Underquoting in Australian real estate industry is leaving buyers feeling betrayed

Sarah has visited almost three dozen properties in six months, and now instinctively questions every market price in case the agent is underquoting.

Since then, there have been 161 penalty infringement notices issued for underquoting and related offences. Each case was fined $2,200.

Agents in Sydney usually charge a commission of about 2% on sales , meaning the revenue on a median house price in the city of $1.6m would be about $32,000.

Waqas Khawaja estimates he and his partner experienced underquoting half a dozen times at auctions across Sydney until finally securing a property in the south-west.

From 1 July 2021 to 31 July 2022, Consumer Affairs Victoria (CAV) recorded 1,466 underquoting inquiries and complaints. During the same period, just 48 infringements and 171 official warnings were laid.

But Morrell estimates 70% to 80% of properties in Victoria are underquoted.

In 2003, he became the first person to make a complaint for alleged underquoting to the Australian Competition and Consumer Commission (ACCC).

A year later, a similar law rolled out in Victoria.

A 2021 University of Melbourne study found the introduction of underquoting laws worked to align listing prices with market values, leading to a relative drop in auction sales prices of between 2% and 6% by cracking down on overbidding.

But Morrell said the laws had done little to dissuade estate agents and were rarely policed.

Hello Haus research found it takes an average of seven months for Australians to buy a property, with 45% of people reporting buyer remorse.

Last week, Aggett bought a property for a client at $3.75m, quoted at $3.2m.

Aggett says fining estate agents $2,200 in NSW is little disincentive when commission will often be at least $30,000.

The Real Estate Institute of Victoria (REIV) has lodged a submission to Consumer Affairs Victoria advocating for transparency reforms, including enhancing compulsory Statement of Information which estimates pricing for all residential properties.