Underquoting and jaded buyers
- Thread starter Jacque
- Start date
I could be wrong mate but that place looks like a significantly better position to yours, much closer to the water with much better views. Also fair bit larger land - this would all add up and make sense. However, your place is beautiful compared to the other one, but at the end of the day it's about location and land value. Good Luck with your sale, I'm sure you'll get what you want.
$335k is not correct; we worked out that $1.65m was to be our figure, based on the other sales and recent listings, and the original estimate made by the agent, without factoring in a possible "emotional" buyer rally. That's approx $200k, based on 4 years ago.
Maybe settle for $1.6m if it was offered; that's around $150k difference.
I guess it would depend on what the building costs are now compared to 4 years ago, and the level of fittings used. I'd be surprised if you got out of it for under $1.5m in today's money.
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Not saying it isn't worth what it sold for; just making the comparisons between it and ours.
I guess you would have to see both houses (and views) in the flesh to really know the value for money.
Our estimate that $500k less for ours would be fair and reasonable, based on all the factors listed previously. It does have more land, but no pool or spa or garage.
Folks do pay more for the more cliff-top location that is true. The views are arguably better in terms of closer to the water, but not always wider. Many are partially blocked by trees as well....lots of variables.
Probably should have explained another thing relating to the "had to laugh" - this guy has been looking for months on the Peninsula, and low-balling everyone as he goes, according to my agent. Might explain why he hasn't secured a sale? And is currently renting after a divorce according to the agent.
As for clearly inflated; I have explained the justification for the expected price range. See above. A $500k reduction for ours based on the $2.127m place is very decent value.
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I worked out 335k by your sale price of 1.7million. You stated he would need to find around 1.45m to build the same house.
1.7 - 1.45 = 250k
Stamp duty on purchase price of 1.7million = 85k
You have to factor in that he gets to build the dream home of his choice not someone else's dream home. Plus he makes a saving, so I can see why he would opt to do that. You can also save a lot of money if you have contacts in the building game.
You have a nice home no doubt, but there are other factors also at play.
519-569k Prie Guide
http://www.realestate.com.au/property-house-vic-aspendale+gardens-119589979
When the median is 670k and you get agencies putting up price guides that are 100k below the median I think that speaks for itself.
Sold for $707,000
http://www.realestate.com.au/property-house-vic-aspendale+gardens-119589979
When the median is 670k and you get agencies putting up price guides that are 100k below the median I think that speaks for itself.
Sold for $707,000
We're pretty sure we won't get $1.7m - very few times do folks offer the asking price (or above), but you never know - as the $2.127m place showed.
So we are factoring offers of probably in the vicinity of $1.5m up to hopefully $1.65m...hence the higher starting figure.
We are well aware that at $1.5m+ the pool of buyers is very thin in our area.
So, the $1.7m figure will do a few things;
1. Only attract the serious buyer who can afford that level, and who are usually wanting a house with nothing to spend.
2. Discourage the too-low buyers who simply cannot afford to get near what we want/it's worth.
3. Might attract the buyer who is starting to max out around $1.5m, but who falls in love with the place and stretches the resources to go that bit higher to meet us at $1.6m.
This is not wildly outside the grand claims of the agent's price estimates, or the recent comparables and recent listings now on the market since we started down this road. When you are playing in the $1.5m+ brackets another $50k for many buyers at at level is not a lot - especially if they are in love with a place. I've seen it many times in various suburbs around Melb.
Ideally; $1.65m to clear all debts and cover the commisssion for the agent, and come out with enough cash to buy a more modest house somewhere else in the town...preferably a well located do-er upper for about $600k so I can throw another $100k or so at it for renos.
Good result all round; we still keep the IP and the business, no debt and sudden massive cashflow increase, the agent makes a good dollar, and the buyer gets one of the nicer houses in the town with arguably one of the best views and nothing else needing to be spent.
Ah, yes! forgot about the stamp duty.
Quite true.
Thankyou, and yes; we have looked at all the factors. I think a $1.6m price tag is about right given all the above.
Good Luck with it Bayview, let us know how it all goes. Lovely place and good market so who knows what may happen.
Does underquoting at auctions happen? All the time. Do I think it's a real issue? No.
Especially in a rising market it is difficult to work out what a property will go for at auction. I saw a property quoted at $480K plus that I thought wouldn't go for much more than $550k go for $575k. To be fair on the agent, it was available at $550k. If the agent quoted somewhere near $550k and the property sold for $575k, should the agent get in trouble for the property selling for $575k. I don't think so.
People should do there own research and work out what a property is likely to go for, rather than simply rely on quoted prices before auctions. The auction price is the starting point of the auction, which I have no problem with.
Especially in a rising market it is difficult to work out what a property will go for at auction. I saw a property quoted at $480K plus that I thought wouldn't go for much more than $550k go for $575k. To be fair on the agent, it was available at $550k. If the agent quoted somewhere near $550k and the property sold for $575k, should the agent get in trouble for the property selling for $575k. I don't think so.
People should do there own research and work out what a property is likely to go for, rather than simply rely on quoted prices before auctions. The auction price is the starting point of the auction, which I have no problem with.
An agent knows roughly what it will sell for going by the median, previous house sales and common sense.
In my example above the buy guide was 100k below median. House was in good shape. So they under quoted on purpose to get more interest in the property.
The price guide they gave was ridiculous.
Sure they can't get it spot on, but how about just quoting the median (for mdian type houses) as a price guide. Will end up being closer to the end result than their bogus estimates.
In my example above the buy guide was 100k below median. House was in good shape. So they under quoted on purpose to get more interest in the property.
The price guide they gave was ridiculous.
Sure they can't get it spot on, but how about just quoting the median (for mdian type houses) as a price guide. Will end up being closer to the end result than their bogus estimates.
It is for the buyers who are expecting a property advertised at a price range to sell remotely near that price range...lots of wasted time at opens, auctions etc.
That is a pretty good estimate by the agent, and the buyers would generally be happy with that.
It's when they go for say; another $100k or more on top that's when folks start to get angry.
Maybe they should do more research..
Even on this forum we have people that complain about the agent putting the advertisied price to high (they wanted it lower) and the other way around.
I would be more pissed off if the agent put the price of 550k+ and no one turned up and later selling for 540k than an agent who put 450k+ and sold for 575k.
Would you not try to offer below the $XXX+ price to see if it was accepted - worth a try?
You can always go up if the offer is rejected.
The buyer who made an offer on our place offered $250k below our base price.
That is no doubt his strategy it seems, and eventually he may succeed with a property somewhere.
We stumbled on this auction on Saturday - the price guide was $1.8M+ and it went for $2.395. Quite a difference.
http://www.domain.com.au/property/sold/house/nsw/northbridge/?adid=2011942511
This was a dumper and next door to it was a newish mansion that sold during the week for $3.3M (after last trading in Fen 2013 for $2.6M).
As always I was surprised at the final price - but would expect the RE agent knew better and was just messing with everybody.
http://www.domain.com.au/property/sold/house/nsw/northbridge/?adid=2011942511
This was a dumper and next door to it was a newish mansion that sold during the week for $3.3M (after last trading in Fen 2013 for $2.6M).
As always I was surprised at the final price - but would expect the RE agent knew better and was just messing with everybody.
Using the story as above if it was advertised 550k+ and I thought FMV was 575k I would probably offer 530k-540k and move up.
However if it was 450k and FMV was 575k I wouldn't offer less than asking price as it would ruin any goodwill in the transaction. So I would start over the 450k and probably about 490k.
However the 450k is likely going to auction and I wouldn't want to reveal my hand before hand
We had a property for sale at our office. The agent was taking feedback to the owners the whole campaign. The day before the auction, when they came to set the reserve they put the price $50k higher because interest rates just got cut *face palm*
But at the end of the day, there is so much information out there. You don't need rpdata or apm to find out sold prices. Buyers just need to go on realestate.com.au and see the sold section. Its hard to determine price as many things are going to auction as well but I definitely agree that underquoting is wrong and should not be done. I've had buyers who just came on the market and they had no idea, stating they wanted to pay $450k for a property would have been in the $600s. It sucks to tell them the news that they cant afford it but also at the same time I don't understand when people get the values so wrong. But then again there are people that go crazy at auctions and throw all comparable sales out
It's just a silly market and I do feel sorry for people who are paying too much out of their budget right now
But at the end of the day, there is so much information out there. You don't need rpdata or apm to find out sold prices. Buyers just need to go on realestate.com.au and see the sold section. Its hard to determine price as many things are going to auction as well but I definitely agree that underquoting is wrong and should not be done. I've had buyers who just came on the market and they had no idea, stating they wanted to pay $450k for a property would have been in the $600s. It sucks to tell them the news that they cant afford it but also at the same time I don't understand when people get the values so wrong. But then again there are people that go crazy at auctions and throw all comparable sales out
It's just a silly market and I do feel sorry for people who are paying too much out of their budget right now
I think almost all agents are underquoting really, my opinion of the regulations anyway.
Previously, when agents used to use "offers over" for advertising it was okay because the prices were actual estimates and as the market moved naturally they got higher prices but it was unknown territory so the price estimates they used were actually estimates.
But now that everyone does it as a marketing tool, the advertising price isn't actually near their estimate price because they do have an idea of selling prices from other recent sales but yet still price it from 50-100k less to get interest.
I actually recently heard a guy ask why his offer of 550k wasn't accepted when they were advertising from 495k. The answer was that the owner wants more money. Maybe, but that would have been because they quoted a higher price to the owner. Then when I asked the agent about similar sales in the area and he was telling me he sold a similar one for 575k recently.
If that's not underquoting then I don't know what extreme it will have to be.
FYI Guidelines from Fairtrading.
http://www.fairtrading.nsw.gov.au/b...gents_and_managers/Underquoting_guideline.pdf
Previously, when agents used to use "offers over" for advertising it was okay because the prices were actual estimates and as the market moved naturally they got higher prices but it was unknown territory so the price estimates they used were actually estimates.
But now that everyone does it as a marketing tool, the advertising price isn't actually near their estimate price because they do have an idea of selling prices from other recent sales but yet still price it from 50-100k less to get interest.
I actually recently heard a guy ask why his offer of 550k wasn't accepted when they were advertising from 495k. The answer was that the owner wants more money. Maybe, but that would have been because they quoted a higher price to the owner. Then when I asked the agent about similar sales in the area and he was telling me he sold a similar one for 575k recently.
If that's not underquoting then I don't know what extreme it will have to be.
FYI Guidelines from Fairtrading.
http://www.fairtrading.nsw.gov.au/b...gents_and_managers/Underquoting_guideline.pdf
Complain to OFT - i did - pretty simple. Offending agent gets a nastygram from them with detail of complaint and steps they need to do to remediate
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To allow NSW Fair Trading to assess the concerns raised please provide;
" A copy of the selling agency agreement
" A copy of the property comparable's used
" A record of the offers made on property leading to eventual sale
" Any further information to support your position.
Please provide the above requested documentation by no later than close of business Thursday 28 May 2015 via reply email.
It should be noted that where business practices indicate misrepresentation or potential for consumer detriment, Fair Trading may commence further action including trader education and/or enforcement action.
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Sure - - they won't deal with you again (but why would you anyway) unless they are McGarth and then don't complain they are underquoting or you get sued - whatever...
http://www.smartcompany.com.au/lega...pany-disputing-inaccurate-quoting-claims.html
----------------
To allow NSW Fair Trading to assess the concerns raised please provide;
" A copy of the selling agency agreement
" A copy of the property comparable's used
" A record of the offers made on property leading to eventual sale
" Any further information to support your position.
Please provide the above requested documentation by no later than close of business Thursday 28 May 2015 via reply email.
It should be noted that where business practices indicate misrepresentation or potential for consumer detriment, Fair Trading may commence further action including trader education and/or enforcement action.
-------------------------------------
Sure - - they won't deal with you again (but why would you anyway) unless they are McGarth and then don't complain they are underquoting or you get sued - whatever...
http://www.smartcompany.com.au/lega...pany-disputing-inaccurate-quoting-claims.html
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