It’s a hot topic – underquoting.
Many of you will relate. You’ve attended an auction hoping to buy your dream home, only to have your dreams dashed because a property sold well above the advertised price. You may know that feeling of disappointment well. Not to mention costing you money to get contracts checked and inspections done.
Week after week, auction after auction, this can become soul destroying.
All too often, underquoting has played a part.
Underquoting in Victoria is illegal. Yet, I see it happen every single week. Agents will tell you they don’t (and there is a very small pool of agents that are telling the truth). The majority, however, in fact do underquote.
So why do agents underquote?
In a nutshell, the ultimate sale of a property they are auction is just one of many outcomes they are looking to achieve. The auction sale, whilst important, is to some degree secondary to other actions the agent will take through an auction campaign to achieve a raft of other goals.
Let me explain.
- Agents want to get as much buyer interest as possible at the state of the campaign. They’re after buyers to come through that first open for inspection, even buyers that in reality will never be able to afford the home. It is a deliberate strategy. Some agencies quote a low initial price to generate interest, then bump up the price in the following or subsequent weeks “due to buyer interest”.
Many statements of information prepared by agents aka price guides are works of fiction. There is a way for these to be easily manipulated to suite the narrative, but that is a tale for another day. - Those buyers, to an agent, are opportunities on legs:
- some of those buyers will have a house to sell = potential further sales for the agent
- some of those buyers will be rental providers themselves = potential to plump up their rent troll by adding new homes to manage
- a buyer that does not like this particular house, many like another house the agent has = they herd them into their other listings
- all buyers attending opens are required to provide their contact details = further marketing opportunities for the agent. It’s database farming.
3. Buyers interested in a house equals a crowd on auction day. Any person attending an auction to bid will know, seeing other people bid against you may raise your anxiety or even bring out your competitive streak. That is what agents are counting on. No other bidder knows how much money their competition has. They have no idea if the person bidding is the (soon to be disillusioned) person that they will outbid. Or the happy winner securing the keys.
That is the game agents play – they need a crowd of would-be buyers. Only one person buys the house. The others walk away to try another day. Or to be shuffled into another home on offer.
So, that raises the question… how do you know if the property you are wanting to buy is priced correctly?
I know, because I know how to play the game.
Do you?
Would you like me to even the playing field for you? Add me on your team as your Buyer’s Advocate and let us support you to buy a home.
Give me a call on 03 9686 2288 to discuss how I can help. I offer free 20-minute consultations at times that suit you.
