Underquoting looks set to continue despite moves in Victoria and New South Wales to clamp down on the practice.

New laws have come into effect in Victoria, following moves from NSW in 2016, aimed at stamping out what one real estate agent calls the industry’s “next big obsession since dummy bidders”.

Peter O’Malley, from Harris Partners Real Estate in Balmain, Sydney, said agents will continue to underquote so long as Australian property market remains hot.

He said buyers should check with local residents and multiple agents if they feel a property is being underquoted.

Underquoting is a tactic used to attract crowds to auctions by advertising prices well below what the seller would accept.

In these high stakes situations, people often bid higher than they might otherwise, thus driving up the price. Many auction attendees also waste extra time and money looking at properties ultimately outside their budget.

Mr O’Malley said underquoting in NSW is simply a matter of agreeing a verbal reserve price with a seller while advertising a lower ‘official price’ in public. He said agents are able to hide behind rising house prices to justify the disparity between advertised prices and sale prices. His advice to potential homebuyers: “Believe nothing, check everything.”

Greg Cooper, a Melbourne real estate agent with Cooper Newman Real Estate, said Victoria’s new laws leave “too much room for manipulation”, allowing unscrupulous real estate agents to continue underquoting.

He said the easiest solution would have been to force agents to display the reserve price – that is, the price wanted by the sellers.

Sellers often only set reserve prices the day of the auction – often after a property has been advertised for several weeks.

But Mr Cooper does think Victoria’s new laws are good, as prices will begin to reappear on real estate listings. He said agents have been avoiding advertising prices as a way to create engagement without being accountable for a price.

As part of the crackdown announced at the start of this year, Consumer Affairs Victoria has started civil proceedings against Melbourne South Eastern Real Estate, also known as Barry Plant Mount Waverley, Oakleigh and Wheelers Hill.

The charges, levelled under the state’s old anti-underquoting laws, bring the tally to several high profile agencies found to have engaged in underquoting, such as Hocking Stuart in Melbourne’s Richmond, which copped a $330,000 fine.

Data released by property price predictor app realAs.com earlier this year laid bare the epidemic of underquoting in Australia’s capital cities. It named Glen Huntly in Melbourne and Carlingford in Sydney as the worst affected areas.

In Victoria, agents listing properties from May 1 will be required to provide potential buyers with a rough selling price, three similar sales in the area and the median price for the suburb. Non-compliance with the new regulations risks fines of $31,000 and above. Agents will also lose commission for setting an unreasonable estimated selling price, or advertising a property below the estimated selling price – that is to say, underquoting.

Biggin & Scott’s James Nicol, a real estate agent based in Ballarat, said underquoting damages trust in the industry.

He said although the penalty to Hocking Stewart sent a message through the industry, there were still some agents who will try and push the envelope. “Some people think its OK to try and jones the system,” he said.

Queensland’s auction laws, which leave agents unable to give buyers a price quote, are “like the Wild West”, he added. This compared to South Australia, where sellers must specify the exact sale prices they’re looking for.