You find a three bedroom place in Umina Beach with a price guide that sits right at the top of your budget. You book a building and pest inspection, get your broker to confirm your borrowing, and turn up on auction day ready to go. Bidding opens above the guide. By the time the hammer falls, the place has sold for a figure you were never in the running for. You’ve lost a Saturday, a few hundred dollars in reports and a fair bit of hope.
Sometimes that’s just a hot market. Sometimes it’s underquoting. Underquoting in real estate is illegal in NSW, but it still happens, and buyers are the ones who pay for it. Here’s how it works, the signs we look for when we assess Central Coast listings, and what you can do about it before you spend money chasing the wrong homes.
Underquoting means the agent tells you less than they told the seller
When a seller signs up with a real estate agent in NSW, the agency agreement has to include the agent’s estimate of what the property is likely to sell for. That estimate is the anchor for everything that follows. Under NSW law, the agent can’t advertise the property, or tell a buyer over the phone or at an open home, at a price lower than that estimate.
The estimate isn’t fixed for the whole campaign, either. If the seller knocks back a written offer that is higher than the estimate, or the agent’s view of the likely price rises for some other reason, the estimate has to be revised. Once that happens, the price buyers are given has to move up with it. Agents also can’t quote a price below a written offer the seller has already rejected.
NSW has tightened these rules and lifted the penalties for agents in recent reforms, so the details are worth checking on the NSW Fair Trading website if you think you’ve been misled. The basic principle hasn’t changed: the price you are told should match what the agent genuinely expects.
Why it still happens, and why it costs buyers money
A low price guide draws a bigger crowd. More people at the open home means more pressure on the buyers who are there, and more bidders on auction day. That suits the seller. It doesn’t suit you.
The cost to buyers is real. Each property you chase properly can mean a building and pest report, a strata report for a unit, a solicitor or conveyancer reviewing the contract, and time off work for inspections. Spread that across five or six homes that were never really in your price range and it adds up fast. The bigger cost is harder to measure: weeks spent on the wrong homes while the ones you could actually afford sell to someone else.
Remember who the selling agent works for. Their job is to get the best price for the seller, which is exactly the point we make in our post on the difference between a buyers agent and a selling agent. Most agents play it straight. You just can’t assume it.
Six signs a price guide is too low
No single sign proves a listing is underquoted. When several of them show up together, though, we treat the guide with a lot of suspicion.
- Recent comparable sales sit well above the guide. If similar homes nearby sold for noticeably more in the last few months and nothing has changed in the market, the guide deserves a hard look.
- The open home is packed. A crowd that spills onto the footpath for a modest listing often means a lot of buyers think it’s cheap. They can’t all be right about getting it.
- The agent won’t commit. Ask, “Would the seller sign a contract at the guide today?” A vague answer, or a quick change of subject, tells you something.
- The guide never moves. If the agent mentions strong interest and offers coming in, but the advertised price stays the same for weeks, ask why.
- The ad says no price at all. “Contact agent” or “auction” with no guide isn’t illegal on its own, but it gives you nothing to test, so do your own homework before you invest in reports.
- The agent’s last few results all landed well over their guides. One big result is luck. A pattern is worth noting.
The Central Coast makes price guides harder to read
Some parts of the Coast are fairly easy to value. A street of similar brick homes in a suburb like Lake Haven or Kanwal throws up plenty of comparable sales. Other areas are much harder. A waterfront house in Saratoga, a home with ocean views in Wamberal or Avoca Beach, or a renovated cottage near the water in Ettalong Beach can be close to one of a kind. With fewer true comparisons, a low guide is easier to slip past buyers, and an honest guide is harder for the agent to get right in the first place.
We also see plenty of buyers moving up from Sydney who are used to a different market. Prices that look reasonable from a Sydney point of view can still be well above what a local street supports, and the reverse is true too. Knowing what a particular pocket has actually sold for matters more than a general feel for the region.
How to protect yourself before you spend a cent
The best defence is to work out your own view of value and treat the agent’s guide as one input, not the answer.
Start with recent sales. Look at homes that sold, not homes still on the market, and compare like with like: land size, condition, number of bedrooms, the side of the street, and things like flood or bushfire overlays that affect price on the Coast. Ask the agent which sales they based the estimate on. A good agent will tell you.
Then ask direct questions and write down the answers. “What’s the seller’s expectation?” “Have any written offers been rejected?” “Has the guide changed since the campaign started?” Agents can’t give you a price that is below their estimate, so a clear question often gets a clearer answer than you’d expect.
Hold off on paid reports until you are confident the home is in range. If the auction is a fortnight away and the signs all point to a low guide, it can make sense to test the waters with a pre-auction offer first. Our guide on bidding at a Central Coast auction covers how to set a firm limit and stick to it, which matters even more when you suspect the guide is soft.
This is also where an independent opinion pays for itself. When we run a property market analysis for a client, we price the home from the sales evidence, not from the ad. That gives you a number to work from before you commit to inspections, finance and a stressful auction day.
What to do if you think you’ve been misled
Keep records. Save the listing, screenshots of the price guide over time, any emails or texts from the agent, and notes from phone calls with the date and what was said. If the home sells far above the guide and you believe the agent knew all along, you can lodge a complaint with NSW Fair Trading, which enforces the underquoting rules.
Be realistic about what a complaint achieves. It may lead to action against the agent, but it won’t get you the house, and it is unlikely to get your inspection costs back. The real win is spotting underquoting early, so your money and your weekends go towards homes you can actually buy.
Get a second opinion on the price
If a listing has caught your eye and the guide feels too good to be true, talk to us before you book the reports. We are flat fee buyers agents, so what we charge doesn’t rise with the price you pay, and our only job is to tell you what the home is really worth. Start with a Central Coast market analysis, or call us on (02) 4302 4123.
Common questions about underquoting in NSW
Is underquoting illegal in NSW?
Yes. A NSW agent can’t advertise or tell a buyer a price that is lower than the estimated selling price recorded in their agreement with the seller. The rules cover online listings, signboards and anything said at an open home or over the phone.
Does a home selling well above the guide prove it was underquoted?
Not on its own. Two or three determined bidders on the day can push a price far past an honest guide. Underquoting is about what the agent believed when they gave you the price, which is why the comparable sales and the agent’s own estimate matter more than the final result.
How do I report underquoting in NSW?
You can lodge a complaint with NSW Fair Trading through its website. Include the listing, screenshots of the price guide, the sale result and any messages or notes from your conversations with the agent.
Can an agent change the price guide during a campaign?
Yes, and in some cases they must. If the seller rejects a written offer above the agent’s estimate, or the agent’s view of the likely price goes up, the estimate has to be revised and the price given to buyers has to reflect it.
What does under offer mean in real estate in NSW?
It usually means the seller has accepted an offer but contracts haven’t been exchanged yet. Until exchange, nothing is legally binding, so the deal can still fall over.
Can I put an offer in on a property that is under offer?
You can. Until contracts are exchanged the seller is free to consider other offers, and the agent should pass yours on. Be ready to move quickly, because the first buyer may already be close to exchanging.
Can a buyers agent tell if a property is underquoted?
We can’t read an agent’s mind, but we can tell you what the sales evidence says the home is worth. If our figure is well above the guide, you know to treat the advertised price carefully and plan your budget around the real number.
