Under-quoting a sale price when a property is going to auction is the single biggest issue the buyer has to contend with in their discussions with a “bad agent”.
However, the people who are most affected by this deception and unlawful conduct is the seller. It is no wonder that real estate agents have a bad reputation in the eyes of the public.
By under-quoting price expectations, the bad agent is guilty of confusing the market place by setting the wrong expectations.
Impact on Buyers:
- This practice lures in some buyers who may not be able to afford the property.
- Buyers in this position leave the auction feeling disenfranchised after investing time and money in property inspections and initial legal/conveyancing fees.
Impact on Sellers:
- Confusing buyers who have the right budget and can afford it.
- A buyer with the budget may go elsewhere or withdraw from bidding if they feel they are paying above market price once the auction bids escalate past the under-quoted price.
- These actions could cost the seller 10%+ of the sale’s value.
In what is a pleasing move for buyers and sellers, a group of real estate agents have launched a campaign to end under-quoting or “price baiting” as it is known. The agents behind the campaign believe the “bad agents” referred to previously are wasting buyers’ time with price estimates that are often well-below the seller’s reserve.
Recently reported on the ABC, the group wants a change in regulation, which would force vendors to publish their reserve price prior to a sales campaign. An extract is below:
The former chairman of the Real Estate Institute of Victoria’s Ethics Committee, John Keating says some agents give price estimates to potential buyers that are up to 20 per cent below the reserve.
He says this results in house hunters wasting time and money on looking at, and often getting building inspections on, properties they cannot afford.
“They’re talking with forked tongues to purchasers and under-quoting in order to get more interest in the properties. Buyers detest the systemic under-quoting that’s going on, so if you can make it an absolutely transparent marketplace, I think more properties would be sold by auction,” Mr Keating said.
If you have been affected by a “bad agent”, the best thing to do is to make a complaint with Fair Trading and let the Department deal with them. Lodge your complaint with the Department of Fair Trading by calling 13 32 20.
If you’re a seller, sack your agent and start again, no matter the cost. These are the questions every seller should ask prior to appointing a real estate agent.
Andrew Bruce & Samia Malouf
Riverview Realty is a boutique agency focused on achieving the maximum price, with a client engagement that is above the industry standard. We call it the “Ultimate Experience” which forms part of our unique selling proposition.
Ph. 02 9420 0083, 59 Tambourine Bay Road, Riverview.
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