Prices that cause pain

In a hot market, would-be buyers who do their homework won’t fall victim to an unscrupulous agent

- NICOLA FIELD

In a booming property market, homes are selling at auction for sums that blow the agent’s price guide out of the water. But the issue of underquoting is nothing new. Years ago, my partner and I set our hearts on a rundown (let’s be honest, derelict) house slated for sale at auction in Sydney’s inner west. The agent quoted an upper price estimate, which was within our budget though at the top end.

Hopes came crashing down when the auctioneer opened bidding at the top price we’d been quoted. After exchanging “What the?” looks, we slunk out of the auction room leaving buyers with deeper pockets to fight it out.

Fast-forward to 2021 and underquoting is once again making headlines as shell-shocked house hunters watch properties sell under the hammer for prices that dwarf the agent’s price guide.

In June, a Toorak mansion sold at auction for $14.25 million, smashing the upper price guide of $11.5 million. In March, a Bondi apartment sold for over $20 million, with the opening bid being a market-whacking $14.5 million though still within the price guide of up to $15 million.

While both homes are prestige properties, underquoting can deliver serious hip pocket pain to buyers with more modest aspirations. Ticking the boxes for due diligence – having the sale contract reviewed by a legal professional, and arranging pest and building reports – has the potential to rack up fees of around $2000, which can prove pointless when a home sells for vastly more than the price guide.