Underquoting Explained: What Property Buyers Need to Know
Underquoting occurs when an agent advertises a property below the price the vendor would actually accept. It is a recognised pattern in competitive Australian markets — particularly in Melbourne and Sydney — and it directly affects how buyers research, budget, and bid. Understanding it before you start inspecting can save you weeks of wasted effort and prevent you from bidding at auctions you cannot win.
What underquoting is
Underquoting, in its legal definition, occurs when an agent advertises or quotes a price that is lower than the vendor's stated reserve or instructions. In practical terms, this looks like:
- →A property listed as "offers over $750,000" when the vendor will not accept anything under $900,000
- →A quoted range of $780,000–$850,000 for a property that the agent knows is likely to sell above $920,000
- →An auction that opens at $700,000 and sells at $870,000 — well above any guidance given to buyers who attended inspections
Why it happens
Underquoting attracts buyers who would otherwise self-select out. If a property's realistic value is $900,000 but it is quoted at $780,000, buyers with a $800,000 budget attend the auction. Once in the room, they bid past their limit. Competing bidders drive the price higher.
Some agents believe underquoting creates competitive tension that achieves stronger results for vendors. Others use it because quoted ranges are difficult to enforce and the gap between quote and sale price is rarely scrutinised by regulators in real time.
State regulations exist in Victoria, NSW, and Queensland to restrict misleading price quotes. Enforcement, however, has historically been inconsistent. Consumer Affairs Victoria has issued fines and licence suspensions, but the volume of complaints compared to enforcement actions is significant.
What the data shows
Research from consumer groups monitoring Melbourne and Sydney auction markets has consistently found that properties sell materially above the bottom of their quoted ranges. In active markets, the gap between the bottom of the quoted range and the sale price has typically been in the 8–15% range.
The following worked example illustrates how this plays out for a buyer relying on the quoted range rather than independent research.
A buyer who budgeted $850,000 based on the quoted range attended the auction with a limit $100,000 below the final sale price. Their due diligence effort — inspections, legal review, time spent attending open homes — was wasted because they were never a viable buyer at that property's true market price.
Important context: Not all agents underquote, and not all gaps between quoted range and sale price reflect intentional misrepresentation. Market conditions change, bidding competition varies, and vendors sometimes set reserves above what the market will bear. This is a pattern observed in active markets — not a claim about all agents or all properties.
How to protect yourself
The practical defence against underquoting is independent comparable sales research. Do not let the quoted range set your ceiling — let your research set it.
Search realestate.com.au/sold and domain.com.au/sold. Filter by suburb, property type, and bedrooms. Look at properties sold in the last 60–90 days. Aim for 5–10 genuine comparables.
Based on your comparables, form a view of what this property would likely sell for. If 8 similar properties have sold at $900,000–$960,000, your estimate should be in that range regardless of the quoted price.
The quoted range tells you where bidding might start. It does not tell you where it will end. Set your budget against your comparable sales estimate.
If your comparable sales estimate puts fair value at $950,000 and your pre-approval maximum is $820,000, you are not a viable buyer at this property. Walk away before you invest time in inspections and legal review.
Setting your auction bid limit based on real data
If your comparable sales estimate puts fair value at $900,000–$950,000, your maximum bid should be set against that range — not against the quoted $780,000 range. A buyer who sets their limit at $850,000 based on the quote will almost certainly lose (and waste their inspection and legal spend).
Set your limit before auction day using the following logic: what have similar properties actually sold for? What is the top of that range? Can I compete at that level within my pre-approval limit? If yes, set your limit at the top of your comfortable repayment capacity within that evidence range. If no, do not attend the auction — or attend only to observe and calibrate your research.
State regulation summary
| State | Regulation | Enforcement |
|---|---|---|
| VIC | Agent must have reasonable basis for estimate; penalties include fines and licence suspension | Consumer Affairs Victoria; most active enforcement |
| NSW | Property and Stock Agents Act — agent must not quote below reasonable estimate | NSW Fair Trading; penalties apply |
| QLD | Agent must not quote below their reasonable estimate of market value | Office of Fair Trading; complaints accepted |
| WA | Less prescriptive — general consumer protection applies | Consumer Protection WA; buyer beware approach |
| SA / TAS / NT / ACT | General consumer law applies; fewer specific price guide rules | State fair trading bodies |