A three-bedroom duplex in Sydney's western suburbs was listed online for $1 million but sold at auction for over $1.3 million. This discrepancy highlights a practice known as underquoting, where properties are advertised at prices significantly lower than their final sale price. Tina, an unsuccessful bidder, expressed frustration, stating, "They'll tell you anything to get you here. Once they do, it's a totally different story."

Underquoting is illegal in Australia, although regulations vary by state. On a recent Saturday, multiple auctions in Sydney's west and inner west demonstrated this issue. In Punchbowl, a property sold for 31% above its online guide price, while in Burwood, a home fetched 28% more than its listed price. In Belmore, a five-bedroom house went for 15% over its guide but did not sell as the vendor sought a higher amount.

Many prospective buyers described the auction experience as "demoralising" and "exhausting," as they repeatedly faced unaffordable bids. Buying agents acknowledged that underquoting is "part of the game," while selling agents attributed the practice to high demand and pressure from sellers. One selling agent, who requested anonymity, noted, "It actually comes down to the vendor agreeing to it. They know that they have to compete with the property down the road that is being underquoted, so that's where the pressure comes from."

Henry Pedersen, founder of the property tracking app Homer, reported that in 2023, over 220 selling agents in New South Wales had guide prices that were, on average, more than 10% below the final sale price. Nearly 60% of these cases were in Sydney's western suburbs. Pedersen described price baiting as a "widespread behavioural problem," despite some price increases being attributed to demand. He stated, "Every single property is clearly different, and every agent will give you that justification that it's impossible to know, particularly at an auction, what's going to happen. But the reality is, on average, it all should come out in the wash."

On a recent Saturday, 287 properties sold in New South Wales, with half selling for at least 10% over their guide prices. At the Belmore auction, two bidders competed while many observers watched. The auctioneer called for bids, but when the highest bid did not meet the reserve price, the auction was declared "passed in." One bidder expressed disbelief, saying, "I can't believe it. They say one-point-five and I offer one-point-seven-two and they bloody pass it."

Frank Russo, a Sydney-based buying agent, criticized the practice of underquoting as "highly misleading" and "unethical." He acknowledged that selling agents are working for the vendor but emphasized that buyers should conduct their own research to avoid making poor financial decisions. Russo stated, "I don't think you need a genius or an expert with years and years of experience to get a rough idea where this property logically sits in the current market, and then understand that that price guide they're giving is not accurate."

In New South Wales, agents found guilty of underquoting can face fines up to $22,000, lose their commission, and risk losing their license. NSW Fair Trading Minister Anoulack Chanthivong condemned price baiting as unlawful and detrimental to buyers. He announced that the government is working on stronger underquoting laws and has established an $8.4 million taskforce to address the issue, with plans for further changes forthcoming.