Underquoting and jaded buyers

I think a lot of people just get dirty because they have to waste money on building a pest, solicitor etc prior to the auction and then they never really had a chance anyway. I reckon the building a pest system needs an overhaul. It should be provided by the vendor and make them all to the exact same format. A lot of this wouldn't be an issue then i reckon.

Agree................
 
I reckon the building a pest system needs an overhaul. It should be provided by the vendor and make them all to the exact same format. A lot of this wouldn't be an issue then i reckon.

Agree. If an inspection is part of the documentation provided by the vendor it would be a lot simpler. I've read about building inspectors providing a report for an interested person, and then, with minimal further work, providing the same report to a second person for the same price.
 
For everyone complaining about underquoting, the easiest way is to just not pay too much opinion to the quoted price guide and ake up your own mind about the value by seeing a few auctions to see what similar properties are going for.
Personally I don't like to give price guides as you'll have half the prospective buyers trying to talk it down saying the owners are dreaming if they think they'll get that much, and the other half thinking you're underquoting- so I give comparable sales of similar ones that have sold.
 
I think a lot of people just get dirty because they have to waste money on building a pest, solicitor etc prior to the auction and then they never really had a chance anyway. I reckon the building a pest system needs an overhaul. It should be provided by the vendor and make them all to the exact same format. A lot of this wouldn't be an issue then i reckon.

All that would happen is vendors would build it into the expected sale price.
 
All that would happen is vendors would build it into the expected sale price.

Fair enough, but with properties costing hundreds of thousands of dollars, another $500 is quite small. The advantage is that all potential buyers could immediately see the pros and cons of a property, thus avoiding wasting the time for all involved. It would also avoid the need for a potential buyer to have an inspection done. For properties in better condition a good inspection report is a selling point.
 
Heres my example which passed in at auction last weekend.

-Apartment advertised for 'over 550' 3-4 weeks ago

- changed to 'price guide on request' the morning after the bresicwhitney court thing happened

- I 'won' the auction at 675, but it seems the owners wanted 720k+ as reserve
Agents tried to tell me that the vendor was getting instruction by phone and changed the reserve higher on the day due to similar auctioned properties in the area that morning. Can't trust those snakes though as this agency (guess who!) often underquotes.

Not to mention incoming levies of 20k
 
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Heres my example which passed in at auction last weekend.

-Apartment advertised for 'over 550' 3-4 weeks ago

- changed to 'price guide on request' the morning after the bresicwhitney court thing happened

- I 'won' the auction at 675, but it seems the owners wanted 720k+ as reserve
Agents tried to tell me that the vendor was getting instruction by phone and changed the reserve higher on the day due to similar auctioned properties in the area that morning. Can't trust those snakes though as this agency (guess who!) often underquotes.

Not to mention incoming levies of 20k

More DD is required then or the vendors have unrealistic expectations which an agent can help assist but you can only lead a horse to water.

Remember this agent gets nothing until it sold, he wants to sell it as hard as he can to you if it is reasonable.
 
Biggest case of underquoting was this week's episode of the Block.

How can properties with reserves of $1.3m sell for over $2m? (Or were they quoting numbers well in excess of the reserve to prospective buyers just to ensure that the contestants were in the black?)
 
Another underquoting special....

http://www.realestate.com.au/property-house-nsw-seven+hills-119633519

Listed a week ago at offers over $500K. Since then price has been hiked up 3 times - $550K, $590K and now $650K.

Appreciate it was set low to generate "interest" but then fluff it up for another $150K in a week?

House needs alot of work as well obviously.....

How do they sell this with a single external photo? (rented?) Seems to me a good agent to buy through, but not to sell through!
 
I know - great presentation - agent doing the seller no favours there so on the surface a potential good buy to a buyer.

But then that gets blown out with this stupid price hike strategy.

Its apparently being sold as an estate sale...
 
More DD is required then or the vendors have unrealistic expectations which an agent can help assist but you can only lead a horse to water.

Remember this agent gets nothing until it sold, he wants to sell it as hard as he can to you if it is reasonable.

I agree entirely with this!

Too much complaining and whinging about this issue.

Do your due diligence, educate yourself about the market and suburb you are buying in, attend many auctions to understand what similar properties are selling for.

To me it feels a bit like a victim mentality going on..
The property is only worth what someone is willing to pay for it, if the agents are being unscrupulous in their approach then that is their perogative. If they generate your interest in a property due to underquoting then so be it, but it ends there, if you know what it's worth and what you are willing to pay then you should have faith in your numbers. If you don't... Then buyers needs to work on their due diligence further and have no one to blame but themselves..
 
I think the amount underquoted in Sydney is still within reason. It's much worse in Melbourne.

+1

Not uncommon for the underquoting to be b/w 20-40% here in Melbourne and there lies the issue. But as long as the State Govt is making their money on the all the stamp duty, who really cares right...
 
Biggest case of underquoting was this week's episode of the Block.

How can properties with reserves of $1.3m sell for over $2m? (Or were they quoting numbers well in excess of the reserve to prospective buyers just to ensure that the contestants were in the black?)

Cant be underquoting if the reserve is 1.3M.. Supply and demand.

If I decide to sell my house with a reserve of $1 I can guratee you it will sell for ALOT more than my initial reserve. Would that mean I underquoted it?

As theoricatlly it could sell for $1, not my fault buyers saw better value in it and used their own DD to determine the price.

Same as I could also set reserve at $10M it wouldn't sell and no buyers would turn up or some people would turn up to see what it actually sold for.

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When buyers buy a TV, car or whatever buyers will spend more time researching about it features (in house terms beds, baths, cars etc) the brand (suburb), warranty (structure of the building) and compare price (sold prices) and then make a determination on which one to buy or what they are willing to pay.

If I tried to sell you a brand new Mazda 6 with leather seats, climate control, etc etc and 5 year warranty for $150,000 would you buy? At this price point you would consider a BMW instead, better brand, technology etc.

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Yet when it comes to buying a house some people want to be spoon fed and expect everyone to tell the truth yet they wont. I told the REA I cant afford much more than 500k for a property worth mid 500s. Yet I had over 200k in cash sitting in the bank and easily could service 800k. I bought the property for 510k way below what my valuation mid 500s and the banks valuer I had done before auction was 530k. I in a way felt sorry for the vendors as I was easily going to pay 40k more (and in private sale probably would of put an offer of 550k) However attended the auction no interest, refused to go inside so I could see everyone had left so I knew I was in a position of power.

However I didn't go in and tell the vendors I would of paid a further 40k more easily (which is the truth) as I was better at the game then both them and their agent.

Later that afternoon a house in the same street sold for $447,500 but was unrenovated, was only 3 bed 1 bath compared to 4 bed + study, 2 bath. The extension the previous vendors did was easily 60k (added 2 bed and 1 bath) which adding to the 447k = 507k total and this doesn't include the reno to the bath, kitchen or rest of the house.

TLDR

If you cant work out what a property is worth maybe you should hire a BA as the vendor has hired their own selling agent and everyone including yourself the buyer will be telling lies.

Please note I do not represent any BA but if you don't have the skills and want to save 5-10k by not hiring an expert on a 500k purchase then you deserve what is coming for you...
 
Here's what i think is a classic case of under quoting

http://www.realestate.com.au/property-residential+land-nsw-baulkham+hills-201151575

Agent told everyone the price guide was $800-$850k.
He showed other vacant blocks of land sold for around $800-$900k as part of his sales "pack".

Reserve on the day (as i was lead to believe - my friend was there and he was keen on buying the land), was over $1m.

What do you do eh? Live and learn and know which agents have a tendency to underquote.

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This one on the other hand, i thought was fair. Agent told people it was $1.05 to $1.1 and that if it got close to $1.1m on the day the owner would most likely sell.

http://www.realestate.com.au/property-house-nsw-strathfield+south-119482731

It was announced on the market at $1.13m (probably would have announced it earlier if bidding had slowed down at 1.1m).

Sold for $1.295m.... auction was 8 mins long.
 
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