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Buyers on underquoting alert over fresh Victorian sale data
Victorian buyers have been put on alert over new findings showing property guides were largely not in line with final sale figures, with buyers warned not to “blindly” follow initial price indicators.
New data has shown that Victorian property guides have largely failed to match up with sale prices, particularly at auctions, throwing the state’s nine years of underquoting measures under the microscope.
According to new Homer data in a report from the Australian Property Institute, in the year to June, just 42.7 per cent of overall property sales in the state closed within the initial price guide.
The analysis of more than 100,000 property sales over the period found that, for auctions, 67.1 per cent of sales landed outside the advertised price range, while 52.1 per cent of private treaty sales fell outside.
The report found auction price guides were consistently set below eventual sale prices, while for private sales, properties were largely sold below their advertised guide.
Property Investment Professionals Association (PIPA) chair, Cate Bakos, told SPI that the auction data was "particularly concerning”, as she suspected underquoting was a main driver of the results.
The findings came despite Consumer Affairs Victoria (CAV) introducing its first major underquoting laws in 2017, and rolling out a dedicated taskforce to tackle the matter in September 2022.
According to the report, since the taskforce became permanent in 2024, the share of Victorian homes selling within their price guide has only increased from 39.6 per cent to 42.1 per cent.
Bakos said underquoting was often used to attract more buyers by making a property appear cheaper than it was likely to sell for.
“Buyers gravitate to properties that they perceive could be bargain buys. Agents who have previously underquoted have attracted more buyers to their auctions,” Bakos said.
“Buyers often realise that the property they love has strong competition, and many rationalise their own budget increases in the face of social proof.”
To avoid being a victim of underquoting, Bakos told buyers to never assume a reserve price represented the likely selling price, particularly in a seller’s market.
“Do not just blindly believe the comparable sales in the Property Price Statement are truly comparable. Do your own comparison,” she said.
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Additionally, she said that, given the new rules requiring the disclosure of final prices seven days after an auction, buyers should pay attention to sales results in their areas of interest.
“You have an opportunity to make use of this data and create your own comparable sales analysis,” she said.
According to Bakos, Victoria’s new laws, requiring the disclosure of reserve prices seven days before an auction, were unlikely to significantly help buyers.
“Consumer Affairs have been under-resourced and broadly ineffective, but the new changes are not helpful at all, and disadvantage buyers in my view,” she said.
“Vendors can change their mind anyway. Where does that leave buyers?”
A CAV spokesperson said that it was too soon to determine whether the underquoting laws were achieving their objective.
The body said that since the taskforce was established, it had conducted 3,330 sales campaigns, issued over 430 official written warnings, and dealt 260 infringement notices totalling more than $3 million.
“Taskforce investigations have also resulted in legal action by Consumer Affairs Victoria against more serious cases of underquoting,” it said.
“Penalties for underquoting have increased to a maximum of over $48,000 per breach for real estate agents, and sellers caught breaking the law.”
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