Pricing a property to sell in Melbourne

Just bought a property two weeks ago. Even though I am in the property industry myself, the process of under quoting sh*ts me to no end.

Because there is no legislation around it, everyone is forced to play the under-quoting game to attract buyers to your property. All the honest agents find that their fair quotes will result in no-one turning up because buyers automatically add 10-20% to their quoted price.

My tip: Ask the agent for comparable sale prices. I found that the comparable sale price agents gave me were much more in line with the final selling price... After you get a set of comparable sale prices (which will be 10-15% higher), feel free to yell at the agent for being an under-quoting a-hole.

 

@Peter L, oh, there is legislation around underquoting. It is quite illegal. I actually didn't mind it as a buyer. It was easy to figure out. It annoyed me a lot more as a seller because of the stupid games real estate agents play to get you to underquote without breaking the law. It turned out that ours might have been a little low which may have attracted the wrong type of buyers. We were fairly close though and I am not sure we would have done better on the day with a different pricing strategy. The problem with underquoting is that when everyone is doing it, everyone else has to do the same thing to be taken seriously. It is a massive issue with no clear solution.

 

Correct me if I'm wrong, but I don't know of legislation in Victoria which expressly states that under quoting will attract a fine. Potentially you could get someone under misleading / deceptive conduct?

I also use this to search for pricing: realAs

I have met the CEO and he is an absolutely fantastic guy (agents are threatening to sue him all the time!)

 

Check Estate Agents Act. I don't have access to it on this device. There is a good write up on the website you linked to. Great link btw.

How to Report Underquoting

 

A REA is not allowed to quote a property below the Vendor's sell price on the authority.

So if the house is worth 800k and the vendor says they want 1-1.1M and the REA says 700k on their estimate the REA is unable to list for less than 1M. Hence why they will put on the vendor TBA (I would never write price here, see later on) and tell the vendor we need to put the price lower here or we are unable to price it lower.

If the vendor comes back and says I want no less than 800k-1M, the REA will tell them that is okay you as the vendor have full control but it is just getting past the legal loop hole.

IF you did write the price of 700k on the vendor price on the authority form and they had an offer of 780k (even 701k) and you didn't accept it, the REA is technically allowed to claim commission as they got you an offer of over 700k and you didn't accept. So they did their job and in return should be compensated.

The reason TBA is used a lot more is prices change either up or down.. Lets say after the negations there was an offer of 795k (using 800k still) and you were going to accept it. The agent would require you to complete a new authority form to secure his commission or otherwise you could argue he didn't do their job (same thing with expired authorities). This creates more paperwork. However lets say you had signed 800k on the vendor price and you now want to drop the price to 780k+ the agent would then need to come to you (or you come in) and complete a new authority to be 780k (or lower) just to advertise. Lets say you did it at 780 but then wanted it to be 750k+ you have to go through the same process again!

Unfortunately there is no easy solution besides do what the market does. Up in Brisbane more houses are price with the upper limit and you work down. If a house is 100k above FMV people will negotiate it down 100k... I see the same thing with a house that is 100k below FMV you would hope to get it for 100k less but reality you would pay 100k more... Same same but different.

The scary part is if a vendor

 

Yes @Big Will, that is exactly what happened with us. We started out at one price based on some sales but as the campaign progressed it was clear from new sales in the area we would not reach our original expectation. We completed a new authority with TBA because we literally could not set our reserve until 5 minutes before the auction. Based on the auction just before ours, we revised our expectations again and were completing the reserve price on the authority form as the auction was supposed to start. It sounds crazy but it actually wasn't that bad. The market is so dynamic that the process needs this type of flexibility.

 

Settlement in 6 days. w00t! Happy days

 

Congratulations..... what next???

 

Changes to Victorian price quoting

 

I am still battling council to get approval to build one additional dwelling (there will be 2 total) on my 4 unit site in Perth

Then looking for local opportunities as local prices tumble. Still not there yet but I will be watching the market.

 

I am also with council in Melb.
I hope Perth will provide opportunities, I am not looking at the moment.

Melb is a very strong market middle ring, East, however prices on development have soared. Even the low base areas that had a 4 in the front they are pretty much drying up starting with a 5 now.