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April 10, 2026 — 5:00am
If you’ve ever set foot in Australia’s property market, especially as a buyer, you can probably see why so many people think real estate agents work in the least ethical profession in the country.
Unfortunately, these agents are also largely unavoidable, almost always standing between us and one of life’s basic necessities: housing.
Here’s the thing, though: most of them aren’t inherently evil (even if they did rank at the bottom of a Governance Institute survey last year which rated a list of occupations by ethical behaviour).
And, like most people, real estate agents are probably largely driven by self-interest (although the profession does seem to attract a bigger-than-average share of people with a bigger-than-average willingness to lie or mislead).
Some real estate agents blatantly break the rules. But many are working within the law which, for years, has allowed behaviour that leads to buyers (and sometimes sellers) wasting more time and money than they need to.
One of the big behavioural problems in recent years has been underquoting: where real estate agents give buyers false hope by whacking a price guide or price range on a property that is well below what the property ends up selling for.
That can sometimes be because a totally unexpected cashed-up bidder rocks up on auction day and seizes the moment.
But it’s clear from the ridiculously high frequency with which it happens that underquoting isn’t just the result of agents taking a stab in the dark: the knife far too often lands well short of the actual selling price. Real estate agents can’t be that prone to missing the mark (especially when it so often seems to skew to underestimating the final price).
The good news is that several state governments have changed their rules.
In March, the NSW government pushed up penalties for underquoting from $22,000 to more than $110,000 (or three times the agent’s commission – whichever is higher) and banned agents from advertising a home for a lower price than a written offer that the seller has already rejected.
And Victoria now requires sellers to publicly disclose their reserve price (the lowest price they are willing to sell at) seven days before an auction.
These rules help to fix what’s called “market failure” where goods or services are allocated in a way that is suboptimal, leading to customers paying much more than they could or should.
Often, this is because of “information asymmetry”, where buyers don’t have all the information – or have inaccurate information – to base their decisions off, leading them towards choices they might not otherwise have made.
The problem with Australia’s housing market is that it’s not just about buyers lacking complete information about a particular property they might want to buy (such as its defects and other downsides) but also uncertainty about its pricing.
For most goods and services, the price is clear. The price you see a carton of milk, a new car, or a movie ticket listed at is generally what you pay for it.
But when it comes to a home, often it’s not as simple as lobbing an offer or making a bid on a property that matches the price it’s listed at.
Auctions, of course, are a prime example of how real estate agents have deceptively listed properties with low price guides to reel in buyers and create an illusion of strong demand for the property – often to boast later about the incredible turnout on auction day.
Like the Victorian government, the NSW government should force sellers to disclose their reserve price – or at least require the minimum price the seller is willing to accept to fall within, or in line with, the price guide. As it stands now, buyers in NSW will continue wasting time and money on inspections, research and going to auctions for properties that they have no chance of buying.
It could also help to have a way of tracking – or requiring real estate agents to publicly report – the average gap between the price guides they issue and the prices they end up selling their properties for. That would not only incentivise real estate agents to quote prices more accurately, but also improve public awareness of the gap between price guides and what properties are realistically selling for.
There are, however, also imbalances in information when it comes to buyers competing for homes sold without an auction.
More than once in the hunt for my first home, I made an offer on a property that a real estate agent said had competing offers, only to have my alleged “competitors” disappear shortly after I bowed out. Funny how that happens.
It’s illegal for real estate agents to make up fake offers, but they’re also not obligated to prove or show evidence of other offers to possible buyers.
That means buyers are generally on the back foot, often paying more than they need to.
There are, of course, relatively low-cost ways for buyers to improve their chances that the real estate agent is telling the truth when it comes to claims of “multiple offers”.
Anyone who has been on the hunt for a property knows handing your contact details over at inspections is a surefire way to ensure you’re never lonely. No one – not even the love of your life – will call you with the enthusiasm, frequency and tenacity of a real estate agent.
Asking them to put their statements in writing is probably a bit intense for a romantic suitor, but when it comes to real estate agents, that can sometimes be enough to boost your chances of receiving the truth. An embellishment of the truth thrown in over the phone is often a lot less scary than leaving a paper trail that is harder to dispute.
Nonetheless, the cards are often stacked against the buyer when it comes to knowing the truth. And given real estate agents in Australia are generally paid by the seller, it’s perhaps little surprise that they rarely act in a way that balances the interests of buyers and sellers.
In recent decades, “buyer’s agents” have emerged as a response to real estate agents. As their name suggests, they help (and are paid by) the buyer who hires them for their expertise in the property market and to help with the process of buying a home, including finding a good property, bidding at auctions and negotiating with real estate agents.
This has helped whittle down the gap in knowledge and negotiating power between buyers and sellers, but comes at a price. For some buyers, it may be worth it.
The less costly (and more effective) solution is to make sure the rules of the property game are fair in the first place and more effectively discourage behaviours that waste people’s time and money.
There will always be real estate agents who bend and break the rules, but that doesn’t mean we should sit back and let it happen. Most people will follow laws, if not out of the goodness of their heart, out of self-interest. If we tighten up the rules, it might be enough to squeeze out some of the behaviour that is worsening affordability in our housing market.
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