In short:
The practice of underquoting is on the rise in NSW, with over 100 complaints so far this year.
A buyer's agent has called for a royal commission, but real estate industry body says most agents are not "deliberately underquoting".
What's next?
NSW Premier Chris Minns said the government was establishing a task force to crack down on offences in the property sector, including underquoting.
A newly renovated two-bedroom home in a trendy inner west Sydney suburb was recently put on the market with a buyer's guide of $1.5 million.
The modest price estimate lured in many hopeful buyers with a budget south of $1.7 million.
But they never had a chance.
At the auction weeks later, the bidding started at $1.8 million and concluded with the Marrickville property selling for more than $2.1 million.
It's just one recent example of underquoting, which is when a real estate agent issues a buyer's guide that is well below their reasonable estimate of the property's likely selling price.
The practice is against the law and according to new figures from Fair Trading NSW obtained by ABC News, reports of underquoting are on the rise.
But those in the housing market believe the number of official complaints does not reflect the scale of the problem.
They say the practice has become so common that many don't even realise it's illegal and those who do don't bother to complain because the consequences are inadequate.
More than 100 complaints of underquoting in NSW in 2024 so far
The government has acknowledged the problem and told ABC News it is going to be cracking down on repeat offenders.
NSW Fair Trading received 168 complaints of underquoting for the entire year in 2023 and since January this year a further 105 complaints have been received.
The department has already issued 55 fines so far this year, compared to 54 for the whole of 2023.
But the total value of the fines issued this year is $113,850, which equates to about $2,200 per fine.
The average commission earned by a real estate agent from a $2 million property sale is usually more than $40,000.
Stephene Bolder and her husband have been looking to buy a new house in Sydney's south-eastern suburbs since January and said they had experience underquoting on "at least 20 properties" in that time.
"Every time we have enquired on a property, we expect at minimum the property to sell for at least 200,000 to 300,000 more than what they've guided," Ms Bolder said.
"It's incredibly stressful and disheartening … we are also spending money on paying our conveyancer to look through the contracts and do all the checks we need to do and we're spending thousands of dollars for no reason."
Mr Bolder said while they knew the practice was against the law, they had not lodged a complaint with fair trading.
"We haven't bothered complaining because we don't think that anything is going to change," she said.
'We need a royal commission'
Sydney buyer's agent Paul Mulligan said he experienced underquoting "every day" and never relied on an agent's buyer's guide.
"I think it's just been there for so long that they have to keep doing it," Mr Mulligan said.
"It costs buyer's money, it costs them time and it causes an enormous amount of distress over properties they were never in the running for through no fault of their own."
Mr Mulligan said most buyers accepted it as part of the industry and those who did want to complain found fair trading's website difficult to navigate.
He called on the government to put more resources into fair trading to bolster their investigators.
"You can change as much laws as you like, but until you have the resources to enforce them, nothing will change," he said.
"We need a royal commission into the whole industry."
NSW Strata and Property Services Commissioner John Minns acknowledged underquoting was "happening more often than the complaints we're receiving".
Mr Minns said the NSW government was establishing a task force within Fair Trading NSW to crack down on offences within the property sector, including underquoting.
"The ones I'm most concerned about is the deliberate and systemic underquoting which we believe exists in a relatively small number of agencies," he said.
"We recognise that we need to raise confidence in the visibility of compliance action in New South Wales."
In Victoria, the state government launched a task force in 2022 to stamp out underquoting, which has since handed out more than $1 million in fines for those not complying.
Mr Minns also acknowledged the fines issued for underquoting were often "inadequate" and said the department would consider imposing harsher penalties for repeat offenders.
"If the compliance inspectors can only impose a $2,200 fine and the agent felt that's just the cost of doing business, that's not going to change behaviour," he said.
"People may well feel it's futile complaining even if they do believe underquoting has happened.
"This is the intention around some of these more substantial operations underway at the moment, if we believe there is egregious misbehaviour in that area, to take a much harder line to go beyond penalty infringement notices and seriously consider court action."
Majority of agents not 'deliberately underquoting'
Real Estate Institute NSW chief executive Tim McKibbin said he believed the majority of agents in Sydney were not deliberately under-estimating property values, but said was it was common to see "an increase in underquoting in a rising market".
"The reason for that is the agent will quote a price of the property, or an estimated selling price, then as the market rises people are disappointed because of the price that its ultimately sold at," he said.
"[The agents] want to have the maximum number of people in competition for the property at the auction… I don't know that it's a valid position to take, but the view is that the more people you have at that auction the greater the competition for the property."
But Mr McKibbin acknowledged "the agent also has an obligation to keep the price guide correct as the market changes".
"If we started at $1 million and the market was moving up, they should be assessing where the market is and giving feedback to prospective purchasers," he said.