An agent quotes a property at '$800,000 - $850,000' but three comparable sales in the area sold for $920,000, $935,000, and $940,000 respectively in the past three months. What issue does this scenario present?

Q: What is the correct answer to: An agent quotes a property at '$800,000 - $850,000' but three comparable sales in the area sold for $920,000, $935,000, and $940,000 respectively in the past three months. What issue does this scenario present?

The correct answer is The quoted range appears to be understated based on comparable evidence. Option B correctly identifies the core issue - underquoting. The quoted range is approximately $70,000-$140,000 below recent comparable sales, which constitutes a significant variance that suggests the price guidance doesn't reflect genuine market value. Under Australian Consumer Law and state underquoting legislation, agents must ensure their price estimates are based on comparable evidence and genuinely reflect the likely selling price. This scenario clearly demonstrates a breach of these requirements.

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

Underquoting legislation across Australian states requires agents to provide price guidance that genuinely reflects the likely selling price based on comparable evidence. The Australian Consumer Law prohibits misleading or deceptive conduct in trade or commerce. Agents must use recent comparable sales (typically within 3-6 months) of similar properties in similar locations to establish realistic price expectations. Penalties for underquoting can include fines, license suspension, and compensation orders. The legislation aims to protect consumers from being misled about property values and ensures fair market practices.

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

COMPARE: Comparable sales Override Marketing Preferences And Require Ethical pricing. Remember that comparable evidence always trumps marketing strategies - if recent sales show higher values, your quote must reflect this reality, not wishful thinking about attracting more buyers. When you see price guidance questions, immediately COMPARE the quoted range to any comparable sales data provided. If there's a significant gap (typically $50,000+ or 10%+), suspect underquoting issues regardless of other factors mentioned.

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

Look for significant gaps between quoted prices and comparable sales data. If comparables are substantially higher than the quote (typically $50,000+ difference), it's likely an underquoting issue regardless of other factors mentioned in the question.

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

An agent lists a three-bedroom home in Paddington for '$750,000-$800,000' to attract more buyers to the auction. However, three similar properties in the same street sold for $875,000, $890,000, and $885,000 in the past two months. Despite the agent's marketing strategy working (generating high inquiry levels), they face investigation for underquoting when the property sells for $880,000, as the quoted range didn't reflect genuine market value based on available comparable evidence.

Question

Property MarketingUnderquoting_legislationMEDIUM

An agent quotes a property at '$800,000 - $850,000' but three comparable sales in the area sold for $920,000, $935,000, and $940,000 respectively in the past three months. What issue does this scenario present?

Answer Options

A

The price range is too narrow for effective marketing

B

The quoted range appears to be understated based on comparable evidence

C

The agent should only quote a single price, not a range

D

The comparable sales are too recent to be relevant