Current Market Insights
The Current Market Insights Podcast is brought to you by Harris Partners Real Estate.
Understanding the property market can be a challenging thing, with highs and lows, twists and turns. The media and agents tend to spread the news they want you to hear, with the advice they want you to follow.
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Current Market Insights
Episode 83: Underquoting Crackdown Falls Flat
Hosts Ciaran O'Brien and Peter O'Malley take a hard look at the NSW Government’s underquoting reforms, which have resulted in just 95 fines—each a mere $2,200—doing little to curb misleading price guides in Sydney’s high-stakes market. With buyers now instinctively adding 10–25% to quoted prices, transparency is collapsing, and trust is eroding.
We break down why the current system enables compliant underquoting, how buyers and vendors are responding, and what lies ahead as the market enters a typically slower stretch around Easter, Anzac Day, and the looming federal election.
As always if there is a specific topic you would like for us to cover, please reach out and let us know!
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Speaker 2:Welcome to the Current Market Insights podcast brought to you by Harris Partners Real Estate. Each episode we chat with real estate author and industry leader, peter O'Malley, to discuss the current property market conditions and provide insights to assist you on your property journey.
Speaker 3:Hello and welcome to another edition of Current Market Insights. I'm your host, kieran O'Brien, and with me, as always, is Mr Peter O'Malley. Peter, hello.
Speaker 1:Hi, kieran, great to be with you, as always.
Speaker 3:Great to be with you for another week, my friend.
Speaker 3:I want to jump in tonight and talk about a topic that I just love discussing on the podcast and that is underquoting, and we have done many episodes now that have either referenced or directly talked about underquoting, and I will continue to push this as a topic for us because I just love seeing agents squirm. Uh, we have talked in the past about how the government was starting to crack down a little bit, and there were some suggestions that fair trading was going to be a little bit more punitive and a little bit more active in tackling underquoting, and we most certainly spoke at length about a case in Victoria where some agents were doing some pretty dodgy things and had been called out. You have sent me to have a look at an article that's come out that has finally named and shamed some agents here in Sydney for their dodgy practices. So I would love if you could give our listeners a bit of a recap as to what the article talks about and then we can sit here and, just you know, make snide comments about the agents involved.
Speaker 1:Yeah, look, the article came out about a month ago and it was in the Saturday Telegraph back in March actually. But why it was interesting is that unfortunately, it looks like the government is not running as hard on underquoting as they promised to last year. So the article is headlined, Revealed the Real Estate Agents that Copped Multiple Underquoting Fines, and they speak about four agencies that got more than one underquoting fine last year. But I'm not here to name or shame any particular agents, Kieran, and the reason being is because the whole industry is adopting this practice in Sydney. Yeah, and when I say the whole industry is because the whole industry is adopting this practice in Sydney.
Speaker 2:Yeah.
Speaker 1:And when I say the whole industry, I mean the whole industry because you can't tell the truth at the moment as to what a listing's worth as a real estate agent, because every other firm in the marketplace is underquoting to some degree or another, so they make your listing look overpriced and no buyers turn up to the open house. So we've got this ridiculous scenario that's now cemented in buyer psychology that whatever a real estate agent tells them, they add somewhere between 10 and 25 percent in their own mind to that price guide, trying to anticipate what the agent's really telling them on price. So in the article they talk about four agencies who copped multiple $2,200 fines for giving low ball price estimates last year. As Fair Trading Minister, it's Analac, analac, yeah, chanthavong.
Speaker 3:Chanthavong yeah, analac, chanthavong, mull's Analac, analac yeah.
Speaker 1:Chanthavong, chanthavong, yeah, analac, chanthavong mulls, tougher penalties.
Speaker 3:I'm glad he's mulling.
Speaker 1:I can tell Analac Chanthavong that if he thinks he needs to mull is it a he or a she? Sorry, it's a he, it's a he Mulls tougher penalties. Well, $2,200 fines for underquoting on the rare instances where you get caught and get fined is nothing more than the cost of doing business for real estate agents. The public were told, as happened in Victoria, but the public in New South Wales were told last year that there were massive fines coming to agents that undertook systemic underquoting and that agents would lose their real estate licence. And now we've handed out a few $2,200 fines and we're mulling tougher penalties. That's as good as it gets after the Minister for Fair Trading would now have ample evidence that underquoting is systemic in the industry.
Speaker 3:Yeah, I had to laugh when I read the article.
Speaker 3:To be honest, you know the agencies named are in parts of Sydney that certainly don't struggle to achieve good prices and, as you know, we have talked about the initial fines, the $2,200 being just the cost of doing business is true, you know, maybe for a small apartment somewhere out west, but you know we're talking about agencies in the east, in the inner west, where their, their fee is many, many, many times in some cases what, what this fine is.
Speaker 3:And you know as depressing as it is. I had to to also laugh at some of the comments. You know some of the agents who are named and then comment back to the paper saying I'm deeply sorry. Well, you know, it really is farcical and and we, I think you and I, were both convinced actually the government might actually do something here and punish agents and and actually engage in some punitive actions that make it not worthwhile, which was going to be good for the industry collectively. And much like you, I think I'm I'm pretty disappointed with what we've seen and certainly, you know, mulling over an issue and waiting for I think one of the closing lines is I need the bureaucrats to tell me what to do or give me advice is just pretty concerning.
Speaker 1:So the minister yeah, I'll quote, unquote minister. The minister said he had asked bureaucrats to give him advice on potential changes to the law to ensure that the laws prohibiting underquoting are as robust as possible and that the penalties are an adequate deterrent well, that's good.
Speaker 3:I mean, bureaucrats have never, ever led anyone astray, so we should uh, you know we can. We can take solace that we should be okay coming out.
Speaker 1:The end of this right you've got greater confidence than me. Now this this was really disappointing. That this was as good as uh their task force, that they named uh last year and promised serious action, became. It just shows you that they um have uh no idea uh how to control this. That's the admission in this article, really, isn't it?
Speaker 3:oh, it is of course yeah yeah oh, and nor have they really looked into it. I mean, you don't, in my mind, you don't undertake and make you know, use such strong language on an issue without actually having consulted your advisors and you know policy directors, whoever you need to talk to to make decisions.
Speaker 1:You don't come out and say we're going to be tough and then actually we're not even entirely sure what we're talking about so some examples that we've seen locally in recent times Kieran Auction Guide 155, no bidders goes on the market a week later for 1.75. Yep Auction Guide 175 for a house where the people paid $2 million for it Doesn't sell at auction. Goes on the market afterwards for 2.1.
Speaker 1:Makes sense Auction Guide 1.8, no bidders at the auction goes on the market afterwards for 2.1. Makes sense. Auction guide 1.8, no bidders at the auction. Goes on the market for $2,040,000. This is happening every week where properties don't sell at auction because the market conditions are patchy, and then they're going back on the market for an asking price comfortably 10%, comfortably above what the auction guide was in the surest admission that underquoting had taken place.
Speaker 3:Yeah, and it vindicates, unfortunately, all the consumers out there who have rightly or wrongly believed that the market is you know, all agents are lying and it's 20% above. Seeing those admissions from these agencies when they fail at auction unfortunately vindicates that view, that view that, yeah, that's exactly right. And then when agents are actually out there and there are good agents out there doing the right thing, trying to get a reasonable price for their vendor, after having a, you know, firm discussion, good market research, whatever it is, and they go to market with the price and the consumers say, well, you're, you know, whatever, mate, get out of here, and they don't come because they think it's it's going to be 20 to 25 percent above that.
Speaker 1:Oh, yeah, indeed, and, and look um, to show you how much integrity has been lost in, in the buyer's eyes, around pricing, more than once in the last three to five years we've had a listing that say, I think, of a terrace up in Roselle that we sold. We quoted 1.55. Sorry, we quoted 1.55. No interest, no one even turning up to partake. I said to the owner unfortunately there's no interest at 1.55. We've got to go to guide 1.45 to stimulate interest. It sold within a week for Above 1.55. 1.55.
Speaker 3:Yeah, there you go.
Speaker 1:And that's not a one-off, that's regular. We'll quote a price. There'll be no interest in it. I'll say to the owner clearly the price is not attracting the buyers. You need to make the price more enticing. You put a more enticing guide price on it and then suddenly someone walks in and offers you the same price point that you weren't getting anyone to walk through the door for two weeks earlier. Yeah, that's just the most obvious example that the whole system is broken right there.
Speaker 3:So it's long been suggested that, you know, agents should just be forced to give an asking price and that's the one and done solution. Do you think, in reality, that that would actually solve the problem, or would it just create a new way for agents the less scrupulous agents out there and possibly complicit vendors to come up with a way to just try and game that system as well?
Speaker 1:Look, I don't think you need to go to that extreme, kieran, do you know what? The, the Department of Fair Trade, are clearly under-resourced. All they need to do is police their own rules. They only need to enforce their own rules. That's why I gave you those examples of those three properties that had auction guides on it. No one bid and then they went on the market for an asking price comfortably 10% above, more than 10% above what the auction guide was in, the surest sign that the agent was underquoting.
Speaker 3:Yeah.
Speaker 1:So all the Department of Fair Trade need to do is police their rules a little bit more.
Speaker 3:So I guess we already know the answer to this question, but based off this article, do you think any of these agents are going to change their behaviour? Do you think that there's been enough other than being publicly named, which is embarrassing? Perhaps do you think any of them are actually going to go home tonight or next weekend and say you know what? We shouldn't do that anymore because that's a bad idea.
Speaker 1:I think they'll play within the rules and we've got to keep in mind that the Department of Fair Trade, wrongly or rightly, have given agents the scope to underquote in a compliant fashion. And that is through their whole 10% thing, the range, yeah, and that is through their whole 10% thing, the range yeah.
Speaker 1:So I think agents who have been named and shamed there's one here in particular and just reading his comments and all you can do is read his comments in the newspaper I think he is embarrassed and he is not going to go about his business as business as usual. He will address his ways and be more careful to make sure that he's working within the rules that the Department of Fair Trade have set and given agents the leverage to say you can say to a vendor 900 to a million, the vendor can have a reserve of a million and you can quote it as guide 900 thereabouts. That's not an unreasonable position. I think in that instance it's 10% from the bottom figure, correct?
Speaker 3:yeah, so 990 should be there, so it'd be 990 to be specific.
Speaker 1:Yeah, but you get the idea that agents that have got a vendor with a reserve of a million dollars, they might say to the vendor 900 to a million on the initial agency agreement and then just before it's really the list on the market, they say, oh, look at all these other people, they're quoting 825 for similar properties, even though it's going to get to 950 a million. So I think we need to quote 825 as well. Yeah, and then suddenly the under quote just perpetuates itself yeah, I look, I I completely hear that.
Speaker 3:I definitely feel, though, there is a difference between uh mistakes, which can happen, and you know, when you've got campaigns that are moving rapidly, or you've got people making office here and there, and the, the legislation, the compliance requirements, can be quite, you know, hard to to, I guess, uh manage on a very short time frame. Mistakes can be made, but I think it's, it's easy uh. Or you know it's fair to say there is a big difference between those that are actively under quoting for the sake of, uh, you know, doing something dodgy and knowing that it's really not all that punitive, and, as you say, an agent who you think was remorseful because they've made an error and will correct their behaviours. I think that's, in my view, that's going to be the minority, as opposed to the majority, who are just using the system to their own advantage, even though it's not right.
Speaker 1:Well, this is the abuse of the system right here. The Telegraph revealed last week this was back in March, as discussed. The Telegraph revealed last week that 95 fines were issued for unlawful underquoting last year agents copying penalties. The opposition has called a slap on the wrist For the Department of Fair Trade to only fine agents 95 times in 2024,. Knowing what I know about real estate and pricing and what's a fair price and what's an underquote, you could go out. Someone with experience could go out and file 95 cases of underquoting this weekend, especially with 1,200 auctions.
Speaker 3:Yeah, that's right yeah.
Speaker 1:And the. Department of Fair Trade's task force quoting this weekend, especially with 1200 auctions yeah, that's right. Yeah, and, and, and, and. The department of fair trades task force uh, I don't know how many people are in this task force managed to find 95 uh cases where they justified a fine over 52 weeks.
Speaker 3:Yeah, I'd say they got less people than the robo debt team, that's for sure. Um I you know, it doesn't escape me, and just before we wrap up, that even issuing 95 fines at 2200 each is less than the fee an unscrupulous agent could get on a top tier property in sydney, like way below right. It's quite easy to make more than that on a sale of one single property, which is just absurd to me. That you know. We're not talking about hundred thousand dollar apartments, we are talking big sales in big, you know, affluent locations.
Speaker 1:These agents are making and killing in some cases off, manipulating people and, and you know, on their biggest purchase of their lives potentially, and to that point, if they put a serious fine in place and a serious task force in place, it'll become a profit centre for the New South Wales government.
Speaker 3:Yeah, yeah, consolidated revenue. Here we come Before we wrap up tonight. Then, peter, I wanted to have a chat with you just very quickly, not related to underquoting, although we will inevitably see plenty of it over the coming weeks. We're entering a pretty dicey time, I think in Sydney real estate or dicey might not be the right word, but certainly tricky. We've got a few things coming up. You know Easter and long weekends and whatever else. Distractions are plenty. Distractions are plenty. You know, excluding the global. You know situation in general. I'd love to just get a quick sense from you about what you think is going to happen over the next few weeks, because there really is. It's a bit of a cluster of events for families, isn't it? That may potentially distract from property in general.
Speaker 1:Yeah, look, it's a great point you raise, kieran. Obviously we're rolling into Easter now.
Speaker 1:Yep, so that's not going to be a full-blooded weekend in the property market. Then we head straight into the Anzac Day long weekend, which coincides with school holidays. Yep, so it's fair to say that this Anzac Day long weekend more people might be out of town than is normal, as people join the Easter long weekend to the Anzac Day long weekend, and just when vendors are looking for things to get back to normal and get their campaign on the road, may 3 is the federal election, which is a mass distraction in and of itself. So there are three really distracting and tricky weekends coming up for real estate agents, home sellers and home buyers. There's no doubt about that to vendors that are on the market over a long weekend is that you would never react to a negative event, ie low inspection numbers on an Easter, saturday or a long weekend but your bank will accept anything positive that happens. What we do see in long weekends is any buyer that is active at that point in time is serious.
Speaker 1:Yeah, no one's window shopping on Easter long weekend yeah that's right, or the Anzac Day long weekend for that matter and we discussed it earlier in the year is that one of our best weekends of the year was Saturday, january 4th, because we were one of the only, if not the only, agency in the West that had a full range of properties to show.
Speaker 1:So we're essentially capturing every buyer that was active, which is not as many buyers as what you see at a peak time in the market, but when you're capturing essentially everyone because you're the only one there with the doors open, things are pretty good. So, unfortunately for real estate agents, it pays to be active on a long weekend because whilst you might be on a normal weekend expecting somewhere around a dozen parties to turn up and inspect a property and you might only see four or five, rest assured those four or five are serious about doing business on something at some stage soon oh look, yeah, you'd rather have two you know 100% hits than 12 5% hits, for example right, you know if you've got two people turning up who are keen.
Speaker 3:Uh, that's. That's much more beneficial for you, for your vendors most most certainly, but also as an agent now, stock levels play a role in this as well.
Speaker 1:We're already seeing, heading into these three awkward weekends, that stock levels are tightening. No doubt, with agents sitting on stock, it's ready to come to market when all of these uh, all of these issues have sort of cleared through the system, if you like. But it does give those vendors that are on the market a chance to take advantage of low stock levels and capture a sale.
Speaker 3:Yeah, it's an opportunistic window, isn't it? Just to grab those really keen people while everyone else is distracted. It could also be a great time for you as a vendor to just if you're considering, maybe stick it out another week or two and get through that period. You might find out.
Speaker 1:Yeah, indeed, you get the result you're after.
Speaker 3:Look really great chat, peter. I think it's an important topic and I know we will always come back to underquoting and hopefully every time we talk, at least in my view. I hope we're talking about further action on this issue and hopefully the government does, you know, find within themselves the guts, I guess, to tackle this problem. But I wouldn't say that that's the New South Wales government's strong point right now, that's for sure. But on that point, thanks so much for coming in to talk, peter. Thanks, kieran, all the best, all the best, and thanks to everyone for listening to Current Market Insights.
Speaker 2:We look forward to speaking with you next time. Thanks for joining us on the Current Market Insights podcast brought to you by Harris Partners Real Estate the podcast providing real estate insights you won't find anywhere else.
