Buying a property is already a challenging process, but one of the biggest frustrations buyers face is underquoting. This deceptive practice can leave hopeful buyers feeling misled, wasting time and effort on properties that were never within their budget. So, what is underquoting, how does it impact buyers, and what can you do to navigate it?
Buying a property is already a challenging process, but one of the biggest frustrations buyers face is underquoting.
What Is Underquoting?
Underquoting occurs when a selling agent advertises a property at a price significantly lower than what the vendor is willing to accept or below what the market suggests it will sell for. This practice is often used to attract more buyers to open homes and auctions, increasing competition and ultimately driving up the final sale price.
For example, a property might be listed with a price guide of $800,000–$850,000, yet the vendor’s reserve price is $950,000. This means buyers with a budget of $850,000 may spend weeks attending inspections, getting finance pre-approved, and emotionally investing in a property they never had a real chance of securing.
The Impact on Buyers
Underquoting has significant consequences for buyers, particularly first-home buyers who may not be as familiar with market trends. Some key impacts include:
Wasted Time & Resources – Buyers spend weeks or even months attending inspections, getting contracts reviewed, and arranging finance for properties that are well beyond their reach.
Emotional Disappointment – Falling in love with a property only to find out it was never affordable can be discouraging, making the home-buying process more stressful and disheartening.
Market Misconceptions – Buyers may start believing they are being “outbid” by other buyers when, in reality, they were misled by an unrealistic price guide.
Financial Strain – Some buyers feel pressured to stretch beyond their budget just to remain competitive, leading to financial stress or overextending themselves on a mortgage.
How Buyers Can Navigate Underquoting
While underquoting can be frustrating, there are ways buyers can protect themselves and set realistic expectations:
1. Do Your Own Market Research – Look at recent comparable sales in the area to get a better idea of what properties are truly worth.
2. Request a Statement of Information – In Victoria, agents are required to provide a Statement of Information that includes recent comparable sales. This can give you an indication of the true market value.
3. Ask Direct Questions – Don’t be afraid to ask agents if the vendor has set a reserve price and what their price expectations are. Some agents will be upfront, while others may avoid giving a direct answer.
4. Follow Up on Sold Listings – Check the final sale prices of properties you were interested in to understand how much they sold for compared to their quoted range.
5. Work With a Buyer’s Agent – A buyer’s agent can help cut through the misleading price guides and provide a realistic price assessment, so you only focus on properties that align with your budget.
6. Be Cautious at Auctions – If a property is underquoted, you might find that bidding escalates quickly beyond your budget. Set a strict limit and don’t get caught up in the heat of the moment.
Underquoting is a widespread issue that makes the home-buying journey unnecessarily difficult. However, by being informed, questioning agents, and relying on expert advice, buyers can avoid the pitfalls of misleading price guides.
At Walsh Brown Property, we help buyers navigate this complex market with confidence, ensuring they pursue properties that are realistically within reach. If you’re tired of being misled and want expert guidance, we’re here to help. Get in touch with us today to discuss how we can help you navigate the property market with confidence! Visit our website or contact us at aly@walshbrownproperty.com.au or 0411771181.
*** Disclaimer: The information provided in this blog is intended for general informational purposes only. While we have made every effort to ensure the accuracy and reliability of the content, it should not be considered as personalised or professional advice. The homebuying process can vary based on individual circumstances, property types, and location-specific regulations.
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