'You're not imagining it': Inside our 18-month investigation into 'misleading' property price guides
August 10, 2025 • 25 mins
If you've bought a house lately - or tried to - then you'd know the price advertised for properties in the big cities are, more often than not, way below what they sell for.
But we've never really had a handle on how widespread underquoting is. Until now.
In a new investigation that analysed tens of thousands of property sales in Sydney and Melbourne, our mastheads have uncovered an extraodinary level of misinformation and deception faced by property buyers.
In today's episode, reporters Aisha Dow and Lucy Macken take us through the results of this investigation and how dodgy price estimates are an open secret in Australia's property market.
To read all the stories in the 'Bidding Blind' series, go to: https://www.theage.com.au/national/bidding-blind-melbourne-20250724-p5mhkc.html
Subscribe to The Age & SMH: https://subscribe.smh.com.au/
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
S1 (00:05):
Good morning, ladies and gentlemen. Welcome to the auction of
number eight Ottawa Avenue in the heart of Blackburn. For
those of you who don't know me.
S2 (00:13):
Every weekend at auctions across the country, prospective bidders flood
the streets to chase the Australian dream of home ownership.
But as buyer's agent Julie de Bont Barker explained one
Saturday morning, the prices fetched at an auction often go
far beyond what's advertised.
S3 (00:31):
The listing shows that it's at 1.2 to 1.25. My
crystal ball prediction is that it's going to be more
around the 1.4. There's a lot of interest for this one,
so let's see what happens.
S2 (00:45):
In an experience that is in no way unique in
our property market. The bidding at this auction in Melbourne
reached beyond the advertised range.
S1 (00:55):
Third and final call at 1295. Gentlemen's offer here. Now
staying next to the tree at 1295, 1.31.3. Thank you. 1.3.
Back in front at 1.3. On my right.
S2 (01:08):
And then, as the price crawled past the $1.3 million mark,
the auction screeched to a halt.
S1 (01:17):
Well, ladies and gentlemen, at $1,325,000, we're just going to
hit the pause button and seek further instructions from our vendors.
I'll be back with you in just one minute. Thank you.
S2 (01:28):
Though bidding had surpassed the top end of the advertised
range given to prospective buyers, the offers hadn't yet hit
the amount that the vendors wanted to sell the property.
S4 (01:41):
The question is, is it going to sell?
S3 (01:44):
Yeah. Yeah. Well, it's it's not on the market. So
it wasn't in the range.
S4 (01:51):
Yeah.
S3 (01:52):
So now they're in there talking to the vendors, saying,
you know, that 1.4 I don't know if we're going
to get it, but it's not quoted with the reserve
in the range for sure, and we'll see if it's
within 10%.
S2 (02:07):
And as predicted, when the auctioneer returned, it was clear
they hadn't reached the reserve.
S1 (02:14):
Third and final call now. One. 325. Granny, any more
bids here? One. Three. Two. Five. Well, ladies and gentlemen,
thank you for your participation. We're officially passing the property
here at $1,325,000. Thank you for participating at one of
our auctions here today. And have a great weekend, ladies
and gentlemen. Thank you.
S2 (02:41):
Now, what happened at this auction is not illegal, but
it speaks to a culture that is entrenched in Australia's
property market, one in which homes will sell for above,
often well above the advertised price. Or like in this case,
the advertised price doesn't reflect what the vendors actually want
(03:02):
for the property. But does it really have to be
this way? From the newsrooms of the Sydney Morning Herald
and The Age, this is the morning edition. I'm Matt Dunkley,
deputy editor of The Age. Filling in for Samantha Salinger. Morris. Today,
reporters Aisha Dow and Lucy Macken take you inside an
(03:25):
investigation into the extraordinary level of misinformation and deception faced
by buyers and how rules to stamp out dodgy price
estimates have ultimately failed. Ayesha and Lucy, welcome to the
Morning Edition.
S5 (03:43):
Hi, Matt. Hi.
S2 (03:45):
Now, this is a remarkable story. I've been rereading it
in recent days, and it's blood boiling. Good. And we'll
get through all of that. But to start with, can
you tell us how you pulled this project together? Because
this is one of the most ambitious data investigations we've
ever done. And as far as auctions go, the public
have never seen figures like this.
S5 (04:06):
Yes, this investigation has been more than a year in
the making and involved countless hours of work from reporters
in Melbourne and Sydney, in particular. One of our data journalists,
Nigel Gladstone. What we wanted to do is essentially take
the advertised price of properties given as they're put up
to auction, and compare that with what they actually sell for.
(04:29):
So essentially, the project was aimed at testing how accurate
these price guides are that are given to buyers. So
it sounds simple, but it wasn't. We couldn't get this
information from the government or anyone else. So we set
about working about how to collect this data ourselves. After
an enormous amount of work by Nigel collating and unpicking
(04:52):
the data, the result in the end was a database
of 36,000 property sales in Melbourne and Sydney, and what
we discovered was quite an extraordinary level of misinformation faced
by buyers.
S2 (05:07):
Yes, it really is remarkable. And we should shout out
to Nigel, who has put in an enormous amount of
work building a scraping bot and validating thousands and thousands
and thousands of lines of data. And before we get
stuck into all of those numbers, I think we should
also just set the frame for our listeners here about
what the rules are around auctions, around selling a home,
(05:27):
because it sets the frame for what we say is
wrong and how it might be fixed. And they're also
a little different in the different states. So we might
go to you, Lucy, to give us a bit of
a run through.
S6 (05:38):
Look, quite simply, the rules are really complicated, actually. In Sydney,
they're governed by the Property and Stock Agents Act and
Australian Consumer Law. Basically, agents have to provide an estimated
selling price when they enter an agency agreement. And that
can either be a single figure or a 10% range.
Now that guide can change. Obviously if there's a surprise
(05:58):
termite infestation discovered by Pest and Building Inspection that could
lower the guide or a higher offer. Made in offer
in writing means that the guide might raise to meet it.
That said, agents are not even required to disclose a
selling price to potential buyers. Then there's the whole matter
of the reserve price that is set by the seller,
not the agent. And it's at this point that things
(06:19):
can get a little tricky. The agent and buyers, for example,
might be operating at one level, and meanwhile the seller
has a figure in mind that is in a wholly
different market. That's how you get the sort of situations
where buyers turn up to compete at auction at one level, say,
1 million to 1.1. And despite a good bit of bidding,
the property is passed in despite reaching heights. Well above
that because the vendor reserve is at, say, 1.3. To
(06:43):
complicate things even further in New South Wales, the agent's
guide doesn't have to reflect the price hopes of the seller.
But according to Australian Consumer Law, if the seller has
firm ideas on price and makes that known to the agent,
insisting that they won't accept anything less than a certain figure.
Then the agent must reflect the seller's price hopes in
(07:03):
the marketing. I spoke to the department in Sydney about
that this morning, and they made clear to me that
agents don't have to take on the listing if the
seller's price hopes are considered unreasonable. I've got to say
the last point will be unknown to many agents in Sydney.
So if they're confused by the laws, is it any
wonder that buyers en masse are as well? Things are
(07:25):
largely the same in Victoria. The difference is that agents
are legally required to give that estimated selling price to buyers.
And like in New South Wales, the reserve doesn't necessarily
have to be the same as the guide because vendors
can just hold off until the day of the auction
to set one.
S2 (07:40):
Well, it does sound complicated, and at face value it
sounds like there are a lot of rules, but as
we'll see, those rules perhaps don't mean all that much
when you have people gathered on the side of a
road or, you know, clustered in a lounge room with
all the hopes in the world and standing in front
of an auctioneer. So what happens? What actually plays out
on auction day.
S5 (08:00):
Yeah. So it probably won't surprise many of our listeners
to hear that it's common for properties to sell way
over the price guide given to buyers. So in Melbourne,
we discovered it's actually more likely for a home to
sell above the top estimate. So above the top estimate
given to buyers then within the range. And in fact
(08:21):
more than half of the homes we looked at sold
above the top estimate.
S2 (08:26):
I think that's if I can just interrupt you. That's
a really key point, isn't it? So if they're given
a range of two numbers, half the time the property
was above the top number that people were expecting rocking
up on the day. Yeah. All right. And what's the
story in Sydney?
S5 (08:39):
Yeah. The situation is a tiny bit different because agents
there typically just give a single figure guide rather than
a range. But we were generous and we gave them
about 10% wriggle room in Sydney. And we found that
about half of homes were still selling above that 10% guide.
(08:59):
So in dollar terms, the average buyer in Sydney has
to budget a whopping $160,000 more than the advertised price.
And I don't know about you guys, but I don't
have another. I don't have $160,000 just sitting there to
play with. Um, so I guess it means if you're
in the market in Sydney, it really will make sense
(09:20):
to look for homes that are listed for, you know,
quite well below what you can actually afford.
S2 (09:29):
And I suppose there's a few reasons why properties might
go well. We have seen that. We've heard of runaway
auctions where the auctioneer is getting excited and they're waving
the gavel around and things are really smoking, and everyone
hugs in the champagne. Right. So couldn't this just be
a symptom of there's just a lot of demand for
a property or that there's heat in an auction? What
do you think, Lizzie?
S6 (09:50):
Yeah. Look, it absolutely it could. And certainly that's what
you'd expect to see in a booming market and in
a one off instance of buyer demand outstripping all reasonable
dollar value. But what our research found is that it's
happening on an industrial scale, and it's happening at a
time when median property values are barely, if at all,
keeping up with inflation. More specifically, values in Melbourne fell
(10:11):
slightly in the 18 months that we've been diving into
the data, and in Sydney, median values rose a modest 3.4%
in the year to March. And in fact, a few
leading agents we spoke to in Sydney who themselves were
complaining about the rife incidence of underquoting in their markets,
said that underquoting always tends to raise its head when
the market isn't doing well. Basically, they were suggesting that
(10:33):
in the absence of strong buyer demand, agents were trying
to fabricate that demand by dropping the guide to attract
more interest.
S2 (10:39):
That's a really good point, because that goes to why
would it be in an agent's interest to under, quote,
what's in it for them to mislead the marketplace?
S5 (10:47):
Yeah, absolutely. And when I started this investigation, I was
kind of a bit confused by that. Why? Why do
agents under, quote like, I'm a bit of a window shopper.
And I know when it comes to property, um, and
I know when I'm looking for properties I tend to
gravitate towards, you know, the maximum I can afford. So
if I go to an auction and it goes above,
(11:09):
you know, it doesn't matter how much I love the property,
I'm not going to get it. But what I learned
is people like me might actually be sort of like
the kindling when it comes to an auction fire. So
we might go to an auction and put in those
early bids before the auction really heats up and the
real buyers come forward. But if those lower budget buyers
(11:30):
like me aren't there, you might see a scenario where
you have a buyer or two, a genuine buyer or two,
just kind of standing around looking at each other. And
the auction doesn't heat up. So even though it turns
out that we can't afford a property and we've wasted
our time, essentially we serve a purpose by heating up
the competition.
S2 (11:49):
Is there something to Lucy in the idea that agents
just want to be able to show vendors a crowd?
You look at all the buyers that we've brought in here.
S6 (11:57):
Absolutely. And you know, when you get, you know, 3
or 4 registered bidders, there is also a sense that
they compete to each other, that they see other people
competing for a property, and that helps them to get
into the move of it. And they're more keen on bidding, probably.
It encourages them to raise their bids. But from an
agent's point of view, auctions are the easiest way and
the most timely way to sell a property. There's a
(12:17):
set time frame, and as they say, there's nothing better
to to sort of let your seller know what the
value is of your house than a apparently transparent auction
process to sort of showcase it. So, you know, it's
a win win situation for the agent, makes their job
a lot easier. And I must say, I have rocked
up to so many countless auctions over the decades, and
(12:39):
I love the theater. I mean, there's nothing more outrageous
than watching what seems to me ridiculous amounts of money
being thrown at, you know, shelter.
S2 (13:01):
That's the big picture. I think we've set that up.
Obviously that's made up of a whole lot of individual
sales and examples, and I think that when readers see
the graphics in our stories and you see all the
dots above the line where the top of the sale is,
everyone will understand what you describe as industrial scale scheme
going on here. But let's zoom in. I'd love to
(13:21):
hear about a couple of the worst examples you've come
across in your travels. Ashley, why don't you go first?
S5 (13:27):
Yeah, it's an interesting question because the worst cases aren't
necessarily going to be the houses that sell for $1
million above the guide, although we did actually see quite
a few of those cases. So, for example, if you're
a first home buyer, you're working with a budget of $600,000.
You want to buy a unit. You're not going to
have that extra $100,000 to spare. If a property is
(13:51):
under quoted. And in the meantime, you've spent $1,000 from
money that you should be using for your deposit, paying
for a building inspection, getting the contract review, and then
you rock up to the auction and you know you're
out of the running in the first bid. People also
tend to be rightly annoyed when the guy they're given
is different to the vendor's reserve. So we we saw
(14:14):
a case recently in Melbourne where the bidders started almost
revolting and heckling the auctioneer.
S7 (14:20):
We're on the market. Yeah, we're on the market there.
I haven't said that. We're on the market. You've got
to keep asking just in case you forget. No, no.
Fair enough. I won't forget. That's my job. Yep. I'll
let you know.
S5 (14:31):
Because the guide for the house was 850 to 890.
So that's in thousands, of course. But the auction bidding
reached almost $100,000 above the top end of the guide.
S7 (14:44):
First call at 986,000.
S8 (14:48):
Don't worry about it.
S7 (14:50):
Second call at $986,000. Third final call. We at this stage.
Need to know. I'm going to break. Take a moment.
Get some instructions from our owner.
S5 (15:05):
And the property still wasn't on the market. So. Yeah,
that's just a scenario that that really ticks people off.
S2 (15:12):
What about you, Lucy?
S6 (15:14):
Yeah. My favorite, for want of a better word, obviously,
is one in Alexandria and in a suburb of Sydney
earlier this year, this was a three bedroom, renovated house
on one of those prized tree lined cul de sacs
that locals always love. Um, you know, you had a
street full of viewers. There were 14 registered bidders, a
guide of 2.3. Everyone turned up to watch. Even a
(15:35):
Herald photographer. The reserve ended up being 2.7. That was
already way above the 10% buffer. But then two bidders
did what they, you know, every seller wishes for, and
they pushed the price up to 3.17 million.
S1 (15:49):
At 3,000,001 70,000 twice. Third final highest bidder buys it
at 3,170,000. Final opportunity before we sell it. Bidding. Sold. Congratulations.
S6 (16:05):
So, almost 1,000,040% higher than the guide. Great news for
the seller. Sure, because it set a street record and
was great windfall for them. But, you know, not so
great for all the bidders who might have spent good
money researching the feasibility of the purchase, only to be
outpriced long before it even hit the reserve.
S2 (16:22):
Of course, there are reasons that that can happen, right?
And this is littered through your reporting. Agents will talk
about in a particular case. There were particular examples. It
was a surprise the vendor had a higher reserve that
they didn't know about. So there's a whole bunch of
reasons that things can happen that don't necessarily satisfy all
of the criteria for meeting the actual offense of underquoting.
(16:45):
But that said, there were some agencies that tend to
keep cropping up in the data, and I know you've
crunched that. I might stick with you, Lisa. Were there
some particular agencies that seem to have the higher ratios
on the data we were looking at.
S6 (17:00):
There were more sort of offices that are part of
the major franchises, if you know what I mean. And
some of those major real estate franchises, you know, we
went to the head office to ask for a sort
of please explain. And they were all asked for comment
about this. And some of the specific sales that we
bring attention to, they all denied Underquoting was an issue
in their network, but they did so in various ways.
(17:22):
To reiterate that auctions are, by their nature, designed to
create competition. And that is true. Likewise, the prices at
auction only go up, right? We're not bidding downwards. But
they also said outlier sales are a result of unexpectedly
high buyer interest and other unpredictable circumstances in a volatile marketplace.
And that's true. But they also acknowledge that they were
(17:42):
also introducing more compliance and training measures. And they too,
called for more transparency in real estate pricing for the
sake of buyers and sellers. One agent who was responding
to us by way of legal correspondence, given claims against
his agency, actually outlined in his defence that his estimated
selling price is often based on other unquoted properties currently
for sale in his market, rather than what they had
(18:05):
actually already sold for. He said if an agent locally
lists a house with a lower guide to attract attention,
he's forced to factor that into his pricing to stay competitive.
S2 (18:14):
So that Underquoting is driving the underquoting downwards.
S6 (18:17):
Exactly.
S2 (18:18):
Goodness me. It is quite remarkable. What about in Melbourne, Asia?
S5 (18:22):
Yeah, as we mentioned earlier, on average half of the
homes in the city are selling above that top end
of the guide. But there were particular agents and as
Lucy said, particular offices generally that we found were doing
this more commonly. So instead of selling over 50% of
their homes above the guide, they were selling more than 80%
(18:43):
of their homes above the guide, or more than 90%
of their homes above the guide.
S2 (18:48):
So look, having seen that and seen all the numbers
that you've seen, have you come to some sort of
idea about how this culture, this absolute habitual practice of underquoting,
has developed?
S6 (19:01):
Yes, certainly. Our research seems to indicate that there's a
level of contagion in terms of underquoting in areas. So
we see these pockets in Sydney where it's rife, and
those are the areas where agents are having to undercoat
to be competitive. And certainly parts of Sydney's western suburbs
and inner west stand out in this respect. But equally, Matt,
I've got to say, you also get areas like Mosman
on the lower North Shore where it's almost non-existent. Agents
(19:24):
there who spoke said that over the years agents have
come in and started underquoting. But because the local market
is heavily reliant on returned business, they only get away
with it for about six months or a year. After that,
their business model drives up and because locals talk and
won't stand for it, you know, they close up and
move on, you know? Which sounds so Mosman. Really.
S2 (19:44):
All right, well, look, there are rules. There are supposed
to be fines. We have a task force down here.
But in reality, is anyone policing what's going on here?
To protect both vendors, to be honest. And the buyers.
S5 (19:58):
Yeah, there's some policing going on. Um, though, you know,
as you sort of indicated there, there are some real
question marks about whether the regulators are doing enough given
the scale of the problem we identified. So in New
South Wales, it's fair trading who over the past two
years have issued 137 fines for underquoting breaches. Um, but
(20:20):
those fines just average about $2,200 each. And you have
to remember that in Sydney, um, an average commission for
an agent is going to be something like 20 or $40,000.
So it's really just a drop in the ocean. Uh,
in Victoria, the regulator is consumer affairs. Um, and in
(20:40):
the past financial year, they have doled out 48 fines,
averaging about $12,000. But one thing that stood out to
me is that they attended just 92 auctions last year,
which is less than two a week. so it's not
unusual for more than a thousand auctions to take place
each Saturday in Melbourne. You know, so when the government
(21:02):
says they're cracking down on Underquoting, you really have to
question whether that's kind of proven in in that data.
Both regulators have taken a handful of cases to court. Um,
but honestly, we heard from those in in the industry
in both Victoria and New South Wales, that fair trading
and consumer affairs were considered to be toothless tigers. And
(21:26):
they they really weren't feared by the agents.
S2 (21:30):
Okay. I think one of the telling things that comes
through is that whilst agents seem to be willing to
defend particular auctions or particular properties, no one is defending
the system at all. Everyone says, oh no, the system
is terrible, that property. Look, there were reasons, but the
system is bad. It needs to be fixed and there
are some ideas that are floating around on that. What
(21:52):
do you think needs to happen? How would we improve this?
Where do we start? It is a terrible mess.
S6 (21:58):
Yeah it is. I was having this chat actually a
day or so ago with a fairly high profile selling
agent in Sydney and a buyer's agent, and as the
three of us were discussing this topic within about five
minutes of sort of debating it, um, they both agreed
there needs to be a major overhaul of the system
in Sydney. A decade ago, there were new rules rolled
out and a lot was made of it. At the time,
I was writing about property at the time, but effectively
(22:20):
all it changed was the wording that agents brought to
their guides. It clearly did nothing about their actual pricing
and to be fair, fair trading have been busy in
recent months. They've told me so. But agents have also
been ringing me regularly to report a fair trading spot inspection. Um,
usually quite welcome. One. One guy told me he opened
the door to them and asked where they'd been for
the last few years. And last year, Fair Trading convened
(22:42):
a couple of roundtable discussions with industry leaders to discuss options.
But nothing has come of that yet. We'll have to
watch this space.
S5 (22:49):
Yeah, and it's a similar story in Melbourne. I think
everyone in the industry agrees that again, change is needed
despite the new laws that came in also a decade ago. Um,
and even if the government kind of wants to ignore
the issue. So in 2022, the Victorian government, they did
commission a report into the effectiveness of underquoting laws. It
(23:11):
costs us as taxpayers about $400,000. But then they buried it.
We've tried to get it through FOI and we haven't
been successful. And as recently as the last couple of weeks, um,
we went to the government and they, you know, wouldn't
explain why they wouldn't release it. I spoke to the
president of the Real Estate Institute of Victoria, Jacob Kane, recently,
(23:35):
and he's among those calling for the Victorian government to
release that report. He said the current rules and regulations
in place in Victoria are the best version we've ever had.
But he still thinks that there's appetite for change. He
said as long as we continue to have questions asked
about price quoting and implications and reports that there's unethical
(23:57):
or illegal practice, then we haven't got where we need
to be.
S2 (24:01):
That's right. Because we've had crackdowns, we've had reports, we've
had reviews, we've had all sorts of buzzwords that governments
love to use. I think that everybody's ready for actually
some action on this, I think. Thank you to both
of you. And we should shout out to Nigel again
for the ridiculous amount of work he did, pulling together
this data for everyone and hopefully have you back celebrating
a win at some point.
S6 (24:22):
Thanks, Matt.
S5 (24:23):
Thanks, Matt.
S2 (24:28):
After we recorded this episode, the peak body for real
estate agents in Victoria publicly supported moves to tackle Underquoting.
In response to our stories published over the weekend, Real
Estate Institute of Victoria interim CEO Jacob Cain told The
Age the organisation would back the publication of reserve prices
(24:49):
and the provision of vendor funded condition reports to buyers
for the latest updates, including any government response. Head to
our websites or check the show notes. For. Today's episode
of The Morning Edition was produced by Kai Wong. Our
(25:10):
executive producer is Tammy Mills. Tom McKendrick is our head
of audio. To listen to our episodes as soon as
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most important news in your inbox every morning. Links are
in the show. Notes. I'm Matt Dunkley. This is Morning edition.
Thanks for listening.
Good morning, ladies and gentlemen. Welcome to the auction of
number eight Ottawa Avenue in the heart of Blackburn. For
those of you who don't know me.
S2 (00:13):
Every weekend at auctions across the country, prospective bidders flood
the streets to chase the Australian dream of home ownership.
But as buyer's agent Julie de Bont Barker explained one
Saturday morning, the prices fetched at an auction often go
far beyond what's advertised.
S3 (00:31):
The listing shows that it's at 1.2 to 1.25. My
crystal ball prediction is that it's going to be more
around the 1.4. There's a lot of interest for this one,
so let's see what happens.
S2 (00:45):
In an experience that is in no way unique in
our property market. The bidding at this auction in Melbourne
reached beyond the advertised range.
S1 (00:55):
Third and final call at 1295. Gentlemen's offer here. Now
staying next to the tree at 1295, 1.31.3. Thank you. 1.3.
Back in front at 1.3. On my right.
S2 (01:08):
And then, as the price crawled past the $1.3 million mark,
the auction screeched to a halt.
S1 (01:17):
Well, ladies and gentlemen, at $1,325,000, we're just going to
hit the pause button and seek further instructions from our vendors.
I'll be back with you in just one minute. Thank you.
S2 (01:28):
Though bidding had surpassed the top end of the advertised
range given to prospective buyers, the offers hadn't yet hit
the amount that the vendors wanted to sell the property.
S4 (01:41):
The question is, is it going to sell?
S3 (01:44):
Yeah. Yeah. Well, it's it's not on the market. So
it wasn't in the range.
S4 (01:51):
Yeah.
S3 (01:52):
So now they're in there talking to the vendors, saying,
you know, that 1.4 I don't know if we're going
to get it, but it's not quoted with the reserve
in the range for sure, and we'll see if it's
within 10%.
S2 (02:07):
And as predicted, when the auctioneer returned, it was clear
they hadn't reached the reserve.
S1 (02:14):
Third and final call now. One. 325. Granny, any more
bids here? One. Three. Two. Five. Well, ladies and gentlemen,
thank you for your participation. We're officially passing the property
here at $1,325,000. Thank you for participating at one of
our auctions here today. And have a great weekend, ladies
and gentlemen. Thank you.
S2 (02:41):
Now, what happened at this auction is not illegal, but
it speaks to a culture that is entrenched in Australia's
property market, one in which homes will sell for above,
often well above the advertised price. Or like in this case,
the advertised price doesn't reflect what the vendors actually want
(03:02):
for the property. But does it really have to be
this way? From the newsrooms of the Sydney Morning Herald
and The Age, this is the morning edition. I'm Matt Dunkley,
deputy editor of The Age. Filling in for Samantha Salinger. Morris. Today,
reporters Aisha Dow and Lucy Macken take you inside an
(03:25):
investigation into the extraordinary level of misinformation and deception faced
by buyers and how rules to stamp out dodgy price
estimates have ultimately failed. Ayesha and Lucy, welcome to the
Morning Edition.
S5 (03:43):
Hi, Matt. Hi.
S2 (03:45):
Now, this is a remarkable story. I've been rereading it
in recent days, and it's blood boiling. Good. And we'll
get through all of that. But to start with, can
you tell us how you pulled this project together? Because
this is one of the most ambitious data investigations we've
ever done. And as far as auctions go, the public
have never seen figures like this.
S5 (04:06):
Yes, this investigation has been more than a year in
the making and involved countless hours of work from reporters
in Melbourne and Sydney, in particular. One of our data journalists,
Nigel Gladstone. What we wanted to do is essentially take
the advertised price of properties given as they're put up
to auction, and compare that with what they actually sell for.
(04:29):
So essentially, the project was aimed at testing how accurate
these price guides are that are given to buyers. So
it sounds simple, but it wasn't. We couldn't get this
information from the government or anyone else. So we set
about working about how to collect this data ourselves. After
an enormous amount of work by Nigel collating and unpicking
(04:52):
the data, the result in the end was a database
of 36,000 property sales in Melbourne and Sydney, and what
we discovered was quite an extraordinary level of misinformation faced
by buyers.
S2 (05:07):
Yes, it really is remarkable. And we should shout out
to Nigel, who has put in an enormous amount of
work building a scraping bot and validating thousands and thousands
and thousands of lines of data. And before we get
stuck into all of those numbers, I think we should
also just set the frame for our listeners here about
what the rules are around auctions, around selling a home,
(05:27):
because it sets the frame for what we say is
wrong and how it might be fixed. And they're also
a little different in the different states. So we might
go to you, Lucy, to give us a bit of
a run through.
S6 (05:38):
Look, quite simply, the rules are really complicated, actually. In Sydney,
they're governed by the Property and Stock Agents Act and
Australian Consumer Law. Basically, agents have to provide an estimated
selling price when they enter an agency agreement. And that
can either be a single figure or a 10% range.
Now that guide can change. Obviously if there's a surprise
(05:58):
termite infestation discovered by Pest and Building Inspection that could
lower the guide or a higher offer. Made in offer
in writing means that the guide might raise to meet it.
That said, agents are not even required to disclose a
selling price to potential buyers. Then there's the whole matter
of the reserve price that is set by the seller,
not the agent. And it's at this point that things
(06:19):
can get a little tricky. The agent and buyers, for example,
might be operating at one level, and meanwhile the seller
has a figure in mind that is in a wholly
different market. That's how you get the sort of situations
where buyers turn up to compete at auction at one level, say,
1 million to 1.1. And despite a good bit of bidding,
the property is passed in despite reaching heights. Well above
that because the vendor reserve is at, say, 1.3. To
(06:43):
complicate things even further in New South Wales, the agent's
guide doesn't have to reflect the price hopes of the seller.
But according to Australian Consumer Law, if the seller has
firm ideas on price and makes that known to the agent,
insisting that they won't accept anything less than a certain figure.
Then the agent must reflect the seller's price hopes in
(07:03):
the marketing. I spoke to the department in Sydney about
that this morning, and they made clear to me that
agents don't have to take on the listing if the
seller's price hopes are considered unreasonable. I've got to say
the last point will be unknown to many agents in Sydney.
So if they're confused by the laws, is it any
wonder that buyers en masse are as well? Things are
(07:25):
largely the same in Victoria. The difference is that agents
are legally required to give that estimated selling price to buyers.
And like in New South Wales, the reserve doesn't necessarily
have to be the same as the guide because vendors
can just hold off until the day of the auction
to set one.
S2 (07:40):
Well, it does sound complicated, and at face value it
sounds like there are a lot of rules, but as
we'll see, those rules perhaps don't mean all that much
when you have people gathered on the side of a
road or, you know, clustered in a lounge room with
all the hopes in the world and standing in front
of an auctioneer. So what happens? What actually plays out
on auction day.
S5 (08:00):
Yeah. So it probably won't surprise many of our listeners
to hear that it's common for properties to sell way
over the price guide given to buyers. So in Melbourne,
we discovered it's actually more likely for a home to
sell above the top estimate. So above the top estimate
given to buyers then within the range. And in fact
(08:21):
more than half of the homes we looked at sold
above the top estimate.
S2 (08:26):
I think that's if I can just interrupt you. That's
a really key point, isn't it? So if they're given
a range of two numbers, half the time the property
was above the top number that people were expecting rocking
up on the day. Yeah. All right. And what's the
story in Sydney?
S5 (08:39):
Yeah. The situation is a tiny bit different because agents
there typically just give a single figure guide rather than
a range. But we were generous and we gave them
about 10% wriggle room in Sydney. And we found that
about half of homes were still selling above that 10% guide.
(08:59):
So in dollar terms, the average buyer in Sydney has
to budget a whopping $160,000 more than the advertised price.
And I don't know about you guys, but I don't
have another. I don't have $160,000 just sitting there to
play with. Um, so I guess it means if you're
in the market in Sydney, it really will make sense
(09:20):
to look for homes that are listed for, you know,
quite well below what you can actually afford.
S2 (09:29):
And I suppose there's a few reasons why properties might
go well. We have seen that. We've heard of runaway
auctions where the auctioneer is getting excited and they're waving
the gavel around and things are really smoking, and everyone
hugs in the champagne. Right. So couldn't this just be
a symptom of there's just a lot of demand for
a property or that there's heat in an auction? What
do you think, Lizzie?
S6 (09:50):
Yeah. Look, it absolutely it could. And certainly that's what
you'd expect to see in a booming market and in
a one off instance of buyer demand outstripping all reasonable
dollar value. But what our research found is that it's
happening on an industrial scale, and it's happening at a
time when median property values are barely, if at all,
keeping up with inflation. More specifically, values in Melbourne fell
(10:11):
slightly in the 18 months that we've been diving into
the data, and in Sydney, median values rose a modest 3.4%
in the year to March. And in fact, a few
leading agents we spoke to in Sydney who themselves were
complaining about the rife incidence of underquoting in their markets,
said that underquoting always tends to raise its head when
the market isn't doing well. Basically, they were suggesting that
(10:33):
in the absence of strong buyer demand, agents were trying
to fabricate that demand by dropping the guide to attract
more interest.
S2 (10:39):
That's a really good point, because that goes to why
would it be in an agent's interest to under, quote,
what's in it for them to mislead the marketplace?
S5 (10:47):
Yeah, absolutely. And when I started this investigation, I was
kind of a bit confused by that. Why? Why do
agents under, quote like, I'm a bit of a window shopper.
And I know when it comes to property, um, and
I know when I'm looking for properties I tend to
gravitate towards, you know, the maximum I can afford. So
if I go to an auction and it goes above,
(11:09):
you know, it doesn't matter how much I love the property,
I'm not going to get it. But what I learned
is people like me might actually be sort of like
the kindling when it comes to an auction fire. So
we might go to an auction and put in those
early bids before the auction really heats up and the
real buyers come forward. But if those lower budget buyers
(11:30):
like me aren't there, you might see a scenario where
you have a buyer or two, a genuine buyer or two,
just kind of standing around looking at each other. And
the auction doesn't heat up. So even though it turns
out that we can't afford a property and we've wasted
our time, essentially we serve a purpose by heating up
the competition.
S2 (11:49):
Is there something to Lucy in the idea that agents
just want to be able to show vendors a crowd?
You look at all the buyers that we've brought in here.
S6 (11:57):
Absolutely. And you know, when you get, you know, 3
or 4 registered bidders, there is also a sense that
they compete to each other, that they see other people
competing for a property, and that helps them to get
into the move of it. And they're more keen on bidding, probably.
It encourages them to raise their bids. But from an
agent's point of view, auctions are the easiest way and
the most timely way to sell a property. There's a
(12:17):
set time frame, and as they say, there's nothing better
to to sort of let your seller know what the
value is of your house than a apparently transparent auction
process to sort of showcase it. So, you know, it's
a win win situation for the agent, makes their job
a lot easier. And I must say, I have rocked
up to so many countless auctions over the decades, and
(12:39):
I love the theater. I mean, there's nothing more outrageous
than watching what seems to me ridiculous amounts of money
being thrown at, you know, shelter.
S2 (13:01):
That's the big picture. I think we've set that up.
Obviously that's made up of a whole lot of individual
sales and examples, and I think that when readers see
the graphics in our stories and you see all the
dots above the line where the top of the sale is,
everyone will understand what you describe as industrial scale scheme
going on here. But let's zoom in. I'd love to
(13:21):
hear about a couple of the worst examples you've come
across in your travels. Ashley, why don't you go first?
S5 (13:27):
Yeah, it's an interesting question because the worst cases aren't
necessarily going to be the houses that sell for $1
million above the guide, although we did actually see quite
a few of those cases. So, for example, if you're
a first home buyer, you're working with a budget of $600,000.
You want to buy a unit. You're not going to
have that extra $100,000 to spare. If a property is
(13:51):
under quoted. And in the meantime, you've spent $1,000 from
money that you should be using for your deposit, paying
for a building inspection, getting the contract review, and then
you rock up to the auction and you know you're
out of the running in the first bid. People also
tend to be rightly annoyed when the guy they're given
is different to the vendor's reserve. So we we saw
(14:14):
a case recently in Melbourne where the bidders started almost
revolting and heckling the auctioneer.
S7 (14:20):
We're on the market. Yeah, we're on the market there.
I haven't said that. We're on the market. You've got
to keep asking just in case you forget. No, no.
Fair enough. I won't forget. That's my job. Yep. I'll
let you know.
S5 (14:31):
Because the guide for the house was 850 to 890.
So that's in thousands, of course. But the auction bidding
reached almost $100,000 above the top end of the guide.
S7 (14:44):
First call at 986,000.
S8 (14:48):
Don't worry about it.
S7 (14:50):
Second call at $986,000. Third final call. We at this stage.
Need to know. I'm going to break. Take a moment.
Get some instructions from our owner.
S5 (15:05):
And the property still wasn't on the market. So. Yeah,
that's just a scenario that that really ticks people off.
S2 (15:12):
What about you, Lucy?
S6 (15:14):
Yeah. My favorite, for want of a better word, obviously,
is one in Alexandria and in a suburb of Sydney
earlier this year, this was a three bedroom, renovated house
on one of those prized tree lined cul de sacs
that locals always love. Um, you know, you had a
street full of viewers. There were 14 registered bidders, a
guide of 2.3. Everyone turned up to watch. Even a
(15:35):
Herald photographer. The reserve ended up being 2.7. That was
already way above the 10% buffer. But then two bidders
did what they, you know, every seller wishes for, and
they pushed the price up to 3.17 million.
S1 (15:49):
At 3,000,001 70,000 twice. Third final highest bidder buys it
at 3,170,000. Final opportunity before we sell it. Bidding. Sold. Congratulations.
S6 (16:05):
So, almost 1,000,040% higher than the guide. Great news for
the seller. Sure, because it set a street record and
was great windfall for them. But, you know, not so
great for all the bidders who might have spent good
money researching the feasibility of the purchase, only to be
outpriced long before it even hit the reserve.
S2 (16:22):
Of course, there are reasons that that can happen, right?
And this is littered through your reporting. Agents will talk
about in a particular case. There were particular examples. It
was a surprise the vendor had a higher reserve that
they didn't know about. So there's a whole bunch of
reasons that things can happen that don't necessarily satisfy all
of the criteria for meeting the actual offense of underquoting.
(16:45):
But that said, there were some agencies that tend to
keep cropping up in the data, and I know you've
crunched that. I might stick with you, Lisa. Were there
some particular agencies that seem to have the higher ratios
on the data we were looking at.
S6 (17:00):
There were more sort of offices that are part of
the major franchises, if you know what I mean. And
some of those major real estate franchises, you know, we
went to the head office to ask for a sort
of please explain. And they were all asked for comment
about this. And some of the specific sales that we
bring attention to, they all denied Underquoting was an issue
in their network, but they did so in various ways.
(17:22):
To reiterate that auctions are, by their nature, designed to
create competition. And that is true. Likewise, the prices at
auction only go up, right? We're not bidding downwards. But
they also said outlier sales are a result of unexpectedly
high buyer interest and other unpredictable circumstances in a volatile marketplace.
And that's true. But they also acknowledge that they were
(17:42):
also introducing more compliance and training measures. And they too,
called for more transparency in real estate pricing for the
sake of buyers and sellers. One agent who was responding
to us by way of legal correspondence, given claims against
his agency, actually outlined in his defence that his estimated
selling price is often based on other unquoted properties currently
for sale in his market, rather than what they had
(18:05):
actually already sold for. He said if an agent locally
lists a house with a lower guide to attract attention,
he's forced to factor that into his pricing to stay competitive.
S2 (18:14):
So that Underquoting is driving the underquoting downwards.
S6 (18:17):
Exactly.
S2 (18:18):
Goodness me. It is quite remarkable. What about in Melbourne, Asia?
S5 (18:22):
Yeah, as we mentioned earlier, on average half of the
homes in the city are selling above that top end
of the guide. But there were particular agents and as
Lucy said, particular offices generally that we found were doing
this more commonly. So instead of selling over 50% of
their homes above the guide, they were selling more than 80%
(18:43):
of their homes above the guide, or more than 90%
of their homes above the guide.
S2 (18:48):
So look, having seen that and seen all the numbers
that you've seen, have you come to some sort of
idea about how this culture, this absolute habitual practice of underquoting,
has developed?
S6 (19:01):
Yes, certainly. Our research seems to indicate that there's a
level of contagion in terms of underquoting in areas. So
we see these pockets in Sydney where it's rife, and
those are the areas where agents are having to undercoat
to be competitive. And certainly parts of Sydney's western suburbs
and inner west stand out in this respect. But equally, Matt,
I've got to say, you also get areas like Mosman
on the lower North Shore where it's almost non-existent. Agents
(19:24):
there who spoke said that over the years agents have
come in and started underquoting. But because the local market
is heavily reliant on returned business, they only get away
with it for about six months or a year. After that,
their business model drives up and because locals talk and
won't stand for it, you know, they close up and
move on, you know? Which sounds so Mosman. Really.
S2 (19:44):
All right, well, look, there are rules. There are supposed
to be fines. We have a task force down here.
But in reality, is anyone policing what's going on here?
To protect both vendors, to be honest. And the buyers.
S5 (19:58):
Yeah, there's some policing going on. Um, though, you know,
as you sort of indicated there, there are some real
question marks about whether the regulators are doing enough given
the scale of the problem we identified. So in New
South Wales, it's fair trading who over the past two
years have issued 137 fines for underquoting breaches. Um, but
(20:20):
those fines just average about $2,200 each. And you have
to remember that in Sydney, um, an average commission for
an agent is going to be something like 20 or $40,000.
So it's really just a drop in the ocean. Uh,
in Victoria, the regulator is consumer affairs. Um, and in
(20:40):
the past financial year, they have doled out 48 fines,
averaging about $12,000. But one thing that stood out to
me is that they attended just 92 auctions last year,
which is less than two a week. so it's not
unusual for more than a thousand auctions to take place
each Saturday in Melbourne. You know, so when the government
(21:02):
says they're cracking down on Underquoting, you really have to
question whether that's kind of proven in in that data.
Both regulators have taken a handful of cases to court. Um,
but honestly, we heard from those in in the industry
in both Victoria and New South Wales, that fair trading
and consumer affairs were considered to be toothless tigers. And
(21:26):
they they really weren't feared by the agents.
S2 (21:30):
Okay. I think one of the telling things that comes
through is that whilst agents seem to be willing to
defend particular auctions or particular properties, no one is defending
the system at all. Everyone says, oh no, the system
is terrible, that property. Look, there were reasons, but the
system is bad. It needs to be fixed and there
are some ideas that are floating around on that. What
(21:52):
do you think needs to happen? How would we improve this?
Where do we start? It is a terrible mess.
S6 (21:58):
Yeah it is. I was having this chat actually a
day or so ago with a fairly high profile selling
agent in Sydney and a buyer's agent, and as the
three of us were discussing this topic within about five
minutes of sort of debating it, um, they both agreed
there needs to be a major overhaul of the system
in Sydney. A decade ago, there were new rules rolled
out and a lot was made of it. At the time,
I was writing about property at the time, but effectively
(22:20):
all it changed was the wording that agents brought to
their guides. It clearly did nothing about their actual pricing
and to be fair, fair trading have been busy in
recent months. They've told me so. But agents have also
been ringing me regularly to report a fair trading spot inspection. Um,
usually quite welcome. One. One guy told me he opened
the door to them and asked where they'd been for
the last few years. And last year, Fair Trading convened
(22:42):
a couple of roundtable discussions with industry leaders to discuss options.
But nothing has come of that yet. We'll have to
watch this space.
S5 (22:49):
Yeah, and it's a similar story in Melbourne. I think
everyone in the industry agrees that again, change is needed
despite the new laws that came in also a decade ago. Um,
and even if the government kind of wants to ignore
the issue. So in 2022, the Victorian government, they did
commission a report into the effectiveness of underquoting laws. It
(23:11):
costs us as taxpayers about $400,000. But then they buried it.
We've tried to get it through FOI and we haven't
been successful. And as recently as the last couple of weeks, um,
we went to the government and they, you know, wouldn't
explain why they wouldn't release it. I spoke to the
president of the Real Estate Institute of Victoria, Jacob Kane, recently,
(23:35):
and he's among those calling for the Victorian government to
release that report. He said the current rules and regulations
in place in Victoria are the best version we've ever had.
But he still thinks that there's appetite for change. He
said as long as we continue to have questions asked
about price quoting and implications and reports that there's unethical
(23:57):
or illegal practice, then we haven't got where we need
to be.
S2 (24:01):
That's right. Because we've had crackdowns, we've had reports, we've
had reviews, we've had all sorts of buzzwords that governments
love to use. I think that everybody's ready for actually
some action on this, I think. Thank you to both
of you. And we should shout out to Nigel again
for the ridiculous amount of work he did, pulling together
this data for everyone and hopefully have you back celebrating
a win at some point.
S6 (24:22):
Thanks, Matt.
S5 (24:23):
Thanks, Matt.
S2 (24:28):
After we recorded this episode, the peak body for real
estate agents in Victoria publicly supported moves to tackle Underquoting.
In response to our stories published over the weekend, Real
Estate Institute of Victoria interim CEO Jacob Cain told The
Age the organisation would back the publication of reserve prices
(24:49):
and the provision of vendor funded condition reports to buyers
for the latest updates, including any government response. Head to
our websites or check the show notes. For. Today's episode
of The Morning Edition was produced by Kai Wong. Our
(25:10):
executive producer is Tammy Mills. Tom McKendrick is our head
of audio. To listen to our episodes as soon as
they drop, follow the Morning Edition on Apple, Spotify, or
wherever you listen to podcasts. Our newsrooms are powered by subscriptions,
so to support independent journalism, visit The Age or. Subscribe
(25:34):
and to stay up to date. Sign up for our
Morning Edition newsletter to receive a summary of the day's
most important news in your inbox every morning. Links are
in the show. Notes. I'm Matt Dunkley. This is Morning edition.
Thanks for listening.
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