Have you ever heard the old real estate agent adage, ‘Quote high and watch it die. Quote low and watch it go’?
It refers to the practice of underquoting that some say is rife in the industry to attract potential buyers to auctions.
So much so that WBP’s Greville Pabst says six out seven real estate agents deliberately underquote to get people to their auctions.
New laws came in this year to crackdown on the practice but according to Mr Pabst it’s not working.
The new rules in Victoria mean real estate agents have to provide vendors with a ‘Statement of Information’ that includes a reasonable indicative selling price based on recent comparable sales.
“Only about one in seven auctions I attend has the agent quoted the right price,” he told Australian Financial Review.
“But these agents that are trying to do the right thing by quoting the full price are not being rewarded by the market.”
“They are not getting as many people to the auction and more of their properties are getting passed in.”
Mr Pabst however, says agents are getting around the new rules too easily, and exploiting the grey area between comparable sales and property that simply exceeds expectations.
“Agents are getting around the legislation by saying there are no comparable sales,” he said.
Underquoting is a source of ongoing frustration for potential property buyers who end up spending and wasting time at auctions they have no realistic chance of being successful at.
Mr Pabst told the Financial Review that real estate agents were paid by the vendor so buyers shouldn’t just take their word as gospel.
“They need to do their own research, there is plenty of free information out there,” he said.
“They can also attend other auctions or consider using a buyer’s agent.”
