A property is advertised with a price guide of '$800,000 - $850,000' but the reserve price is set at $920,000. What issue does this create?
Correct Answer
A) Likely underquoting, since the reserve sits well above the advertised range.
This is a clear case of underquoting, where the advertised price guide significantly understates the vendor's true price expectations as evidenced by the reserve price. This misleads potential buyers and violates consumer protection legislation.
Why This Is the Correct Answer
A reserve of $920,000 means the vendor will not sell within the advertised $800,000 to $850,000 range. Advertising that range tells buyers something the agent knows is untrue, which is underquoting.
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Previous Question
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?
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A property is passed in at auction with the highest bid of $780,000, but the reserve was $820,000. What happens next?