Underquoting for Auctions - is it the agent's fault?

Discussion in 'The Buying & Selling Process' started by The Y-man, 10th Oct, 2019.

Join Australia's most dynamic and respected property investment community
  1. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    11,409
    Location:
    Melbourne
    We see a lot of threads complaining about or alleging underquoting for auction price ranges ~ and perhaps rightly so. Many blame the selling agent.

    However, I would like people to put themselves in the position of the seller - suppose the agent does their (5 min) research and comes back and tells you your house can be sold for $X and this is justifiable in terms of advertising (i.e. supported by similar sales etc).

    However, you personally want to set the reserve 10% above the agent's range?

    Do you disclose this reserve price to the auctioneer prior to the auction? Many here I suspect would say "Of course not!! I want to make the auctioneer earn his keep". How then would the selling agent know what the expected sales price range should be?

    If you are selling by auction - would you disclose the "true" reserve to your agent?

    The Y-man
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    24,339
    Location:
    Sydney or NSW or Australia
    There should be no relationship between what the agent has put on the agency agreement (between the Agent and Vendor) and the number that the Vendor sets as their reserve.

    Why? The agency agreement is the agent's opinion of what the property will achieve whereas the reserve is determined by the Vendor as the price that they will be happy to be relieved of the property (this price may be set in discussion with the agent, based on the feedback from opens, based on a valuation or in isolation).

    It doesn't help if the agent and vendor are on two different paths.
     
  3. momentum26

    momentum26 Well-Known Member

    Joined:
    16th Mar, 2018
    Posts:
    465
    Location:
    Australia
    I had a sales agent advising me (seller), you don’t have to tell us your expected sale price. This lets them advertised whatever they feel is appropriate under the revised law and the agency also don’t get caught into underquoting. This still allows the agent to underquote in someway or the other by staying under the radar.
     
  4. kaibo

    kaibo Well-Known Member

    Joined:
    30th Jul, 2017
    Posts:
    599
    Location:
    Melbourne
    yeah they also get you to tick the "I don't take pre-auction offers" box so even if someone offers in your range they can say vendors instruction to not accept offers prior so they don't have to reject the offer formally and bump up the quote. However if you offer a higher price than the indicative price then the vendor magically will consider it

    Probably less relevant in the current market where some properties are selling below the indicative selling price and pre auction offers are being canvassed
     
  5. momentum26

    momentum26 Well-Known Member

    Joined:
    16th Mar, 2018
    Posts:
    465
    Location:
    Australia
    That is so true @kaibo

    The sales agents do not advertise the sale price in such situations, stating the vendors have asked not to. I wonder why would the vendor who has sold and pocketed the money worry if the sale price is advertised or not on the website. I sense this is another way to politely tell the caller (who is a prospective buyer in the area) that it sold lesser to what the area sale price is but we won’t tell you in order to not impact our next weekend auction for similar property.
     
  6. Gockie

    Gockie Double boosted!! And still covid free. Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    13,709
    Location:
    Sydney
    I was a purchaser and I asked the agent to not show the sales price after we purchased as I felt the price we paid was very low and I didn't want the neighbourhood to know that we paid that much.

    The agent said they can have the websites not show the price, but it would appear after about 3 months when the data is in the government's hands and they can't control it from then.
     
  7. Jobin

    Jobin Well-Known Member

    Joined:
    29th Sep, 2020
    Posts:
    113
    Location:
    NSW
    I have a situation now where we've put in a pre-auction offer 14% above listed guide, which was rejected by the vendor. The guide has not changed a week later, so this is blatant underquoting at this stage. Questions...

    1) Is it worth my while calling them out on it a week prior to auction date?
    2) Will it even help my cause at this point?
    3) Would I go the agent first or straight to Fair Trading?

    Unsure what to do...
     
  8. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    7,924
    Location:
    Australia
    What is your ‘cause’? Justice? Buying the property at your offer price?

    the vendor isnt any more likely to accept your offer even if you bring the agent to court for underquoting.

    if you want it, offer your best price. If they reject, go to the auction and take your chances.
     
  9. Jobin

    Jobin Well-Known Member

    Joined:
    29th Sep, 2020
    Posts:
    113
    Location:
    NSW
    Well the more people there are at an auction the more psychological impact it will have on buyers. It creates hype & will likely lead to more emotional bidding, driving the price up. This isn't news to anyone though...
     
  10. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    7,924
    Location:
    Australia
    Which WOULD be good for the seller, who is paying the agent to sell the property for the highest price......

    Look, understand that you are frustrated by this as a buyer, but you want to play the game, understand the rules no matter how unfair they might seem to you.

    Imagine this was 2018. Youd probably offer lower than the range.
     
    Last edited: 11th Dec, 2020
  11. Jobin

    Jobin Well-Known Member

    Joined:
    29th Sep, 2020
    Posts:
    113
    Location:
    NSW
    Of course. So you're advocating underquoting though?
     
  12. Jobin

    Jobin Well-Known Member

    Joined:
    29th Sep, 2020
    Posts:
    113
    Location:
    NSW
    They are literally breaking the rules though. I've read the underquoting legislation & it's clear as day. https://www.fairtrading.nsw.gov.au/...LOAD-Underquoting-Guidelines-March-2020-4.pdf

    But regardless of that, sadly it's probably not in my best interest to cause a stir at this stage & I will have to suck it up & watch the hopeless masses congregate on the day...
     
  13. wylie

    wylie Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    12,470
    Location:
    Brisbane
    Why not give Fair Trading a call? The rules are there for a reason.
     
    Pingu1988, craigc and David_SYD like this.
  14. Jobin

    Jobin Well-Known Member

    Joined:
    29th Sep, 2020
    Posts:
    113
    Location:
    NSW
    I have & they agree it's underquoting & I need to submit a complaint online to pursue. But as @Trainee said, what's it going to gain me at this point... frustrating.
     
  15. Stoffo

    Stoffo Well-Known Member

    Joined:
    14th Jul, 2016
    Posts:
    4,039
    Location:
    Sydney
    No one is, the underquoting guidelines in reality help to stop people wasting their time.

    By making your offer well above the guide you have probably effectively told the vendor that you are prepared to pay more than that, you also don't know what other offers may have been made, as the vendor knowing you are prepared to pay more I'd also still proceed to the auction (that I've already paid for).

    Worst case, I could pass it in on the day and negotiate with you later
     
    AxeLy likes this.
  16. Jobin

    Jobin Well-Known Member

    Joined:
    29th Sep, 2020
    Posts:
    113
    Location:
    NSW
    It's all just a big filthy game isn't it :)
     
  17. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    7,924
    Location:
    Australia
    No, but i accept that rules are often broken without consequences, and things are not always ‘fair’.
     
    Jobin likes this.
  18. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    7,924
    Location:
    Australia
    have you found life to be so very different?
     
    AxeLy likes this.
  19. Jobin

    Jobin Well-Known Member

    Joined:
    29th Sep, 2020
    Posts:
    113
    Location:
    NSW
    @Trainee How about this one then... The vendor also supplied a building & pest that was carried out by the building & pest company their parents own & they run (admin & operations)? Wasn't disclosed.
     
  20. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    11,409
    Location:
    Melbourne
    Yes - and I guess the choice is to understand it and play it to your best advantage.

    In Vic, AFAIK with your scenario, the vendor can knock your offer back legitimately (as long as it was a formal unconditional offer), but they must update the price range on the statement of disclosure (upped to your offer).

    The Y-man
     
    AxeLy and craigc like this.

The shift to the regions has been quite profound with Millennials and Gen X leading the way. It seems affordability, lifestyle, and working from home have been the key drivers from which these generations have been able to take most advantage.