An agent advertises a property with a price guide of '$800,000 - $850,000' but the vendor's reserve is $900,000. What is this practice called?
Correct Answer
D) Underquoting
Advertising a range whose top is below the vendor's $900,000 reserve is underquoting. NSW and Victoria have specific underquoting laws, Queensland bans price guides for auctions altogether, and in every state a price guide that understates what the vendor will accept can be misleading conduct under the Australian Consumer Law.
Why This Is the Correct Answer
Underquoting is advertising or quoting a price below the vendor's known minimum or the agent's genuine estimate. A range of $800,000 to $850,000 against a $900,000 reserve fits that description.
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- → Tom plans to bid at a NSW house auction on behalf of his sister, who will instruct him by phone from Perth. Neither holds power of attorney. What must Tom do to bid for her?
- → An agent in NSW quotes a property at $800,000-$850,000 but sets the reserve at $900,000. Three weeks later, the agent receives feedback that most buyers are interested at $820,000-$840,000. What should the agent do to comply with underquoting legislation?
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- → In NSW, the auctioneer takes a bid on the vendor's behalf without announcing it as a vendor bid, and the property is then knocked down to a genuine bidder. What is the legal position?
- → On auction morning a NSW vendor tells the auctioneer she will text her reserve price once she sees how bidding goes. What do the auction conditions require?
- → A married couple intend to bid together at a NSW residential auction to buy the house jointly. What registration is required?
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Previous Question
An agent advertises a property price guide as '$1.2M - $1.32M' but the reserve is set at $1.4M. Three comparable sales in the area in the past 6 months were $1.35M, $1.41M, and $1.38M. What is the most serious legal issue with this marketing approach?
Next Question
An agent in NSW quotes a property at $800,000-$850,000 but sets the reserve at $900,000. Three weeks later, the agent receives feedback that most buyers are interested at $820,000-$840,000. What should the agent do to comply with underquoting legislation?