Obvious underquoting

Razzle7 · 24th Jul, 2011

Heres an example of obvious underquoting in property prices.

An auction price range $550 - $600k to drum up interest.
Passed in and now listed for $630k private sale.

So obviously all along the vendor wanted at least 630k. So why was it listed at $550+? 80k difference.

This is an obvious case of underquoting.

Aaron_C · 24th Jul, 2011

Nah you can't prove it (I know it looks obvious). Most agents only set reserves with vendors on auction day. Therefore you can't prove that 'the vendor's reserve was 100k over the price guide' because during the campaign there was no reserve...Sorry buddy

buzzlightyear · 24th Jul, 2011

Incorrect - this is not underquoting

Razzle, you raised this issue previously in another thread and I suspect you ignored the response to which I had previously provided in that thread.

Namely, the upper end of the range quoted needs to be within 10% of the reserve price. Therefore, in your example, the reserve price needs to be within the upper range at $660k maximum. The fact that the listed price is now at $630k, means the reserve is somewhere between $600-$630k. This is therefore an entirely reasonable and legal approach in the advertised selling price by the REA.

I hope you accept that these are the rules in Victoria when ranges are quoted. Buying a property is not like going to Myers and buying some shoes, with the sale price is on the tag.

If you don't accept the game for what it is, you may need to find another to play.

mech81 · 24th Jul, 2011

Unfortunately you are right Aaron. This glaring loophole just seems to allow underquoting practices at its best. The REIV definitely knows about this and casts a blind eye to this practise. Few owners rarely would change their reserve in a blink of an eye.

If only there was a independent organisation where quoting ranges on adverts are screened or lodged or recorded, and the vendor/RE is only able to put their reserve in that range and the independent organisation will investigate any complaints of this deceptive practice when it happens. *I'm only dreaming*

Dazz · 24th Jul, 2011

buzzlightyear said:
Buying a property is not like going to Myers and buying some shoes, with the sale price is on the tag.

If you don't accept the game for what it is, you may need to find another to play.

Best post of the week - top notch Buzz.

The vast majority of buyers of residential real estate get so upset when they do not a jot of independent research, rely solely on what the REA says and does.....and then chuck a hissy fit when they plan around what information they glean off the Seller's representative to try and use against the Seller...what the ??

Don't speak to the agent, don't look at anything they hand you. Look at the property yourself, do your thorough research yourself.....and then you'll never feel inclined to moan about what they say or do.

Property Meister · 24th Jul, 2011

im still very surprised that reserves are made on the day, because I would have thought without deciding prior to even listing the auction, then the power is in the vendors hands, and worse still as an agent you may be completely wasting your time if the property is worth $500k, but the vendor has a silly reserve of $800k, and on auction day, agent asks, whats the reserve, and vendor says, "$800k no less, and im not budgin"

Bigtone · 24th Jul, 2011

buzzlightyear said:
Razzle, you raised this issue previously in another thread and I suspect you ignored the response to which I had previously provided in that thread.

Namely, the upper end of the range quoted needs to be within 10% of the reserve price. Therefore, in your example, the reserve price needs to be within the upper range at $660k maximum. The fact that the listed price is now at $630k, means the reserve is somewhere between $600-$630k. This is therefore an entirely reasonable and legal approach in the advertised selling price by the REA.

I hope you accept that these are the rules in Victoria when ranges are quoted. Buying a property is not like going to Myers and buying some shoes, with the sale price is on the tag.

If you don't accept the game for what it is, you may need to find another to play.

exactly what he said!

Aaron_C · 24th Jul, 2011

If the agent is playing games with you just walk away....if you show you are a serious buyer they will definitely chase you

Player · 24th Jul, 2011

buzzlightyear said:
Razzle, ......................I hope you accept that these are the rules in Victoria when ranges are quoted. Buying a property is not like going to Myers and buying some shoes, with the sale price is on the tag.

If you don't accept the game for what it is, you may need to find another to play.

BLY has explained it well.

These are the rules. Learn the rules and play by those rules.

It doesn't mean anyone of us here enjoy the charades and the carry on, however as long as they (in Vic at least) are within the limits of those ranges, we can complain all we like, no one will listen; certainly not the clubhouse (REIV).

Become an expert in your chosen area(s) and you will be well armed to negotiate strongly. Once agents get a wiff of you having done some DD
and have been following a particular market, and as mentioned that you are serious, you will gain some respect and with a foot in the door of rapport, they may even tell you what the seller will sell for...........then deduct another 5 % or so.

Razzle7 · 24th Jul, 2011

Well from where Im sitting, it feels that you all accept this game. I don't. It's hard earned money at stake here. And I for one think it's absolute BS.

wylie · 24th Jul, 2011

buzzlightyear said:
Namely, the upper end of the range quoted needs to be within 10% of the reserve price. Therefore, in your example, the reserve price needs to be within the upper range at $660k maximum. The fact that the listed price is now at $630k, means the reserve is somewhere between $600-$630k. This is therefore an entirely reasonable and legal approach in the advertised selling price by the REA.

Doesn't this make sense to you Razzle7?

Player · 24th Jul, 2011

Be a little flexible.

Razzle7 said:
Well from where Im sitting, it feels that you all accept this game. I don't. It's hard earned money at stake here. And I for one think it's absolute BS.

Well, respectfully, if you wish to purchase in Victoria, you haven't a choice unless you go door knocking and attempt to buy off a vendor direct.

BTW, I personally find Victoria the easiest state to purchase in with Sec 32 Vendors statement easy to navigate and allows you to do as much DD before you even leave your desk. NSW is more challenging if you wish to buy with conditions......lawyers will be involved day one. Qld is a bit in the middle. If you really want to see games though, come up to the Gold Coast and deal with some of the agents here

Some are OK, however many of them are...............

Seriously though Razzle7, if you want to buy in Melbourne you need to adapt....become a little flexible to the rules and bend a little or you'll break like a bone.

Aaron_C · 24th Jul, 2011

Don't get mad - get even

buzzlightyear · 24th Jul, 2011

At least in this market (Melbourne), prices aren't moving, so this makes it easier to price for all concerned.

When a bull market/sellers' market is on, and there were a number of anecdotes about this scenario, where this fictional property was priced at $550k-$600, the vendor's reserve was a fair estimate based on comparables at $630k. The property went to auction, and when the bidding got to $630k, the property was on the market, the bidding took off, taking the price to $720k.

The underbidders were p'od off because they lost and then blamed the REA because they believed they falsely under-quoted the advertised range of $550-$600k, as it sold for $720k.

Who'd want to be an agent!

Sheryn · 24th Jul, 2011

Razzle7 said:
Heres an example of obvious underquoting in property prices.

An auction price range $550 - $600k to drum up interest.
Passed in and now listed for $630k private sale.

So obviously all along the vendor wanted at least 630k. So why was it listed at $550+? 80k difference.

This is an obvious case of underquoting.

Razzle

Learn to play the game, you could try making an offer to purchase before auction and get the property off the market so auction is cancelled.

If the property was passed the vendor is playing the game their way, the REA is giving a range where he or she are reasonably sure the property will sell but the VENDOR wants more and you the prospective BUYER wants the property for less.

Cheers
Sheryn

RightValue · 24th Jul, 2011

buzzlightyear said:
At least in this market (Melbourne), prices aren't moving, so this makes it easier to price for all concerned.

you must be looking in different parts of Melbourne to where I operate.

Prices are moving again, after having plateaued .. the current direction is down.

I am currently seeing quite a few sales quite a bit lower than prices achieved at Auction and passed in or below private sale offers which were rejected months before. Quite a few are selling lower than I would have expected based on comparable sales evidence.

Speaking of advertised sales ranges, here is one I am inspecting tomorrrow.

Bought in mid 2007 for $385k from the developer by an interstate investor.

Advertised for sale in Feb 2011 $515k-$545k

In May on with a different agent, advertised at $500k-$530k; In June advertised $470k- 495K.

Sold July for $440k.

This is why valuers look at selling prices not asking prices, unfortunately the neighbours usualy look at the asking prices and assume it sold near the top of the range when they do their estimates of value for refinance.

The suburb even changed it's name to a better suburb in that time .. from Truganina to Williams Landing.

Aaron_C · 24th Jul, 2011

RightValue said:
you must be looking in different parts of Melbourne to where I operate.

Prices are moving again, after having plateaued .. the current direction is down.

I am currently seeing quite a few sales quite a bit lower than prices achieved at Auction and passed in or below private sale offers which were rejected months before. Quite a few are selling lower than I would have expected based on comparable sales evidence.

Speaking of advertised sales ranges, here is one I am inspecting tomorrrow.

Bought in mid 2007 for $385k from the developer by an interstate investor.

Advertised for sale in Feb 2011 $515k-$545k

In May on with a different agent, advertised at $500k-$530k; In June advertised $470k- 495K.

Sold July for $440k.

This is why valuers look at selling prices not asking prices, unfortunately the neighbours usualy look at the asking prices and assume it sold near the top of the range when they do their estimates of value for refinance.

The suburb even changed it's name to a better suburb in that time .. from Truganina to Williams Landing.

Well it is expected that properties in those areas would fall...not so in other suburbs. However I have noticed that even in Richmond, 2 bedroom apartments aren't selling, when only 6 months ago they would've been sold without any issue whatsoever. Sign of the times I guess

Bigtone · 24th Jul, 2011

RightValue said:
The suburb even changed it's name to a better suburb in that time .. from Truganina to Williams Landing.

u can't polish a turd

AlmostBob · 25th Jul, 2011

Just in case

If you ever need it

Kanemicm · 25th Jul, 2011

An agent from Sweeny's in Foostracy just got done by the REIV for under quoting.

He had to place a full page apology in the paper and was fined $10k

What the above is doing is ok, agents have a 15% range when quoting. So $550kplus is up to $632k. So they are clear.

The REIV is coming down very hard on agents at the moment.

Obvious underquoting

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