Under-quoting still happening

[Razzle7]

Why are agents still underquoting. Wasn't there a shake up a few years ago?

A recent property I saw listed at 550k-600k passed in at auction. It was then listed for sale at 690k. How is that legal? _________ are the worst culprits.

Also it is targeting the wrong brackets. If it was originally intended to be a 690k property then why advertise it to me? It is wasting my time because I don't have that much money to spend, and I could have spent the time looking at something that was in my bracket and hence buying something.

The real estate market just has us going around in circles.

It is just plain stupid.

 

[Piston Broke]

Close your eyes and block your ears so that properties won't be "advertised" to you.
Stupidity is legal.
There is nothing illegal about asking whatever price a vendor want for his property.
Get over it and yourself.

 

[buzzlightyear]

The biggest impact (at least for inner suburb Melbourne metro properties) is that REA don't actually advertise price anymore. At least HS are consistent.

I think you will find, that the advertised upper price level needs to be within 10% of the reserve price. So you might find that the property will sell for a litle less than that advertised price ie the reserve price may indeed by $660k.

I don't see underquoting as being as big an issue now.

Don't abdicate your knowledge about pricing due diligence to the REA advertsied price.

 

[Razzle7]

Close your eyes and block your ears so that properties won't be "advertised" to you.
Stupidity is legal.
There is nothing illegal about asking whatever price a vendor want for his property.
Get over it and yourself.

What are you on about? If I see a property advertised for 550-600 then thats what I am expecting. I am not expecting a 690k. How is that stupid?

 

[dl2276]

I think the stupidity is on the part of the agent.

If a property is clearly valued at significantly more than $600k (based on your due diligence/comparables etc) than it is the agent's stupidity to advertise at such a low price range.

The agent is merely providing a guide - it is up to the potential purchaser to assess what the value is.

I usually add 5 to 10% to anything the agent says is a 'price guide' - even in the current market !

 

[Piston Broke]

What are you on about? If I see a property advertised for 550-600 then thats what I am expecting. I am not expecting a 690k. How is that stupid? You're stupid.

The property was listed at 550-600.
The property was auctioned and not sold.
The vendor now wants 690k.
He can list it for 5,000,000 tomorrow if he wants to. It is his property.
And it's none of your business what he does with his property and how much he wants for it.
Who is being stupid? Who is being ignorant?
Who has no idea of what's going on here?

All you can do is make an offer. You want a say? Put your money on the table.
[edit]
And of course read up on the negotiating threads round here.

 

[Razzle7]

The property was listed at 550-600.
The property was auctioned and not sold.
The vendor now wants 690k.
He can list it for 5,000,000 tomorrow if he wants to. It is his property.
And it's none of your business what he does with his property and how much he wants for it.
Who is being stupid? Who is being ignorant?
Who has no idea of what's going on here?

All you can do is make an offer. You want a say? Put your money on the table.
[edit]
And of course read up on the negotiating threads round here.

Oh dear. I am not throwing a tantrum. I am merely stating that what they quote and what they expect are two different things.

They are underquoting on a property when they are expecting more.
So you are telling me that it is right or normal that a vendor may advertise for a 500k property when in fact he wants 5 million?

Once again, what are you on about?

 

[Melbournian]

he means if he advertises it for 550K

and then he asks the agent to put it up for 690K for some what reason (maybe financial, stupidity, thinks the market is up) he may do so.

normally you go down not up... but it's the vendor's call.

i don't think the agent is that stupid as he would want to make a quick turnover.

As to if it is sold for 690K ... it is subject to the bidders who bid for it and raise the bar. ppl get emotional and stupid and put it up.

 

[Razzle7]

he means if he advertises it for 550K

and then he asks the agent to put it up for 690K for some what reason (maybe financial, stupidity, thinks the market is up) he may do so.

normally you go down not up... but it's the vendor's call.

i don't think the agent is that stupid as he would want to make a quick turnover.

As to if it is sold for 690K ... it is subject to the bidders who bid for it and raise the bar. ppl get emotional and stupid and put it up.

Yes ok totally get that, and yes the vendor can do what he likes. What Im saying is that this is happening quite a bit. Every property that I have seen that is passed in and is then for private sale is always at least 50k more. Its not a once off.

 

[Melbournian]

i'm not sure which areas you are in.

any links or examples to illustrate?

can't be that hot in st kilda or south yarra.

 

[cleverproperty]

expectations...?

Piston Broke has some valid points - as subtle as a sledgehammer - but valid nevertheless.

I do understand how frustrating it is working toward purchasing a property that is not priced anywhere remotely near the Vendors expectation. After all we don't go into a supermarket to buy a Mars Bar for $2, only to be told at the counter that it is now $3.50...?

And then - we don't know who the fault lies - with (e.g. the owner might have changed his mind and listed it higher... or the agent may have given the idea that the owner might get more).

The outcome generally is that it does get purchasers upset. I guess it is important to never approach an investment property in a manner whereby you do get upset that you missed out. Unless there is a very good reason as to why.

Generally that says to me that you really wanted the property and had allowed emotion to come into the negotiation process. Perhaps I am wrong?

Walk away... my mother used to tell me that there were other fish in the sea... I know that applies to investing too Good Luck!

 

[Melbournian]

never get emotional otherwise it would be like someone courting a girl by calling her daily and asking why don't she go out with me?

likewise it's not a pretty sight or picture.

and yes there's plenty of fish around the sea. if you can't buy in the suburb go to another and same applies for the buildings etc.

 

[ldriver]

Razzle, have you zoned in on the area you'd like to buy? this will help you estimate the value and allow you to ignore the agent's quote range.

 

[mech81]

I can understand what you mean Razzle.

Recently I attended and observed an auction for a inner Melbourne apartment listed and quoted for 480-500k. Coincidentally, a colleague of mine was there as a serious bidder. Auction bidding started at 460k and he was the only bidder there so the property was passed in.

I asked my colleague later out of curiousity what the vendor's reserve was...
his reply was 560k!!!!
WTH? Now if thats not underquoting I don't know what is..

 

[wylie]

I can understand what you mean Razzle.

Recently I attended and observed an auction for a inner Melbourne apartment listed and quoted for 480-500k. Coincidentally, a colleague of mine was there as a serious bidder. Auction bidding started at 460k and he was the only bidder there so the property was passed in.

I asked my colleague later out of curiousity what the vendor's reserve was...
his reply was 560k!!!!
WTH? Now if thats not underquoting I don't know what is..

How do you know the vendor decided the morning of the auction to surprise everyone (including the agent) with his reserve.

It might not have been the agent's fault. There are (and always have been) a lot of vendors with unrealistic ideas of what their house is worth.

Of course there are agents who "buy" listings, and always has been, but there are two sides to most stories. It is not always the agent who is being a bit "dodgy".

 

[Propertunity]

Razzle, have you zoned in on the area you'd like to buy? this will help you estimate the value and allow you to ignore the agent's quote range.

Exactly!

Look I went to an Open 2 weeks ago where the agent was quoting "Offers over $580K". I paid $675K for it last week. I have plenty of comparables to prove it is worth around $680K.

Was the agent under-quoting? You bet he was! Buy neary $100K!!
Did I care? Not really, I knew what the property was worth, so I ignored his 'Price Guide'.

 

[Piston Broke]

Piston Broke has some valid points - as subtle as a sledgehammer - but valid nevertheless.

lol maybe, I just want to be straight to the point.
I'm no agent friend but investing is tough game and dealing with them is just part of the process.
Instead of filling the forum with "vendors wont take my money" the OP should be asking "why wont they take my offers?" and if not move on (as you also posted).
There are always opportunities out there, and there's plenty stuff here on dealing with agents.
Life is to short to be a sore head, it's a matter of getting over it and on with it.
Not whine and complaining.
There's been a few "Is it legal?" for a vendor to ask whatever he wants for his property here.
Geez, communism has not totally set in yet and people are free to set asking prices for what they own in this country.
The agent works for the property owner. He must by law answer to the property owner.
Often the agents P off owners much more than vendors by quoting them optimistic sale prices.
When it gets passed in at auction the owner is in his full rights to then set the price at double if he so chooses.
Just as he chooses, and changes the reserve price as he see fit.
Until there's a contract, it's open negotiation.

PS having a price ticket on an item does not constitute a contract "offer", but only an invitation for a buyer to make an offer.
When you take the mars bar to the counter, you are "offering to buy" it for the price on it.
The vendor then has the option to accept or decline that offer.

 

[Melbournian]

a property is only worth as much as a buyer is willing to pay

obviously if someone wants to pay 100-200K above what was listed that's up to them

This is very obvious for overseas buyers who applied to FIRB to get approval on the property they wish to purchase for business or children's educational reason. They only have that 1 shot and maybe took a trip down Aus to secure it. THey might think i really like it and i'm going for it. bang the price goes up.

End of the day - they are deals to be made and deals that can't be made.

 

[Bradsdad]

I can see where Razzle is coming from and understand where his (?) frustrations are coming from. What you have to remember Razzle is that the agent is (should be) working only in the best interests of the vendor. By giving a lower price range they expect to get more people through the door. on many occasions the initial price range is just to get a gauge on the level of interest.

What I find amusing is that agents for year have wanted to be seen as trustworthy and professionals in their industry. By consistently quoting below the market value how on earth can they be seen to "professional"? Surely as an agent they would have a better grasp on the value of a property and as such be able to market the value of the property closer to the mark. Many agents have now decided not to list a price at all and instead put the ball back into the potential purchasers court. Whilst this can seem frustrating to some it shouldn't be. Before making any offer the potential purchaser should due their due diligence and have a fairly good idea on the properties worth. This is the same for properties listed with a price range.

By your initial post it seems that you are on your way to knowing the tricks of the trade and by realising some of the tactics used be in a better position to cull through the adverts. Just don't discount all the ranges as you may get lucky with a property that hasn't had much interest and needs to be sold ASAP. The range given might just be closer to the mark than you think.



Regards
Steve

 

[Razzle7]

Interesting reading, interesting comments...

Thanks for all your 'guidance'

You are right Bradsdad, I do know what tricks they are up to, I do know that if I see something quoted within a range that I need to add at least 50k, I do know that they quote low to get people in, I know all the BS. I know how to play the game, Ive bought two properties well below the asking price.

But i dont believe that with every auction the vendor decides on the day to up his reserve by 50k over the end of the quoted price. Thats just total BS and you know it. Its obvious underquoting.

The reason for this post is that I am merely stating that underquoting is still going on. That is all.