Once upon a time, a price guide did what its name suggests, providing potential buyers with a ballpark figure a home would likely sell for.
Over time, the distance between that guiding figure and the actual selling price has grown by quite a few ballparks. Agents underquoting to drum up interest and competition has been a bone of contention for buyers, with little in place to deter agents from using the tactic. At least, until now.
In response to a number of complaints by buyers—many who feel a sense of betrayal once they realise they never stood a chance at auction—Consumer Affairs Victoria filed criminal charges against Manningham Sales Pty Ltd this week. Trading as Barry Plant Manningham, the agency is accused of twice failing to provide a reasonable selling price on a townhouse in Melbourne’s north-east that sold at auction in July of 2023 for 40% more than the highest estimated selling price.
Originally listed for $900,000 to $950,000, the three-bedroom, two-bathroom townhouse at 3/27-29 Kenilworth Parade in Ivanhoe had its estimate raised to $1M to $1.1M after a few days following buyer feedback. It then went on to sell for $1,538,000 at auction.
Also included in the charges is the agency’s claim it could not find comparable properties that had sold in the same suburb. Under the Estate Agents Act, Barry Plant could face a fine of more than $38,000 for each breach. The agency has denied the underquoting allegations, instead attributing the 40% higher sale price to unexpected competitive bidding between bidders on the day.
Despite Barry Plant originally advertising the property as a “beautiful townhouse on breathtaking parkland” where the “perfectly positioned residence neighbours Nellie Ibbot Park to create a home filled with scenic, leafy views”, the agency is now singing a different tune via their official statement in response to the charges.
Instead, the property “has several negative aspects for some buyers, including being largely unrenovated, unfenced, in front of an off-leash dog park and directly facing public toilets located within metres of the front door.” So, not exactly “perfectly positioned” after all?
According to Consumer Affairs, a crackdown on underquoting is now underway in Melbourne, with taskforce officers attending auctions this weekend. Established in 2022, the taskforce has monitored more than 700 auctions and issued more than $1.1 million in fines to agencies caught breaching rules. Still, most dodge serious repercussions. From 1 July 2021 to 31 July 2022, Consumer Affairs Victoria (CAV) recorded 1,466 underquoting inquiries and complaints, yet just 48 infringements and 171 official warnings were handed out to offenders.
In May of 2021, NSW Fair Trading established a dedicated underquoting team to address concerns, but with each case copping a measly $2,200 fine, it’s hardly much of a deterrent. And while the bulk of underquoting complaints come from disgruntled potential buyers, a quarter of submissions are from fellow real estate agents dobbing in their rivals.
But the practice continues to run rife in Sydney’s market. In June last year, an Epping home with a price guide of $1.4M ended up selling for $2.11M, a whopping 51% over the price guide. In September, a Bellevue Hill home was guided at $3.5M, despite the median house value in the exclusive suburb being $9.7M. It went on to sell for $7.8M pre-auction. Quite a few ballparks’ distance from the 10% ‘wiggle room’ real estate agents are allowed when setting the action price guide, no?
