The Price Isn’t Always Right
As an auctioneer calling hundreds of auctions a year, there are many trends and truths that you observe along the way that can help predict the success or failure of a campaign.
One of these truths that has become more noticeable in recent months is seemingly one of the most enduring.
Buyers shop through the window of price.
An attractive price guide will open the door to more buyers, while a steep guide can completely derail your campaign. Getting the price right is an art, yet for a long while, running without a guide was a tempting alternative to clarity ... but that convenient loophole is closing fast.
To understand the reasons why, one needs to first consider the current underquoting rules and the significant reforms coming into effect under the Minns Labor government.
Currently, the maximum fine for underquoting is $22,000. Hardly a risk for the agent keen to test his luck in the booming property market where properties regularly clear hundreds of thousands over guide. However, under the proposed reforms, this maximum penalty will be increased to $110,000 or three times the agent's commission, whichever is higher. Such a significant consequence is a powerful deterrent to even the foolhardiest of gamblers, powerfully signalling the government's strong commitment to stamping out underquoting in the hope of restoring buyer confidence.
The other significant change: it will be compulsory for agents to publish a price guide on all advertising. This closes a not insignificant loophole which has allowed agents to advertise a property with "Auction if not sold prior," or “Contact Agent” a practice that understandably often frustrates overwhelmed and time poor potential buyers.
Somewhat paradoxically given the motivations for ambiguity, advertising price guides on listings has been proven to attract more buyers, due mainly to the reality that most will rely on price filters when searching for properties online. But most simply, buyers just appreciate the transparency, as it prevents them from wasting time and money on due diligence (strata, building/pest reports, solicitor fees, etc.) for a property that is ultimately outside their budget.
In essence, this means that agents will need to adapt their pricing strategy or risk large penalties and the loss of their license. Agents who take the time to conduct thorough research and implement the correct strategy in the living room will be the ones who thrive in the years to come. I would argue that never has it been more important to set the Estimated Selling Price (ESP) accurately not just for the clients but for one’s own reputation as an agent. With these new reforms, honest conversations about price with vendors are a necessity and will ultimately determine either success or failure on auction day.
Simply, the key to campaign success rests on open and transparent communication. At a basic level, in any auction campaign, it is crucial to communicate that the Advertised Price, Estimated Selling Price, and Reserve Price are three distinct concepts:
Estimated Selling Price (ESP): The price range the agent has formally provided as their professional estimate, based on their research and comparable sales.
Advertised Price: The price range (based on the ESP) advertised online and in marketing materials.
Reserve Price: The confidential minimum price set by the vendor, which determines when the property is officially declared "on the market" on auction day.It is also important for vendors to understand that the ESP and Advertised Price can and should change throughout the campaign based on ongoing market feedback, formal offers, and the overall trajectory of buyer interest. Nothing is ever set in stone.
In short, the successful agents of 2026 and beyond will be those who are able to effectively communicate the different types of prices within the auction campaign, not just to clarify their purpose, but clearly articulate their accurate ESP. This will not only provide much needed transparency to buyers but also earn the trust of their vendors and the confidence and competence for years to come.
