Soaring auction results are in Melbourne are currently blowing price guides out of the water.
Buyers and their agents are finding homes are selling well above quoted price guides and believe they are not taking into account how quick the market is rising or are deliberately underquoting.
Buyer’s agent Wendy Chamberlain told Domain the current discrepancy was causing frustration.
“I have one client at the moment who is a first-home buyer and has been looking since the start of the year,” she said.
“Even before a house gets to auction, I am having to tell her that it is out of her budget, even though the price guide says otherwise.”
“She is getting really frustrated and confused because the price guides are saying one thing, but we are seeing pent-up demand and a shortage of stock pushing prices to some really ridiculous levels.”
According to Ms Chamberlain, properties that are under $1 million have price guides that are anything between $70,000-$100,000 short, and it’s even worse for properties over the $1 million mark.
“People are being crazy in what they are offering at the moment, it’s like a feeding frenzy,” she told Domain.
Buyer’s advocate Nicole Jacobs also spoke to Domain and said she put a lot of the discrepancy down to underquoting.
“A large portion of the real estate industry is trying to quote correctly,” she said.
“However, there are some agents out there who have reverted to tactics that were being used 10 years ago of ‘quote it low and watch it grow’.
“In this market they think they can get away with it because the media is talking up house prices and we’re seeing fierce competition mixed with a fear of missing out contributing to some houses sailing well over their price guides.”
Homes that are listed for sale must have a Statement of Information prepared by the real estate agent that has an indicative selling price or at least a price range within 10 per cent.
Properties can be underquoted when advertised at a price that is less than the estimated selling price, less than the seller’s asking price, or has already been rejected by the seller.
Underquoting is very hard to prove, but since 2015 Consumer Affairs Victoria has taken court action from 12 real estate agencies with fines and court costs totalling $3,149,550.