Understanding property prices

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Real estate pricing and advertising

Property advertising must not be misleading or deceptive. It is illegal for a seller or agent to misrepresent a property in any way when advertising or marketing that property, whether verbally or in writing and photographs.

Since 1 May 2017, if a property for sale includes a price, it must be listed as a single figure or a range of up to 10 per cent. The price cannot use any qualifying words or symbols, such as 'from', 'offers above', or '+'.

An agent must provide an estimated selling price that:

  • is reasonable
  • takes into account the sale prices of the three most comparable properties to the property for sale.

It is illegal for an agent to advertise or advise you of a price that is less than:

  • the seller's auction reserve price or asking price
  • a price in a written offer already rejected by the seller on the basis it is too low, or
  • the agent's current estimate of the likely selling price.

Agents must update the advertised price if it changes during the sales campaign.

If an agent does not comply with the above, then they are engaging in underquoting. For more information, view the underquoting information below.

Statement of Information

The Statement of Information is an important resource for any home buyer and it is the first thing you should check once you have found a property you like.

It is a legal requirement for all residential properties for sale in Victoria to have a Statement of Information that includes:

  • an indicative selling price - this can be a single price or a price range of no more than 10 per cent
  • details of the three most comparable property sales - including the address, date of sale, and sale price. For information on when this does not have to be included, view the Comparable properties section on our Understanding underquoting page
  • the median house or unit price for the suburb - this can be for a period of between three to 12 months, and cannot be more than six months old.

Agents do not have to advertise a price, so you should use the indicative selling price as a guide to what the property might sell for. If the indicative selling price changes, agents must update the Statement of Information to keep it accurate and up-to-date.

This, along with the property and suburb information, can help you decide whether you are spending valuable time and effort on a property you have a realistic chance at and can afford.

You can get a Statement of Information:

  • at the property's open for inspection
  • by checking online advertising - agents often include it with the property listing as a 'Statement of Information' tab or a PDF you can download
  • from the agent - they must give it to you within two business days of your request.

Seller's reserve or asking price

The lowest price a seller is prepared to accept for their property is called the:

  • reserve price for an auction, or
  • asking price for a private sale.

The seller's reserve price is usually set on the day of the auction. It may be higher than the advertised price.

If a seller tells the agent of their asking or reserve price during the marketing campaign, the agent cannot advertise the property below that price.

If a seller does not give the agent an asking or reserve price, the property must not be advertised for sale at a price that is less than the agent's estimated selling price. This is the reasonable price the agent estimates a property is likely to sell for, based on the three most comparable property sales.

Underquoting

Underquoting can occur when a property is advertised at a price that is less than:

  • the estimated selling price
  • the seller's asking price, or
  • a price already rejected by the seller.

Comparing the initial advertised price with the sale price is not necessarily evidence of underquoting.

Tips

  • Research the market value of property in your preferred areas by searching the internet, attending auctions, speaking with a variety of estate agents and monitoring auction results. This will give you a realistic idea of the suburbs and types of properties you can afford. For more information and resources, view our Property data page
  • Use the agent's estimated selling price as a guide only. The agent represents the seller but must be fair and honest with buyers.
  • Ask the agent to justify their advertised price. They should have knowledge of the market in the area to support their estimate.
  • If no price is advertised, use the indicative selling price and the three comparable property sales (both found in the Statement of Information) as a price guide.
  • The seller is unlikely to set their auction reserve price until the day of the auction. The reserve price decided on the day might be above the advertised price.
  • Do not allow emotion to cloud your judgment and be realistic about the likely selling price.

Reporting underquoting

Before you call us about instances of what you believe may be underquoting, you should read our Understanding underquoting page and be able to provide us with the following information:

  • property address
  • your contact details
  • details of the real estate agent
  • screen shots of the property advertisement
  • Statement of Information
  • written representations made about the property (if relevant)
  • explain the problem - for example, why you think the property advertising is misleading
  • any other documents that you think may help us.

We do not respond to every report we receive, but we keep all information for our intelligence purposes and use it to inform our compliance and enforcement activities.

To report underquoting, call the Estate Agents Resolution Service on 1300 737 030, 9:00 am to 5:00 pm, Monday to Friday (except public holidays). Note: Calling us costs the same as a local call. Additional charges may apply if you are calling from overseas, on a mobile or payphone.

Enforcing real estate pricing laws

We regularly inspect real estate agencies and conduct reviews of agency documentation to ensure estate agents are complying with the law.

We use a range of compliance tools against agents who underquote, including warning letters, enforceable undertakings, injunctions and prosecutions.

The action we take depends upon the impact on a buyer and the seriousness of the breach.

For more information, view our Regulatory approach and compliance policy.

Our recent underquoting outcomes

Understanding property prices video