New rules needed to prevent underquoting

Agree 100% with this. In fact, the fairest way would be to make it mandatory that the price estimate provided to vendors on the listing agreement with the agent be made public knowledge, as this provides consumers with a more realistic idea on price.

I also like the way that one agency in Sydney currently conducts themselves, and accordingly to placate the OFT (as they've been heavily fined in the past for not doing the right thing) and that is to alter the advertised price guide once an offer has been made. For example, on one property that I was attempting to purchase on behalf of my client, the price guide changed from Offers Over $650K to Offers Over $700K over a period of mere days, due to increasing offers from potential purchasers. At least this gives the buyers a fairer idea of what they're up for.

There are still several agents, however, who beat up massive interest by underquoting by up to 20% and then, even when receiving pre-offers, don't alter the price guide to reflect the "real" price. I consider this practice both unfair and unethical, as it's so disheartening for buyers to continue missing out and doing their money on auction after auction.

As for agents being held more accountable, most of them will wriggle their way out of it by claiming they have no control over the "market" and what buyers will pay. In some cases, this can be true, but in others it's simply false. They know full well what the level of interest really is, but continue to mislead buyers by underquoting and providing a very different guide to the reserve. Some recent examples here in the Sydney market include:

Property advertised price guide $780K sold $920K
Property advertised price guide $800K+ (and let's get some legislation on what + can mean- up to a max of 5% over I would suggest is fair) sold $950K

Property advertised guide approx $800K sold $935K
Property guide given verbally by REA low $7000K's sold $815K
Property guide $500K+ sold early $600K's.

The OFT is basically a toothless tiger when it comes to dealing with REA's and underquoting. There appears to be no standard ie: estimate to be within 10% of selling price but rather each case is considered individually, with the agent undergoing review of documentation by the OFT to ensure they weren't engaging in misleading information when it came to price.

It's difficult enough for buyers out there right now to secure a property for a fair price, let alone deal with the minority of agents who elect to continue to underquote. I see no reason why the price estimate provided on a listing agreement between agent and vendor isn't good enough for a reserve/price guide. Until this happens, the games will continue.