Real estate agents risk losing commissions in under-quoting crackdown

Saw this one in the agency window today: Blatantly misleading @ bids starting from $1,200,000. That implies that you can buy into the area cheaply when it'll more likely sell for $1,600,000 +

 

Places in Melbourne's inner north are selling at auction for $150k-$200k above the top end of the advertised price.

Huge waste of time for people that are new to the market and don't realise this is how it works.

 

8 Young Street, Kew. It's a rather decrepit '50s or '60s modernist house on 844 m2 of land. The agent quoted around $1.8 million, and it went for $2.5 million.

It was being sold as a development opportunity. No applications were in place, but the agent said that the local plan would allow for it to be replaced by a pair of dwellings. Whether anything of a higher density could be built there is a different question.

As an aside, I don't see the value being due to the property. A Robin Boyd house of similar vintage in Studley Park sold for $2.3 million a week or two ago. That was in better condition, and had a far superior design, so would have been a better buy.

Whilst I'm riffing on mid-century architecture, the best buy in Kew was probably Peter McIntyre's purchase of the plot he built the River Residence on. It's just down the road from 8 Young Street, and he paid £200 (about $400) for 9 acres in 1947, at the age of 19!

 

Auctions should be advertised using the reserve price in my opinion.

 

When I was shopping in the area just over 12 months ago I learnt very quickly that this was wiseberrys thing, so automatically dismissed any listing of theirs.

However, I can only hope this does sell for as much as possible as I bought on that street but on the side that has water views, with bigger land size, more bedrooms, bathrooms, and car spaces for much less than the lower figure and looking to get it revalued early next year to allow me to purchase again.

 

The value is due to the land size, the improvements are worth next to nothing, esp on the Young Street property. Young St has a larger allotment so is worth more even if the improvements are inferior.

The development site market in Melbourne is moving so quickly at the moment I have more sympathy with quoting on them. Esp since its generally more sophisticated purchasers looking at them.

 

The Young Street property only made sense for redevelopment. Whilst I'm a fan of modernist architecture, the house was badly sited and constructed, and needed a lot of work to it.

The Boyd designed house on Redmond Street was also subject to a heritage order. That would pretty much scare off any developers.

Another possible underquoting case: 18 Merriman Street in Millers Point. Listed at around $1.4 million, and went for nearly $2.5 million.

 

Would be nice but what if a reserve isn't set until less than a week or the day before the auction?

I have seen times where the vendor has given the auctioneer the reserve price right before the auction is about to start.

As a buyer I would want to know the vendors sell price as it would reveal their cards but as a seller I wouldn't want to disclose this details as things can change during the auction campaign and people should do their own DD.

If I put my first car (1986 Corona) up for sale for $20,000 do you think I will get any bites? No cause people would look at what comparable cars they can get for that price and decide to either buy a new car or a luxury second hand car maybe.

If you went to Harvey norman and looked at buying 50in tv and I saw 3 different TVs brands (Sony, Samsung, LG) and they were priced $1 (ex display), $2,000, $2,500. Which one would you choose? I would choose the $1 without even thinking.

However if it was $1,800 (ex display), $2,000 and $2,500 I would probably get the $2,000 one. Remember this is not a unique product as the 50in LG tv is the same as the next 50in LG tv.

With property EACH property is unique so you cant use advertised prices as some don't even give a price. However you can use sold prices and determine the price. There is serious dollars that are spent and some people are not doing their own DD due to laziness or don't have the skill set (which you can hire).

In a game where no one tells the truth how do you expect the truth to be told?

Buyer tells REA I would only pay 500k for it (really would pay 550k or more) I have done this so guilty.

Vendor tells REA their lowest price is 600k but would accept 550k as they want as much money as possible.

The REA is communicating both what the Buyer and Vendor are saying and might even put their own spin on it but everyone here is not telling the truth.

 

I like that, 350 - 430....well, close enough to 100k or near to 25% of the low end, will it be any surprise when it is not sold anywhere near that.

 

I don't believe this would be a good practice to solve the issue
Many agents choose comparable sales that support what they are trying to achieve. Ie) they give buyers more expensive comps to get them to pay more than what the property is really worth.

 

The agencies create their own sub methods off selling too. once you know the agents tactics you are awake to them and known the rules of their game, but when you don't know what game you're playing it can be a steep and dissapointing learning curve.

Sellers markets are the toughest for buyers. Al, the games go out the window in a balanced market because agents don't have the leverage of definite multiple buyers.

 

Good point.

 

Passed as a law now in NSW effective from Jan 1 2016
https://www.finance.nsw.gov.au/about-us/media-releases/underquoting-bill-passes-nsw-parliament
http://www.domain.com.au/news/under...they-are-a-kneejerk-reaction-20151015-gk9snr/

 

Seems like the agent can tell the seller "I think it'll go for $800K but I have to fill out this pesky paperwork and to attract more bidders I'm going to write $650K, okay?"

The say there has the be registrar of their quotes but doesn't seem to be any punishment if the quotes provided to the vendor are consistently under by $200K...?

Seems very much like making a law but dropping the ball on enforcement. An agent who gets pulled up on the example about just has to go in and say all the bad things about the place. "I thought $650K because there was mold and grime and broken tiles and x, y, z...".

I would have thought an online public registrar would be more useful in naming and shaming.

 

But you are right Leo. House in QLD asking offers above 260. Sold for 257. Was on the market for couple months though. When it's hot, it can go way above the 'Offers Above' price. When they start getting desperate, then we see prices actually below the 'offers above' prices.

 

I don't understand how this law achieves anything. Even if I bid right at the top of the range agreed to by the vendor and RE, the vendor can still reject the bid as not enough.

Right? If so, seems pointless.