Statement of Information Victoria: How to Spot Underquoting Before You Bid

Underquoting is one of the most common, well-documented, and financially damaging practices that first home buyers encounter in Melbourne's property market. Understanding the Statement of Information — the document designed to prevent it — and knowing how to use it to independently verify a property's realistic price will save you from wasting thousands of dollars chasing properties the vendor was never going to sell at the advertised range.

What the Statement of Information Is

Under Section 47AF of the Estate Agents Act 1980, Victorian real estate agents are legally required to provide a Statement of Information (SOI) for all residential properties offered for private sale or auction. The SOI must be available at all inspections and made available to any interested buyer who requests it.

The SOI contains three mandatory elements:

1. An indicative selling price or price range. The agent's estimate of what the property will sell for. This is not the reserve price — the vendor's minimum acceptable price — but it is supposed to reflect a realistic expectation based on market evidence.

2. Three comparable sales. Three recent sales of similar properties in the same suburb or nearby areas, which form the evidentiary basis for the indicative price range. The sales must be for properties that are genuinely comparable by size, type, and location.

3. The suburb median price. For houses or units, depending on the property type, for the preceding 12 months.

What Underquoting Actually Is

Underquoting occurs when an agent advertises a property at a price range that is materially below what the vendor is actually willing to accept. The legal definition under the Estate Agents Act is specific: it is an offence to advertise at a price that is less than the agent's genuine estimated selling price, or below a price the vendor has already indicated they would not accept.

In practice, it looks like this: a property is advertised with a "price guide" of $900,000–$990,000. The vendor's reserve is $1,100,000. The property sells under the hammer for $1,080,000 after multiple genuinely interested buyers — who believed $990,000 was achievable — committed to building inspections and contract reviews at $500–$700 each.

The financial damage to a buyer who spends $1,000 preparing for an auction that was never in their realistic price range is real. Multiply this across even two or three auctions and the cost becomes significant. The emotional damage — the repeated auctions where the price disappears into a range you cannot reach — contributes to the phenomenon Melbourne buyers and researchers call "auction trauma."

Consumer Affairs Victoria's Enforcement Record

Consumer Affairs Victoria maintains a dedicated underquoting enforcement taskforce. The scale of the problem is evident in the enforcement statistics: in a single recent 12-month period, the taskforce issued 48 infringement notices totalling over $520,000 and issued 37 official warnings across 29 estate agencies. Major agencies have faced penalties of up to $600,000 for deliberately deceiving clients and potential buyers.

Despite this, underquoting remains among the most reported real estate issues in Victoria, with thousands of complaints filed annually. The enforcement activity has not eliminated the practice — it has reduced the most egregious cases and created legal risk for agents who quote demonstrably below reserve, but the subtler forms of optimistic quoting continue.

How to Use the Statement of Information to Detect Underquoting

The SOI is useful as a starting point — but it should not be your only source.

Step 1: Examine the comparable sales. Look at the three comparable sales the agent selected. Are they genuinely comparable? Properties in the same suburb do not automatically compare — a renovated four-bedroom house on 600 square metres is not comparable to an unrenovated three-bedroom house on 400 square metres, even if both are in the same suburb. If the agent selected the least comparable properties to support a lower price, that is a signal.

Step 2: Run your own comparable sales analysis. Use Domain, realestate.com.au, or CoreLogic to search recent sold prices for the same suburb and comparable property specifications. Pull five to ten recent sales yourself. If your median sold price across comparable properties is 10–15% above the agent's price range, the range is likely artificial.

Step 3: Compare to the suburb median. The SOI includes the suburb median. If the property is a well-renovated home in a desirable street and the agent is quoting below the suburb median, ask yourself why. Most sellers with a good property expect to achieve above median, not below it.

Step 4: Track the agent's history. CoreLogic and some property data services track the difference between a property's advertised price range and its final sale price. Agents with a consistent pattern of selling 15–20% above their advertised ranges are systematically underquoting. This is available data.

Step 5: Ask the agent directly. Ask the agent: "What is the vendor's reserve price?" They will not answer directly — agents cannot legally reveal the reserve — but their response, and particularly their body language, can be informative. You can also ask: "Has the vendor indicated a price they would not accept below?" Under legislation, if they have received such an indication, they cannot advertise below it.

The Financial Implication for Your Search Strategy

The practical consequence of underquoting is that you need to build in a margin above the advertised price range when deciding whether a property is worth pursuing.

If a property is advertised at $900,000–$990,000 in a suburb where comparable properties consistently sell at 10–15% above the agent's guide, your true minimum budget to have a realistic shot is $990,000–$1,100,000. If that range exceeds what you can borrow, walk away before spending on inspections.

This is counterintuitive but important: the advertised price guide is not the price. It is the floor of what the agent thinks they need to say to attract buyers to auction. Your research needs to tell you the ceiling.

Reporting Suspected Underquoting

If you believe an agent has underquoted a property — particularly if the final sale price is dramatically above the advertised range — you can report this to Consumer Affairs Victoria. Reports that include documented evidence (the advertised price range, the final sale price, the agent's name) are most likely to result in investigation.

Consumer Affairs Victoria's website provides the reporting mechanism. This is worth doing even if the immediate investigation does not directly benefit you — accumulated complaints about specific agents are what triggers formal taskforce investigations.

The Victoria First Home Buyer Guide includes a property valuation worksheet that shows you how to build your own comparable sales analysis to independently verify what a Melbourne property should realistically sell for. Get the complete guide at firsthomestartguide.com/au/victoria/first-home/.

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