I have been involved with Auctions in the inner city since 1997, 15 years. From the day I got involved Under quoting price expectations to the public has been a huge problem, the REIV has set out advertising guidelines and there are legislative requirements at State and Federal level to try and stamp out Under quoting yet we still see it occurring daily.
We were recently advertising a property in the Wellington Gardens complex. We were then shocked to lose interest from a few buyers with them quoting we were too expensive. We were providing comparable sales from early through to mid 700’s. The property people were comparing ours to was another property in Wellington Gardens with an advertised price of $700,000+ we had appraised this property for the owner just prior to them going to market and indicated that they could expect a result around $880 – $920k (it was much larger than the property we had on the market and contained an extra bedroom, 2 extra bathrooms and an extra car space).
We spoke to the owner about our concerns around price which they seemed to take on board then we received an email from their agent telling us to keep our opinions to ourselves.
The people I felt really sorry for we’re the first 3 people bidding at the Auction who bid competitively up to $800,000 the question… “Is the property on the market yet?” kept coming up and rightfully so, the price was well above the $700,000+.
After a vendor bid or two (the agents legal way of bidding for the Vendor to keep the bidding moving) and the new bidding of some experienced buyers the property was announced on the market in the high $800’s, bidding concluded and the property sold for $920,000, $220,000 above the quoted price.
Whilst some would think ‘wow what a huge result’, we know better. It was the right result, as I mentioned earlier we’d indicated a high 800’s to low $900’s. The issue I have is how unfair this is to the buyers who were left in the wake…….. WAY back in the wake! Especially given the buyers we lost for our campaign (that ended up selling right within our indicated range at $756,000) could have bought ours but instead were loured by an unrealistic quote price and hence missed out on a property that they could afford and that met their needs.
At Harcourts City Residential any buyers looking at a property will be provided with a list of comparable sales, the agent will always be able to talk you through the differences in each of the sales compared to the subject property. This allows any prospective purchaser to make an educated estimate of the selling price, the same way an agent would when assessing the likely selling price or a vendor would when estimating the likely expected price of their property.
If you are looking at property with us you can use the link advertised within the add it will take you to the ‘outgoings summary’ which includes the list of comparable sales, or you can use this link and then click the address of any property you are interested in. Be sure to then contact the relevant agent so they can help talk you through the differences.
Buyers do your homework, it’s super easy to get an idea of price in and around the inner city, go to an auction or two and then when you see the next property ask yourself objectively………… How does it compare in; size, accommodation, quality of fixtures/fittings, aspect, views, facilities, car park, outdoor area etc. Then make allowances up or down for the differences.
An active buyer will often have just as much of an idea of property values as an agent in a very quick period of time.
What you will start to see in this market is less agents reporting the results of their Auctions because as the clearance rate falls the exposure of under quoting rises, ie; if the agent in the example above quoting 700+ didn’t sell and then had to report a passed in result and a reserve they would become very much exposed if the reserve was $900k or $920k.
Agents with more informative pricing methods will not have huge crowds at Auctions but rather a small collection of qualified buyers at the right price.
They will also find even if a buyer misses out they will be happy to continue working with that agent as they were not mislead in anyway and the relationship between buyer and agent remains intact.
So if you’re a buyer or seller, do your homework. When receiving information on price from agents consider it objectively. Compare apples with apples and take off your rose coloured glasses, be realistic with your expectations. Remember……. If it’s too good to be true, it probably is!
Happy house hunting!
Harcourts City Residential (Melbourne)