Under-quoting still happening

[Player]

Razzle, you will be better served accepting what is and directing your energies on becoming an expert in the one or two suburbs/precincts you are intending to purchase in regardless of what is occurring. You should know the sales prices/data irrespective of quoted price ranges.

Here is the link to what the club advise their brethren:

http://www.reiv.com.au/en/Training/...duct 2010/Codes of Conduct_partB_pg41_58.ashx

I posted that link on the other thread that you had started:

http://www.somersoft.com/forums/showthread.php?t=72847

By the way, I don't agree with what they do but as mentioned in that other thread by my posts and those of others...........learn the rules (of the seller and rea) and play by the rules. You can have your own strategies for auction or when the property passses in. It is what it is. If you don't accept the situation and the games they play in Melbourne, then don't play and don't buy. The market is there for participants not spectators who can't accept how it works..........pure and simple.

Focus on your plan and playing in that arena, not what it should be in the ideal purchasing world.

 

[The Y-man]

Not sure if the view from the vendor's perspective has been aired here - so here goes...

When we was selling some of our IP's (about 2 years ago) in Melbourne (by auction of course)

1. we did advertise a price in a 10% range of what the agent thought we were likely to get (based on recent sales etc - they provided the stats etc)

2. we were very coy about telling the agents/auctioneers our reserve, and when we did, we gave them an inflated one well above the advertised price range (none of the agent's blinked an eyelid - they simply said, ok, let's see how we go!). We didn't want them to simply stop when they got to a low reserve and not try to get more from the potential buyer.

How did other people on here deal with setting reserves and prices etc when selling?

The Y-man

 

[Melbournian]

I am also gobsmacked by some of the attitudes. Underquoting is illegal. If there is a quoted range of 550-600, then I expect a reserve within that range. Because that's what has been advertised. It's SIMPLE.

What happens after that I couldn't give a rats. It might sell for 900k due to interest. But no false advertising please, it's a waste of time for everyone.

it is illegal - but to say that a property has to be sold within the range of 550-600K is a bit naive. why wouldn't the owner accept an offer above that limit and how can you restrict other purchasers to up the price? things like that are out of your control.

the only way to see what the interest is at is to talk to agent, go to the opens, etc. But from what you're saying all the times you went to a auctions or private sales you did not get even one ?

 

[Ed Barton]

solution.. no price range allowed at all. in the auction capital of oz, brisbane, no range is quoted.

 

[Aaron_C]

solution.. no price range allowed at all. in the auction capital of oz, brisbane, no range is quoted.

Then buyers complain about lack of information.

 

[wylie]

Whilst I don't like agents who deliberately under-quote I have a little story which shows how difficult things can be for agents, vendors and purchasers.

My parents fell in love with a house for their PPOR. It was a little unusual for the area, so a little difficult to price as easily as the usual house for the area. It was very upmarket but had been auctioned and passed in at about $720K, and was now with a different agent.

Agent told me "if they get anything over $700K they'll take it" which was a load of rubbish. My parents offered (again from memory) $720K or $740K (a little higher than the previous passed in amount), which was refused and the auction went ahead.

The thought was that it was worth perhaps late $700K but, again, due to it being "unusual" it was difficult to place any sort of accurate value on it. There was spirited bidding up to about $750K and then three genuine bidders going up in $2K, $5K etc. It finally came down to two bidders, both wanting the house. I do remember at the time that the tv show with Michael Caton had wanted to film the auction but my parents didn't want that, and it didn't eventuate.

My parents finally had the final bid and paid high $800K for it. It was a long and tortuous climb for the last $100K in $2K and $5K increments, with a few "shock" increases thrown in by my mother to throw the other bidders off. They just went up another $2K. The other couple were sitting a few seats from us, and clearly wanted it too. The third bidder had dropped out, but came back in when it looked like it was stopping. It was a real fight.

Did my parents pay too much? With two others prepared to pay the same, I don't think so. Doesn't matter though, because they loved that house, and were very happy there for the next six or seven years. It is worth more now, so whether they paid over the odds is a moot point.

If the agent could have been fined (back then) for quoting a sale price within a certain range, it would have been very unfair for that agent. No matter how realistic the price range or quote is, you never can stop a couple of bidders pushing the price up.

 

[wylie]

solution.. no price range allowed at all. in the auction capital of oz, brisbane, no range is quoted.

Brisbane... auction capital of oz???

 

[rastus2]

Whilst I don't like agents who deliberately under-quote I have a little story which shows how difficult things can be for agents, vendors and purchasers.

My parents fell in love with a house for their PPOR. It was a little unusual for the area, so a little difficult to price as easily as the usual house for the area. It was very upmarket but had been auctioned and passed in at about $720K, and was now with a different agent.
................

If the agent could have been fined (back then) for quoting a sale price within a certain range, it would have been very unfair for that agent. No matter how realistic the price range or quote is, you never can stop a couple of bidders pushing the price up.

A good story, and a fine example of how it would be wrong to enforce any kind of rule on underquoting with no consideration of unusual events.

However, having read this thread, may I point out that most house sales are not unusual, and thus, while your story is interesting, it is not a good example of most instances where under quoting is happening, and thus, causing frustration.

Many houses are considered (by their owners) to be unique... but very few really are.

I would consider the comments from some to be a bit blinkered ...

No one is expecting an owner to be forced to sell at auction for a price less than they wish... however when their desired price has been revealed with a lower and upper price range, I think it is safe to say that their price wish has been advertised.

What is expected by any reasonable person is that if a price range is given, and the mood at the auction on the day is that the price range was, indeed, correct for the market sentiment (ie. bidding stopped at or below the top of the range quoted), then all conditions have been met to proceed with a sale on that day.

For some to say that the vendor has every right to sell a property after an auction for any price they choose is fine.... but only if the conditions of that auction have not met the expectations that were advertised.

There is seriously a double standard happening here if vendors expect bidders to honor a bid at auction above reserve, but vendors do not wish to honor a price range that drew the bidders to the auction in the 1st place.

No one wants to sell a property for anything less than they could achieve ... that is why 'interest above 500k' is more apt than 'price range of 500 - 550k' when advertising.

 

[Ed Barton]

Brisbane... auction capital of oz???

i was being sarcastic.

i can't recall a price guide on any brisbane auction. does anyone know if they are not permitted in qld?

 

[wylie]

i was being sarcastic.

i can't recall a price guide on any brisbane auction. does anyone know if they are not permitted in qld?

Oh I see, you were using sarcasm and "umour". I am sick and didn't pick up on that. I just thought you were delusional .

 

[Ed Barton]

Oh I see, you were using sarcasm and "umour". I am sick and didn't pick up on that. I just thought you were delusional .

a speedy recovery to you, oh, and I'm not being sarcastic on that front.

i have a very sarcastic and dry sense of humour, which doesn't work that well on the net.

do you know if price guides, ranges etc is a no no in qld? cause i can't remember ever seeing one.

talking about auctions - they're a bit of a mysterious thing to me in brissie. so few to go to it would take a lifetime to educate yourself.

 

[wylie]

a speedy recovery to you, oh, and I'm not being sarcastic on that front.

i have a very sarcastic and dry sense of humour, which doesn't work that well on the net.

do you know if price guides, ranges etc is a no no in qld? cause i can't remember ever seeing one.

talking about auctions - they're a bit of a mysterious thing to me in brissie. so few to go to it would take a lifetime to educate yourself.

Thank you for your kind wishes. Hubby wants to put up a sign on our fence "Coughs Harbour". If I could stop coughing I would feel much better. This cold has knocked me flat. We are flying out in four weeks. Thank goodness I am not having to fly feeling like I have been hit by a bus. I need to stay away from any "people" for the next three weeks to keep healthy.

I don't know the answer to your question because I don't really look to closely at houses for sale by auction. I just had a look through the Saturday Property section of the Courier Mail and cannot see any price guides for anything being taken to auction.

 

[Ms Jade]

How did other people on here deal with setting reserves and prices etc when selling?

Pretty much the same way as you, Y-Man.
I think it's common for the vendor to play their cards close to their chest with the agent.

I think this whole argument about 'under quoting' holds more sway in a bull market, when it's obvious that a property will likely go way over the quoted range. However, things are a little more uncertain now. For every house that sails past the reserve there will be another that just makes it over the line. Selling prices have become less certain IMO.

 

[buzzlightyear]

Not sure if the view from the vendor's perspective has been aired here - so here goes...

When we was selling some of our IP's (about 2 years ago) in Melbourne (by auction of course)

1. we did advertise a price in a 10% range of what the agent thought we were likely to get (based on recent sales etc - they provided the stats etc)

2. we were very coy about telling the agents/auctioneers our reserve, and when we did, we gave them an inflated one well above the advertised price range (none of the agent's blinked an eyelid - they simply said, ok, let's see how we go!). We didn't want them to simply stop when they got to a low reserve and not try to get more from the potential buyer.

How did other people on here deal with setting reserves and prices etc when selling?

The Y-man

2 sales in 2008 and 2009 each.

For both properties I was very aware of the market prices, knew what I wanted to nett out of the purchase to make it worthwhile. I was very clear, that if I didn't receive 'x' amount, I wouldn't be selling.

I always couched the sale as being one which was going to fund another property opportunity. And the sale would only be worthwhile if I netted 'x'. It wouldn't serve me to sell for less, because I wouldn't have enough funds. I was also communicated that I was prepared to accept the 'loss' of the cost of the s32 and advertising (for one of the properties which I had advertising costs).

In both cases, these sold for the reserve number and I was happy with the outcome. One sold in 45 days and another in 60. A little longer than what was normal back then.

 

[The Y-man]

2 sales in 2008 and 2009 each.

What were the advertised prices or price range with respect to your reserve (as a pecentage) or was it a PS from the start (eg asking $X where X = Y + reserve)?

Cheers,

The Y-man

 

[buzzlightyear]

What were the advertised prices or price range with respect to your reserve (as a pecentage) or was it a PS from the start (eg asking $X where X = Y + reserve)?

Cheers,

The Y-man

One was simply an asking price. For memory is was set at $559k and sold for $545k. The selling authority had a range of $545-560k.

The other was advertised at $400-450k. Reserve at $450k (selling authority had $450k as reserve) and sold for this amount. This one took 60 days to sell. Even the REA was starting to doubt wehther it would sell. She received the $450k offer, go tthem to sign the contracts, drove over to my place the same day and I signed.

 

[dan c]

it is illegal - but to say that a property has to be sold within the range of 550-600K is a bit naive. why wouldn't the owner accept an offer above that limit and how can you restrict other purchasers to up the price? things like that are out of your control.

You're missing the point. If it SELLS above the advertised price, then someone was obviously willing to pay that amount. If you get two people who really want it at auction and they bid it up, then great!

The issue I have is where it's advertised for a price, yet the vendor won't accept an offer ABOVE the advertised price.

I'm not saying it has to be SOLD at a certain range, just that if the vendor advertises at $600k, they should be willing to accept an offer of $600k.

 

[Razzle7]

You're missing the point. If it SELLS above the advertised price, then someone was obviously willing to pay that amount. If you get two people who really want it at auction and they bid it up, then great!

The issue I have is where it's advertised for a price, yet the vendor won't accept an offer ABOVE the advertised price.

I'm not saying it has to be SOLD at a certain range, just that if the vendor advertises at $600k, they should be willing to accept an offer of $600k.

Exactly, I agree.

 

[Melbournian]

You're missing the point. If it SELLS above the advertised price, then someone was obviously willing to pay that amount. If you get two people who really want it at auction and they bid it up, then great!

The issue I have is where it's advertised for a price, yet the vendor won't accept an offer ABOVE the advertised price.

I'm not saying it has to be SOLD at a certain range, just that if the vendor advertises at $600k, they should be willing to accept an offer of $600k.

that's a different story altogether.
again - it's the seller's call

one of the agent's techniques is to put a price say 599K so the people who have a budget of X amount still come to view the property and if they like it - they try to cash in on the emotional buyers who like it. If they put it too high - many might not even reach the door step.

 

[MellyBelly]

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? Hocking Stuart are the worst culprits.

It is just plain stupid.

Yep, I've seen so many similar instances too. There was one property advertised by them for "between $1.5 and $1.6 million" - the property sold for $2.23 million. The buyer is struggling to rent it out at even $625 p/w now.

I'm new here and don't see myself buying at an auction ever. Prefer buying through negotiation and/or private sales, if at all. No risk of getting carried away or emotions getting in the way.