Real estate agents are being accused of hiding behind the runaway market as underquoting allegations mar Melbourne’s market rebound.
Buyer’s advocate David Morrell claims househunters are being “left behind by misleading quotes” while properties sell hundreds of thousands of dollars above expectations.
Realestate.com.au figures reveal one in five Melbourne homes sold above their advertised prices in February.
But data from Victoria’s consumer watchdog does not reflect a rise in reported underquoting incidents, suggesting red-hot market conditions are more to blame.
Consumer Affairs Victoria received 212 complaints and inquiries relating to underquoting between December 1 and February 28 — down from 242 for the same period the previous year.
Underquoting is deliberately advertising properties below their expected selling price in an effort to increase interest from buyers.
Victorian agents are required to advertise a realistic price range that is not below their estimated selling price. They must also revise their quote within 24 hours if they receive a written offer higher than the advertised price.
Auction sales have been in full swing since Melbourne’s extended lockdown ended. Picture: Nicki Connolly
Full Circle Property Advocates director Robert German said agents needed to “clean up their act”, noting an increase in properties selling “nowhere close” to their listed prices.
He said he suspected agents were not formally presenting offers to vendors in an effort to avoid amending the price guides in line with the offer.
“It’s a total misrepresentation and manipulation, which is unfair to buyers,” Mr German said.
“Agents want to lure buyers from different (price) brackets to make sure they have six bidders and not two, to build momentum at the auction.”
He said underquoting often came in waves, with agents becoming more cautious when it was publicly discussed.
Low interest rates and government incentives have also helped encourage competitive pricing.
According to Consumer Affairs data, underquoting complaints and inquiries peaked at 2095 in 2017-18 after the introduction of harsher laws around the practice in Victoria.
They then almost halved to 1218 in 2018-19, before dropping again to 977 in the past financial year.
Underquoting allegations were made over a property that sold for a massive $1.8m above its reserve when it fetched a whopping $5.8m at auction last week.
Realestate.com.au director of economic research Cameron Kusher said analysis from agent-supplied listings data showed the biggest proportion of February sales were inside the agent’s price range.
“Approximately 15 per cent of sales sold for less than the advertised range, while less than 20 per cent sold for more than the advertised range, despite record-high buyer demand driving increased competition and price growth,” Mr Kusher said.