Do you think this Strategy works

[MTR]

Curious as to what others think about this strategy.

In a slow market, when there is too much stock on the market/same product one strategy to create competition is to advertise the property below market value...... FROM XXXX

This attracts buyers who believe they will secure a bargain.
Once the buyers are in the door then you need a gun re agent to work the buyer up.

Anyone used this strategy?? Has it worked for you??

 

[MRO]

Is this bordering on 'bait advertising'?

 

[MTR]

Is this bordering on 'bait advertising'?

Its a strategy to entice, dont think it illegal

 

[Kinnon Bell]

Its a strategy to entice, dont think it illegal

You sure?

An article about under-quoting in NSW.

 

[Tano]

If you offer from XXX and someone puts in an offer at the price or above and you dont accept with good reason then its illegal based on misleading or deceptive conduct (i have heard).

 

[Tano]

Here is the description from my textbook

Best practice advice is that ?offers over? or non-specific price range marketing should only be used where the prospect can purchase or lease the property at the list price or higher, depending on other interest. If an agent were to use this strategy without intent of selling or leasing at the starting or lower price, it could be considered bait advertising and the agent would be guilty of misleading conduct. In other words do not offer property for sale or lease at a price that it cannot be purchased or leased for.

Therefore, if an agent were to promote a property for sale by stating, ?Offers from $300,000?, then the seller must have provided the agent with price instructions of $300,000. This price should also be consistent with the price opinion provided by the agent. This means that the property is available for sale at a price of $300,000 or any offered price above $300,000. If a buyer for instance offered $320,000, and was subsequently rejected, there would be a very strong case to argue that the price of $300,000 was simply ?baiting? the buyer to make an enquiry.

Under section 29 of the Australian Consumer Law, a person is prohibited from making false or misleading representations in connection with the supply, possible supply or
promotion of goods or services.

i.e If the person was knowledgeable enough then they could get ACCC involved and the agent will be stood down whilst under investigation

 

[james start]

If you offer from XXX and someone puts in an offer at the price or above and you dont accept with good reason then its illegal based on misleading or deceptive conduct (i have heard).

Ok then what about eBay

Pretty sure hundreds of thousands of listed products go everyday above and beyond listed price / reserve, sure there is probably small print but who would even read, care or litigate if ignored

 

[james start]

Curious as to what others think about this strategy.

In a slow market, when there is too much stock on the market/same product one strategy to create competition is to advertise the property below market value...... FROM XXXX

This attracts buyers who believe they will secure a bargain.
Once the buyers are in the door then you need a gun re agent to work the buyer up.

Anyone used this strategy?? Has it worked for you??

This is used in the Melbourne market, every time we have sold, agent has listed property as "competitively" priced just to get people in to view, then obviously goes for 10% above listed price

 

[MTR]

Yes James, something like this, I am from Perth auctions not as big as in Melb/Syd.

I am well aware of re agent underquoting massively they all do it, seems to be the norm, I don't see anyone pulling them up by the way, does anyone else??

This is my example .. perhaps I would like to achieve $500-510K range, and have the listed price from $485,000, as a starting point.

 

[MTR]

Here is the description from my textbook

Best practice advice is that ?offers over? or non-specific price range marketing should only be used where the prospect can purchase or lease the property at the list price or higher, depending on other interest. If an agent were to use this strategy without intent of selling or leasing at the starting or lower price, it could be considered bait advertising and the agent would be guilty of misleading conduct. In other words do not offer property for sale or lease at a price that it cannot be purchased or leased for.

Therefore, if an agent were to promote a property for sale by stating, ?Offers from $300,000?, then the seller must have provided the agent with price instructions of $300,000. This price should also be consistent with the price opinion provided by the agent. This means that the property is available for sale at a price of $300,000 or any offered price above $300,000. If a buyer for instance offered $320,000, and was subsequently rejected, there would be a very strong case to argue that the price of $300,000 was simply ?baiting? the buyer to make an enquiry.

Under section 29 of the Australian Consumer Law, a person is prohibited from making false or misleading representations in connection with the supply, possible supply or
promotion of goods or services.

i.e If the person was knowledgeable enough then they could get ACCC involved and the agent will be stood down whilst under investigation

I think the way the agents get around this in Syd and Melb is it goes to auction, no price listed but when prospective buyers phone they basically give a range which from my experience been massively underquoted.

I am not interested in massively underquoting but just making it competitive enough to entice.

 

[Tano]

Maybe you can state from 485k and then all offers presented to owner by date x. That way you don't have to accept first low offer and if your agent tells the buyers there is x offers already then you might get the low 5s you want

 

[neK]

Curious as to what others think about this strategy.

In a slow market, when there is too much stock on the market/same product one strategy to create competition is to advertise the property below market value...... FROM XXXX

This attracts buyers who believe they will secure a bargain.
Once the buyers are in the door then you need a gun re agent to work the buyer up.

Anyone used this strategy?? Has it worked for you??

I guess it must have worked for that guy in Blacktown who had a $1 reserve.
Issue is that he would have had to have sold it even if it was below his expectation.

Personally I dont think it was worth the risk.

 

[Bargain Hunter]

Currently popular in Sydney west is the 'offers over' marketing. Some of the properties are going $100k over. Even if you offer over the price advertised the vendor does not have to sell. The vendor has the right to accept or reject any offer, and does not have to accept the highest offer.

The one that gets me are the advertised price range where you have to go above the top range to secure the property.

In a hot market REA's could possibly argue that they had advertised in good faith and the offers were well over expectations.

Regards

Andrew

 

[MTR]

But in a hot market I would not even bother with this strategy as there is enough competition to push the prices up.

What I am on about is when you have a buyers market, there is choice so much stock on the market, so it comes to a price point, but you need to bring the buyers in. I have used this strategy before when the market crashed, bust times, it can work, but you have to be prepared to go low, many sellers will not do this as they think the agents will screw them. At the end of the day you sign the contract to sell not the agent.

I am not too worried about the legal aspect, seriously have you ever heard of a re agent getting pulled up for under quoting??? Its happening all the time. Happy to be proven wrong, but I just dont see this in my backyard.

 

[westminster]

Yes REA have been slapped numerous time for under quoting. It just doesn't seem to stop them as they will say 'but the Vendor changed their mind about the reserve' in the case of Auctions etc.

If someone makes a cash offer over the amount specified then you are supposed to accept it even if it's 1c over. However if it has Subject To then you can reject based on those Subject Tos

 

[MTR]

Yes REA have been slapped numerous time for under quoting. It just doesn't seem to stop them as they will say 'but the Vendor changed their mind about the reserve' in the case of Auctions etc.

If someone makes a cash offer over the amount specified then you are supposed to accept it even if it's 1c over. However if it has Subject To then you can reject based on those Subject Tos

Tells me the slap is a fairy slap or feather slap, nothing to deter this practice and dont see this changing

 

[Big Will]

If you advertise offers over 450k and you reject an unco offer for 480k the advertising needs to reflect 480k+.

A vendor can change their mind or not like a condition though, even if it was subject to pest not causing structural dmg to the main building, it is a condition that they might have rejected the offer on and not just the price

If you put a low price e.g. you are wanting low 500s for the property and it is advertised at 420k+. The REA should get a huge influx of buyers come through and then needs to manage them buy saying we are seeing interest in the mid-high 400s and a couple weeks later we are seeing interest in high 400s and eventually high 400s low 500s and get a couple of offers which will push the buyers higher if the value is in the 500s.

 

[Big Will]

Tells me the slap is a fairy slap or feather slap, nothing to deter this practice and dont see this changing

People should really do their own research, unfortunately those people that complain are not on this website lol.

 

[Blacky]

If someone makes a cash offer over the amount specified then you are supposed to accept it even if it's 1c over. However if it has Subject To then you can reject based on those Subject Tos

I disagree.
The price indicated is an invitation to treat, and not an offer/acceptance.
It would be the same if a shop accidentally printed the wrong price on the tag - but had the right price at the cashier. They are not legally obliged to sell you the product at the advertised price - hence the constant adds in the paper 'apologising' for the miss-stated prices in advertising.

If it came to it, the REA could just print an apology.

But Im not a lawyer - so don't take my word on it.

Blacky

 

[Chomp]

I think you could advertise at 510-520k and negotiate from there. If you advertise at 485k you will get offers around 470k etc... and you will be too far away to negotiate (In my opinion)

Chomp