you can protect yourself from underquoting:
Research comparable sales. Visit sites like realestate.com.au or Corelogic to access suburb profile reports that will detail the sale prices and auction results of neighbouring properties. Only consider the data of comparable properties.
Consult professionals. Speak to real estate agents or buyers agents that aren't involved in the sale as they'll be more likely to give you a true estimate of the price. Speak with other residents who are familiar with the area. You may want to consider using the services of a buyer's agent.
What should I do if I suspect an agent is underquoting?
A real estate agent is legally only underquoting if they did so to intentionally mislead. If you believe that an agent has intentionally underquoted the estimated sale price, you can report them.
The authority on this lies within each state (e.g. NSW Fair Trading, Consumer Affairs Victoria).
Consult your local authority and file a complaint. When doing so, ensure that you have evidence to suggest that the agent has been reckless with their quoting, such as providing comparable sale prices.
What obligations does a real estate agent have?
Real estate agents have the following responsibilities when selling or marketing real estate:
To make honest and reasonable estimates of sale prices
To maintain records to demonstrate what information they used to reach estimates
To maintain records of any conversations where estimates are adjusted
Price guides
When advertising a property for sale, there are certain rules around the way real estate agents can advertise the property price.
These can vary by state but typically:
The agent may advertise the price either as a single figure or as a range of up to 10% (e.g. $600,000 - $660,000).
They can't use terms such as 'from' or 'offers above' or '+' (e.g. $700,000+).
Frequently asked questions about underquoting.
The genuine estimated selling price is the price that is documented in the agency agreement that represents the agent's true estimated selling price. If a real estate agent advertises an estimated selling price in the agency agreement that is not consistent with their true estimate of the likely selling price for the property, then this may be considered false or misleading.
Typically, the seller's minimum expectation should be disclosed in writing before the marketing campaign commences.
While each agency will have their own practices, some of the ways agents determine a selling price are:
Recent comparable sales. This may include any changes in the market since the comparable property was sold or variations between the comparable property sale prices.
Property valuations. Understanding the recent values of the property is key when deciding the sales price.
Location factors. An agent should carefully consider average property prices in the area, supply and demand factors including days on market (DOM) and vacancy rates.
Vendor expectations. The agent should include information regarding any specific instructions in regards to marketing campaign, preferred method of sale and the vendor's genuine price expectations.
There are laws around underquoting in New South Wales and Victoria.
In New South Wales, a real estate agent could be issued with a penalty infringement notice of $2,200. Further action could be taken depending on the circumstances. If an agent is found guilty in a court trial they could face a fine of $22,000. They may also lose the full commission and fees for property/properties underquoted.
In Victoria, real estate agents could face a penalty of at least $36,000. They may also lose commission for selling the property in serious cases.
Rebecca Pike is Finder’s money editor, with over 7 years of experience in mortgages and personal finance. A frequent TV and radio commentator, she frequently appears on Sunrise and 7News, Today and 9News, as well as Sky News, Channel 10 and across radio and print. Rebecca previously served as Editor of Mortgage Professional Australia. She has a Master’s degree in Journalism as well as ASIC-recognised certifications in Tier 1 Generic Knowledge and Tier 2 General Advice Deposit Products, which comply with ASIC guidelines.
See full bio
Rebecca's expertise
Rebecca
has written
284
Finder guides across topics including:
A Section 173 Agreement is a contract between a local council and a landowner about what can be done with the land. If you own property in Victoria, learn about how Section 173 Agreements work here.
A sinking fund is an essential financial plan for any strata scheme, allowing the owners’ corporation to set aside funds for future capital expenditure.
A joint home loan could be your ticket to home ownership with a spouse, friend, relative or partner. Learn more about joint home loans and compare offers today.
A property's market value helps determine how much it could sell for while a bank valuation helps a lender determine its risks, and the two values can be very different.
Important information about this website
Finder is a comparison service. We do not compare every product or every provider in the market.
We make money through commercial arrangements with some of the providers on this site. Products marked 'Sponsored', 'Promoted', 'Featured' or 'Advertisement' appear as a result of a commercial arrangement.
Our editorial content, product reviews and any 'Top Pick' designations are prepared independently of these commercial arrangements.
The default order of products in our tables can be influenced by commercial arrangements. You can re-sort or filter using the controls above each table.
Some content on this site may be generated or supported by AI tools. You should verify details directly with the provider.
Finder is one of Australia's leading comparison websites. We are committed to our readers and stand by our editorial principles.
Our comparison service does not include every product or every provider in the market. Some product issuers offer their products under multiple brands or through associated companies. Where we can, we identify the underlying issuer so you can compare like with like, but you should always check with the provider directly to confirm which brand you are dealing with.
Finder is a comparison website and an intermediary. We are not a product issuer and we do not provide personal financial or credit advice. When you click a link to a product, or apply for a product through our site, you deal directly with the product issuer. We may receive a referral fee, commission or other payment from the issuer if you click through, apply or take out a product. We describe these arrangements in more detail under 'How we make money' below.
Product features, fees, terms and eligibility criteria are set by the product issuer and may change. We rely on information supplied by issuers when we present product details on our site. Before you apply for or take out any product, you should confirm the details directly with the issuer.
We earn revenue from Finder in four principal ways:
Referral fees and commissions. When you click a product link, complete an enquiry form or apply for a product through our site, we may receive a referral fee, commission or other payment from the product issuer. We may also receive payment based on the volume of leads or conversions we send to an issuer.
Sponsored placements. Products marked 'Sponsored', 'Promoted', 'Featured' or 'Advertisement' appear as a result of a commercial arrangement between Finder and the issuer. These labels always indicate a paid placement. We do not use them for editorial choices.
Display advertising. Banner advertising, newsletter advertising and similar display ads on our site are paid by advertisers.
Content sponsorship. Some articles, videos and social media posts are sponsored by an issuer and are clearly labelled as such.
Our editorial opinions, product reviews and any 'Top Pick' designations are prepared independently of these commercial arrangements. A 'Top Pick' is an editorial choice made by our writers and editors based on the criteria described on each comparison page. A 'Top Pick' is not a personal recommendation and does not mean the product is appropriate for your circumstances.
If you would like to know whether we have a commercial arrangement with a specific product issuer, please contact us.
When products are grouped in a table or list, the default order can be influenced by commercial arrangements we have with product issuers. In some categories, sponsored or featured products appear in the top positions of the table by default, and are always labelled as such.
Other factors that influence default order include price, fees and features, and (where relevant) our editorial view of the product.
You can re-sort every comparison table using the controls above the table. You can filter by product features that matter to you. The order you see after re-sorting or filtering is not influenced by commercial arrangements.
Some content on this site is generated or supported by artificial intelligence tools, including our AI-powered assistant FinderBot. AI-generated content may contain errors. Please verify important information directly with the product issuer before making a financial decision. For more information about FinderBot, see the FinderBot Terms of Use and FinderBot Privacy Collection Notice.
Please read our website terms of use and privacy policy for more information about our services and our approach to privacy.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
