A property is advertised with a price guide of '$800,000 - $850,000' but sells at auction for $950,000. The agent had three recent comparable sales ranging from $920,000 to $960,000. What issue has likely occurred?

Q: What is the correct answer to: A property is advertised with a price guide of '$800,000 - $850,000' but sells at auction for $950,000. The agent had three recent comparable sales ranging from $920,000 to $960,000. What issue has likely occurred?

The correct answer is The property was likely underquoted in the advertising. Option B correctly identifies underquoting as the primary issue. The advertised price guide of $800,000-$850,000 was significantly below the property's true market value, as evidenced by the $950,000 sale price and comparable sales ranging from $920,000-$960,000. This substantial variance between advertised and actual values constitutes underquoting under Australian state legislation and potentially breaches Australian Consumer Law provisions against misleading and deceptive conduct. The agent should have used the comparable sales data to establish a more accurate price guide.

Q: What background knowledge is needed for this Property Marketing question?

Underquoting refers to advertising property with price guides significantly below likely selling prices. Australian states regulate this through legislation like Victoria's Estate Agents Act, requiring price guides to reflect genuine selling expectations based on comparable sales evidence. Australian Consumer Law also prohibits misleading and deceptive conduct in property advertising. Agents must use recent comparable sales data to establish realistic price guides, typically within 10% variance of expected selling price. Penalties for underquoting include fines, disciplinary action, and potential license suspension. The practice misleads buyers about affordability and market positioning, undermining consumer protection and market transparency.

Q: What is a good way to remember the answer to this Property Marketing question?

G-U-I-D-E: Genuine pricing, Use comparables, Inform accurately, Don't mislead, Evidence-based. Think of a tour guide who must provide accurate information - an agent's price guide must genuinely reflect market evidence, not mislead buyers down the wrong path. When you see price variance questions, apply GUIDE: check if the advertised price was Genuine based on comparable Evidence, or if it failed to Inform accurately and instead misled buyers.

Q: What exam tip applies to this Property Marketing question?

Look for significant variance between advertised price and sale price/comparables. If advertised price is substantially lower than both sale price and comparable evidence, it's likely underquoting regardless of other factors.

Q: How does this Property Marketing concept apply in Australian real estate practice?

An agent lists a renovated family home with a price guide of '$650,000-$700,000' based on older, unrenovated sales. However, recent comparable renovated properties sold for $780,000-$820,000. When the property sells for $795,000, buyers who attended based on the lower guide feel misled. The agent faces potential regulatory action for underquoting, as the price guide should have reflected the renovated comparables, not the older, inferior sales evidence.

Question

Property MarketingUnderquoting LegislationMEDIUM

A property is advertised with a price guide of '$800,000 - $850,000' but sells at auction for $950,000. The agent had three recent comparable sales ranging from $920,000 to $960,000. What issue has likely occurred?

Answer Options

A

The auctioneer conducted an illegal auction

B

The property was likely underquoted in the advertising

C

The purchaser paid above market value

D

The vendor set an unrealistic reserve price