Bait pricing

Discussion in 'Investment Strategy' started by Gockie, 25th Sep, 2016.

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  1. Big Will

    Big Will Well-Known Member

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    The vendors actual number does mean something, it actually is a legal contract that if the agent does get an unconditional offer of anything above that price they are entitled to commission. That is if the agency will enforce it, as what it is in writing stipulates what the agent job description is and how much they will be paid for it. However very few agencies will enforce this if they are doing it with an agreement to under quote.

    There will always be uneducated buyers, thing is with property everything is unique about it. No two properties have the same location including units due to different elevations. Even the computer generated prices can be accurate or very inaccurate. I saw a property in reservoir that sold over double the computer price or 1M above it. It wasn't anything fancy it was just a standard 3 bedroom house (IIRC) but the location of it was absolutely stunning but I don't think it was worth the price they paid.
     
  2. albanga

    albanga Well-Known Member

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    I agree it's a stupid practice but I don't know anyone who does any form of diligence would think something would sell at a bait price?
    And no vendor unless absolutely motivated by other reasons would sell for anything than comparable.

    So in my eyes it's a no event. If you see a place and think "wow that's undervalued", no it's not! It will be valued at exactly what it is worth compared to other properties.
     
  3. Gockie

    Gockie Life is good ☺️ Premium Member

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    It's very false advertising though.
     
  4. Cia

    Cia Well-Known Member

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    This place in Drummoyne was first priced at $550K after 2 weeks of inspections changed to $600K. My bet is it won't sell for under $700K. It's 100sqm, great high ceilings, big windows, 2 big balconies with some water views to Chiswick Bay, 60s bathroom, but needs kitchen renos new carpet and a wardrobe in the main bedroom. It's on Lyons Rd so v noisy but also v close to shops and transport. No garage or car space. I went to the first two Saturday inspections - people lined up and out the door both times.
    5/64 Lyons Road, Drummoyne NSW 2047 - Apartment For Sale - 2013073208
     
  5. albanga

    albanga Well-Known Member

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    No doubt it is but if you actually do any diligence then I do not see why it should upset you?
    Sure I understand for the uneducated, and that is no doubt where it is aimed, but I can say with hand on heart in my experience in the markets I know it has never worked once.
     
  6. Ghoti

    Ghoti Well-Known Member

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    Bought 2 peoperties in Melbourne this year and in both cases the agents quoted 'plus 10%' when asked how much above the price guide I should make offers (private treaty and auction sales). Suffice to say almost all sold for well over 'plus 10%'.
     
  7. Scott No Mates

    Scott No Mates Well-Known Member

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    @Cia - a reasonable part of Drummoyne, handy to shops, transport & firies. If it's got views it would be away from the street - mid to high $700's is more realistic with new 2 bedders topping $1m in most developments. This is on Victoria Rd, not the best location but still $1m without views.

    This newer one in a better location is sub--$900k
     
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  8. Cia

    Cia Well-Known Member

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    @Scott No Mates I'm currently looking for a PPOR in Drummoyne, Gladesville or Hunters Hill sub $800k if possible. I saw both of those and agree the Vic Pde one was a better buy, although not on the main road, the traffice on bridge noise is v loud. Is that bait advertising starting at $550K for something that realistically going to go for $750K to $800K?
     
  9. Scott No Mates

    Scott No Mates Well-Known Member

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    Hard to prove bait pricing as you're not privy to the selling agent's agreement which they used to justify the sales to the vendor but the agent will be able to provide several 'comparable' sales to justify the lowball price.

    Lane Cove West or North (Mowbray Rd) would also have units in that price range and access to transport/schools/shops etc.
     
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  10. Cia

    Cia Well-Known Member

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    I like the one you refer to but that's outside my budget. The unit on Lyons Rd went for $765K today. I was there, the opening bid started at $600K. The next bid by an obvious buyers agent was $700K. At least 9 registered bidders. Someone new came in at $705K. Then those 2 bid it out to $765K. The buyers agent didn't win it - due to budget. I agree, I didn't end up bidding as I could see it was going for more than what I wanted to pay for it. You're totally on the money @Scott No Mates
     
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  11. Cia

    Cia Well-Known Member

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  12. Cia

    Cia Well-Known Member

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    Please post link?
     
  13. blonde

    blonde New Member

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    Went to an auction yesterday. Literally dozens of registered bidders, all given guide and estimate sale amount of 1 million by the agent throughout campaign and reassured pre-auction this was still the estimate and no indications otherwise. The bidding flew from 950 straight to 1.1. They didn't put property on market until over 1.3 and sold over 1.4. Lots of disappointed and dejected people.

    It's an utterly run-down, poorly configured 1-2 bedroom brick veneer with original kitchen, bathroom, wallpaper, carpet etc. Block of <700 sq metres in Turramurra. Various neighbours have done knock-down and rebuilt with project homes and resold for 1.6-1.7.

    Pretty disappointing at the time I wasted, and saw loads of people frustrated at this auction. Most of us didn't even have a chance and shouldn't have been there but the agent kept encouraging us and said it'd be at 1m level.

    Just a little vent for cathartic value.
     
  14. Gockie

    Gockie Life is good ☺️ Premium Member

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    I have to say... Don't expect to buy any sort of land in Turramurra for $1 mill. But yes... extremely misleading.
     
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  15. Scott No Mates

    Scott No Mates Well-Known Member

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    Agree with you @Gockie - who was living in 2010?

    @blonde - How can anyone seriously expect sub-$1m in the area unless the block was tiny, on a main road, totally unliveable, difficult to build upon, poor access, heavily treed and heritage overlay. What was your research indicating?

    It may be one to report to OFT if the agent was adamant that it was sub-$1m - you'll need it in writing (print the webvert). The agent's defence will be the amount of interest/number of registered buyers.
     
  16. dabbler

    dabbler Well-Known Member

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    Don't believe anything any agent says about price in a hot market, but they know what the vendor will likely get.

    In fact, warm/hot markets not worth going to an auction at all if you ask me, unless it something you really must have and have deep pockets.
     
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  17. Cimbom

    Cimbom Well-Known Member

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