Under Quoting Still a Hot Topic…..

Following our Blog in July 2012, we now draw your attention to The Age article of similar topic, Agent under-quoting. Many of the points raised in The Age article we support. Under-quoting has not changed and under the current Stressed from agent underquotingarrangements unless the public make a complaint through correct channels it will continue to dominate Melbourne’s Real Estate Market. Greg Hocking makes a point I strongly support, regulators are ‘‘either under resourced or under inspired’’ and should ‘‘pro-actively investigate the scores of examples each weekend’’ instead of waiting for a complaint. The public are usually so disappointed that they’ve wasted their time and money they don’t care to waste any more in reporting someone through formal channels.

Buyers, take note of the tips in our Blog “How to avoid the disappointment of Agent underquoting” see link below.

We have recently come under fire from several buyers who, have clearly experienced and are frustrated by underquoting that, when we try to take the time to discuss with them recent comparable sales, they shout at us ‘just give me a straight answer’. What they miss is that, that is exactly what we are trying to do. Educate them as to the comparable sales so they can make an educated opinion around price rather than giving them a vastly underquoted price like many agents are doing. It is very much the same conversation we have with our Vendors to educate them as to the likely price of their property.

Best advice I can give, build relationships with Agents you trust and avoid the ones you don’t. Take the time to understand the comparable sales to avoid disappointment.

The Age – 17th September 2012. Estate agents cop flak as buyers bite back on auction quotes…….. http://theage.domain.com.au/estate-agents-cop-flak-as-buyers-bite-back-on-quotes-20120916-260kp.html

Our Blog “How to avoid the disappointment of Agent underquoting” written 6th July 2012 http://blogs.harcourts.com.au/harcourtscityresidential/tag/agent-underquoting/

Under Quoting Still a Hot Topic…..

Following our Blog in July 2012, we now draw your attention to The Age article of similar topic, Agent under-quoting. Many of the points raised in The Age article we support. Under-quoting has not changed and under the current Stressed from agent underquotingarrangements unless the public make a complaint through correct channels it will continue to dominate Melbourne’s Real Estate Market. Greg Hocking makes a point I strongly support, regulators are ‘‘either under resourced or under inspired’’ and should ‘‘pro-actively investigate the scores of examples each weekend’’ instead of waiting for a complaint. The public are usually so disappointed that they’ve wasted their time and money they don’t care to waste any more in reporting someone through formal channels.

Buyers, take note of the tips in our Blog “How to avoid the disappointment of Agent underquoting” see link below.

We have recently come under fire from several buyers who, have clearly experienced and are frustrated by underquoting that, when we try to take the time to discuss with them recent comparable sales, they shout at us ‘just give me a straight answer’. What they miss is that, that is exactly what we are trying to do. Educate them as to the comparable sales so they can make an educated opinion around price rather than giving them a vastly underquoted price like many agents are doing. It is very much the same conversation we have with our Vendors to educate them as to the likely price of their property.

Best advice I can give, build relationships with Agents you trust and avoid the ones you don’t. Take the time to understand the comparable sales to avoid disappointment.

The Age – 17th September 2012. Estate agents cop flak as buyers bite back on auction quotes…….. http://theage.domain.com.au/estate-agents-cop-flak-as-buyers-bite-back-on-quotes-20120916-260kp.html

Our Blog “How to avoid the disappointment of Agent underquoting” written 6th July 2012 http://harcourtscityresidential.wordpress.com/2012/07/06/how-to-avoid-the-disappointment-of-agent-underquoting/

How to avoid the disappointment of Agent Under Quoting!

Stress2-300x300I 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.

http://cityresidential.harcourts.com.au/Home/Buy/Outgoing-Summaries/26684

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!

Dionne Wilson

Harcourts City Residential (Melbourne)

Underquoting – A Hot Topic

 

Underquoting – A Hot Topic

 

At our weekly review meeting the interesting topic of Sunday’s news release came up in conversation. Not only because it was an odd time for a release (Sunday not being a regular media hotspot), but because it dealt with the ever-contentious issue of underquoting.

The auction underquoting debate rears its head whenever the real estate market perks up with confidence. We would hope that most of society would actually see this confidence as our economy re-asserting its strength again and investing in its future rather than reacting with anger and disappointment.

As an agent, Terry McCrann’s article in the Herald Sun was a breath of very relevant and sensible fresh air. You can check it out here http://www.news.com.au/heraldsun/story/0,21985,25811073-36281,00.html

In the article, McCrann asks society to take a long hard look at themselves. ‘How about asking potential buyers to do something which is out of order in the nanny state? To take some responsibility for their own actions; to do a bit of due diligence’

What we’d like to impress upon all our buyers and readers generally is that fining an agent or an owner for a market rising is certainly a soft option. The agent neither buys, nor owns the property in question. Their role and responsibility is to get their boss (the vendor) the most money possible for their most valuable asset. So before pointing the finger at the agent and blaming us for ‘underquoting’, when we have done an excellent job for our ‘boss’, perhaps we should step back and look at the mechanisms that make an auction work.

The key mechanism is emotion, for both the vendor and the purchaser. You cannot legislate for emotions. At the beginning of a campaign, the vendor perception of the value of their home can be extremely different to the reserve that they set on the auction day. This ‘emotional’ journey for the vendor of either adjusting their reserve down to ‘meet the market’ or conversely raising their reserve in light of market feedback can’t be legislated against. No one could make a vendor promise to sell their property at ANY price throughout ANY campaign. This is the key point we wish to impress upon you.

Post January 2010, we will likely see CAV find a soft target agent and attempt to fine them for underquoting, a bit of a Rene Rivkin event. This will simply force agents to give the buying market less information – we will remove the quote bracket. It will simply be too dangerous for agents to give a quote range. Where does this put the purchaser? Even further in the dark than they already perceive they are.

Currently, buyers have the benefit of having a price bracket quoted to them – a guide to expectation. This guide can change throughout the duration of the campaign, as can the vendor’s reserve. The vendor’s reserve is generally given to the agent and the auctioneer the morning of the auction. We cannot force an owner to change their mind about their reserve – after all, it is their asset. The quote that is currently given by most agents to the public is a good indication of where expectation lies. A better quality agent (like ourselves at Harcourts CBD) will also give you relevant comparables so you can make a decision for yourselves as buyers. So what are you going to be fining the soft target estate agent for? Not being able to predict their clients future emotions about the value of their asset? Or for the emotions of competitive buyers?

I would encourage you all to read McCrann’s excellent article and think about the way you want your society to be managed – are you happy to make decisions for yourselves, or would you prefer to keep pointing the finger at others? There are lots of tools out there if you want them – not only the weekly sales reports on Sundays in The Age and the Herald Sun, but also through websites such as domain.com and realestate.com. Happy hunting!

For any points of discussion for the topic of underquoting, please comment below. We are very keen to hear your thoughts and perspectives on this quixotic topic!

For further information on this, or any other property needs you may have, please contact:

DW_1802_200dpi_HS

Dionne Wilson

Director – Harcourts City Residential

Ph: 03 9664 8100          Mob: 0417 318 705

E: dionne.wilson@harcourts.com.au Web: www.cityresidential.harcourts.com.au

*Harcourts City Residential has gathered this information to provide an interesting document for apartment owners and prospective purchasers. Harcourts City Residential may not have affected any or all of the transactions noted; rather we’ve gathered as much market information as possible on ALL transactions to be as conclusive as possible.

Information contained herein is gathered from a range of sources including but not limited to; The Age Property Results, The Herald Sun Property Results, Valuer General Information & Agents own investigations. All efforts are made to verify the information provided. The information is not to be relied upon or used in dealings with third parties and people should make their own investigations regarding their own property or personal circumstances. Opinions offered are just that, our opinions & observations and should not be treated as fact.

If your property is exclusively listed with another agent please disregard this communication.