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If you are fortunate enough to try to enter Australia’s property market, you have come across its gatekeepers – real estate agents.
You may have suspected price guides were being lowballed, been promised the world by an agent, or felt like you were outright misled.
Four Corners has spoken to more than 100 people — real estate agents, property professionals, buyers and sellers — as part of a crowdsourced investigation into the sector.
These insiders have lifted the veil of secrecy that hangs over how the industry works.
Here are the tactics agents use, the limits to regulation, and the pitfalls you should avoid.
Underquoting: ‘It’s everywhere … it’s really blatant’
One of the most common concerns of buyers is underquoting — agents listing a property with an unrealistically low price guide to lure them in.
Would-be purchasers can spend thousands of dollars on property inspections and lawyers, only to find they never had a shot at getting it within their budget.
Some agents, like Sydney’s Mark Jones, said the practice was widespread.
“It’s everywhere, and it’s obvious; it’s really blatant,” he said.
“Anyone who’s in the industry or anyone who’s trying to buy a property, certainly in the eastern suburbs of Sydney, can see it on listings.”
Mr Jones said he regularly saw price guides listed for 20–30 per cent below what the property actually sells for.
Occasionally, those price guides are even below what properties have previously sold for — a major red flag.
He characterised the industry as “extremely insincere”.
“It’s lies on top of lies. A lot of people get hurt in the process. There are a lot of people who waste money.”
Melbourne agent Zed Nasheet said “underquoters” give real estate agents a bad name.
“The amount of buyers that show up to auctions in today’s environment, where agents have underquoted … they market a house between $2.4 — $2.6 [million] where they’ve [got a] reserve price of $3 million. The buyers get pissed off.
“They need to change their ways.”
Underquoting is broadly prohibited in all jurisdictions if it amounts to false or misleading conduct under Australian consumer law.
In NSW and Victoria, there are also specific offences for underquoting. Agents must keep a record of comparable sales they’ve used to provide a price estimate.
But Mr Jones said some agents gamed the system by creating a trail of paperwork designed to mislead the regulator.
“There’s no standard property, so you can always pick whatever properties you like to basically fudge the data any way you like, up or down,” Mr Jones said.
“It’s very easy to manipulate the data to suit the narrative.”
There were only five prosecutions against agents in NSW in 2022, and none were for underquoting.
Real Estate Institute of New South Wales CEO Tim McKibbin said it showed that most agents were doing the right thing.
“I’m aware it does take place, but having said that, I don’t think it is anywhere near as big a problem as what the community would believe it to be,” he said.
Secret commissions and referral fees
Real estate industry professionals regularly refer clients to different services. What you might not know is on some of these occasions, money changes hands simply for the service of dropping a name.
Mr Jones said it was standard for referral fees to be paid to anyone who brings an agent a listing or a lead — if it results in a sale, it can be 20 per cent.
“Buyer’s agents are referring their clients to selling agents, selling agents are referring clients to buyer’s agents. Same thing with financial planners, accountants,” he said.
“It’s all considered very normal, which I don’t have a problem with as long as it’s disclosed.”
Each state and territory has different rules around this. They all require agents to disclose any commissions they may have received, but the details vary. Insiders tell us some agents are not.
“If there’s any kind of commission payment channelled back to the buyer’s agent, we need to make that really clear to the consumer. Unfortunately, though, a lot of people don’t do that,” said Cate Bakos, CEO of the Real Estate Buyer’s Agents Association.
The Consumer Action Law Centre’s Stephanie Tonkin said disclosure to consumers was uneven.
“Without full disclosure and a full understanding of the money being passed between different businesses in relation to a sale of a property, it’s hard for the individual purchaser to make an informed choice about whether they’re getting the best deal.”
Conditioning: ‘Appraise high without accountability’
Listings are the lifeblood of real estate agents. With that comes competition.
“A lot of people think that real estate is about selling property. It’s actually about winning the listing,” said Adelaide real estate agent Steve von der Borch.
“The temptation is that agents who will tell an owner what they want to hear are more likely to get the listing.”
This can mean “conditioning” — giving a home owner an unrealistic expectation of what their place could sell for, then slowly adjusting their expectations to where the market really is as the campaign runs its course.
In his nearly 40 years working in the industry, Mr Von der Borch said he had “seen laws bent breached and broken”.
“Their modus operandi is appraise high without accountability and quote low to make dough,” he said.
“There’s no real empowerment of the authorities to go out and find this stuff out and deal with it because it’s nuanced and it’s whispered. It’s not apparent.”
It is a practice that even peak bodies acknowledge happens from time to time.
“A real estate professional shouldn’t be inflating the price in order to secure the listing and then subsequently trying to condition the vendor to accept a lower price,” Real Estate Institute of Queensland CEO Antonia Mercorella said.
“A good real estate agent should be able to substantiate the amount that they think the property will achieve.”
Many of the buyers who contacted Four Corners gave accounts of instances where they had been misled by agents.
In 2015, John O’Brien and his wife bought a property in South Australia’s Clare Valley. The agent, who also happened to own the property, advertised the property as 8 acres.
It was only when the couple were planning renovations that they discovered they had been misled.
“We ended up with 5 acres, so we’re missing 3 acres,” Mr O’Brien said.
The South Australian regulator, Consumer and Business Services (CBS), investigated and found the agent had engaged in misleading conduct.
The agent signed what is known as an “enforceable undertaking” to not make false or misleading representations. The undertaking also noted that, as both the owner and agent, he should have known the land was only 5.2 acres.
There was no other penalty.
Every state and territory keeps an online register so consumers can check a real estate agent’s licence. South Australian law requires disciplinary findings to be recorded on the register.
In the case of Mr O’Brien’s agent, there was no reference to the undertaking.
“It’s disgraceful, isn’t it? There’s nothing on here at all. Unbelievable,” Mr O’Brien said.
A CBS spokesman said: “In this instance, an enforceable undertaking was determined to be the most appropriate action.”
The agent’s licence was cancelled administratively in January this year as it was not renewed.
Four Corners found eight other instances where undertakings were not disclosed on other agents’ licences.
“While assurances and undertakings are publicly available on the CBS website, they have not been included on an individual’s licence page. This practice is being reviewed,” the CBS spokesman said.
Fines are ‘not a deterrent’
When it comes to policing the industry, each state and territory has a different regulator, with different laws and frameworks around what is allowed and what is not.
Canberra real estate agent Christine Shaw said many in the industry did the right thing and followed the spirit of the law.
“There are others, however; they will find the loopholes in the legislation, and they could drive a truck through it,” she said.
“I believe our legislation should be improved so that consumers have greater protection.”
In NSW and Victoria, advertising cannot say things like “offers over”. There is no such rule in jurisdictions like Tasmania.
In Queensland, properties going to auction cannot provide a price guide during the advertising campaign. There is no such prohibition in many other states and territories.
Fair Trading officers in NSW can only dish out on-the-spot fines of up to $2,200 to agents who engage in misbehaviour. If NSW Fair Trading launches court action, a lengthy process, that could increase to $22,000.
“For a lot of these agents who are making millions of dollars a year, it’s just the cost of doing business. It’s not a deterrent,” Mr Jones said.
NSW Fair Trading commissioner Natasha Mann said that was concerning.
“If they are baking it into the cost of doing business, they need to look more broadly about what it is doing to their reputation, both as an agent, but also as the sector.”
Ms Mann said she would welcome the ability to impose stronger penalties. That would require action from politicians.
Mr McKibbin does not think fines are the solution.
“Do we take the approach that we want to fine the industry … or do we take a better response and say we want to work with industry and bring the level of compliance to where the regulator wants?” he said.
NSW has imposed 2,781 on-the-spot fines against agents since 2018. The rules around when penalties can be imposed vary significantly across different states.
In South Australia, for instance, Consumer and Business Services told Four Corners it had not imposed an on-the-spot penalty notice on an agent in the last four years.
It said issuing an infringement notice was not an option under the current law for many offences.
The Victorian government has established a task force to tackle underquoting. But some agents said they did not believe the regulator had sufficient resources to tackle the issue.
“Consumer Affairs in Victoria … are supposed to oversee what happens with thousands and thousands and thousands of real estate transactions every year,” Melbourne buyer’s agent Miriam Sandkuhler said.
“I think agents feel that statistically if they’re doing it, they’ve got a pretty good chance of getting away with it.”
Consumer Affairs Victoria said it took estate agent conduct seriously and would investigate allegations of wrongdoing and take action where necessary.
Watch Four Corners’ full investigation into the real estate industry tonight on ABC TV and ABC iview.