A group of property investment advisers and real estate agents in Victoria and New South Wales has launched a campaign to crackdown on what they say is the deceptive tactic of underquoting or “price baiting”.
The group wants a change in regulation, which would force vendors to publish their reserve price prior to a sales campaign.
The former chairman of the Real Estate Institute of Victoria’s ethics committee John Keating says some agents give price estimates to potential buyers that are up to 20 per cent below the reserve.
He says this results in house hunters wasting time and money on looking at, and often getting building inspections on, properties they cannot afford.
“They’re talking with forked tongues to purchasers and underquoting in order to get more interest in the properties,” Mr Keating said.
“It’s gypping people, it’s disgraceful, and it’s wasting all their time on getting legal reports and billing investments.”
Mr Keating and other agents have started online petitions in Victoria and NSW calling for the state governments to make it compulsory to publish reserve prices.
“Buyers detest the systemic underquoting that’s going on, so if you can make it an absolutely transparent marketplace I think more properties would be sold by auction,” he said.
Mr Keating says price baiting was so rife that properties in Melbourne’s east and bayside suburbs were being promoted to buyers for as much as $400,000 below their reserve.
“There’s a misguided perception that if you get more people (at an auction), you’ll get more money for the property,” he explained.
“Now sure, it’s the job of the sales people to get people to the auction, but you don’t have to do it by duping people.”