New guidelines: price advertising & underquoting

Written by Paul Kounnas | Monday, 03 December 2007

In response to public outcry about real estate price under quoting, Consumer Affairs Victoria (CAV) has released new guidelines for real estate sales people, ‘Price Advertising & Underquoting’.

The new guidelines have been prepared to assist agents meet their obligations under the Fair Trading Act and the Estate Agents Act when advertising or providing information about the price of properties for sale.

Further clarification with the new guidelines was necessary, however there were many agents in the past who did not comply with the old guidelines and continually got away with it.

If ...

the CAV is serious about real estate salespeople meeting their obligations under the new guidelines they need to set up a satisfactory investigation and policing process in order to clean up the industry.

Underquoting occurs when a salesperson;

• Advertises or advises a buyer that a property is available for sale at a price that is less than the vendor’s asking price or auction reserve price.
  
• Advertises or advises a buyer of a price that is less than the agents current estimate of the likely selling price.
  
• Continues to advertise a price that is less than a genuine offer previously refused by the vendor.
  
• Gives an inaccurate appraisal of the current market price of a property.
  

Under the new guidelines, advertising a property for sale at a price that is less than the vendor’s selling price is false and misleading. It leads buyers to believe that properties are for sale at prices that neither agents nor vendors expect they will sell.

Price is an important piece of information about the property. It is only fair that the buyer should have the right information to make an informed decision. This is also good for vendors because only qualified buyers who can afford to pay their price will inspect their property.

If you are selling or buying and would like a copy of the CAV’s Guidelines so you are better informed you can call our office and we’d be glad to send you a copy by email or post.

Consumers beware!

Written by Paul Kounnas | Monday, 29 October 2007

Under quoting to home buyers in the Melbourne property market is out of control and in some respect ridiculous. Misquoting of prices remains widespread across Melbourne despite laws introduced in 2003 to stop this happening.

Properties are selling well above advertised prices and many agents are using the strong market as an excuse for misquoting.

When agents visit a property and appraise it they ? nd out what the sellers expectations are and what the market value of the property is. So it is an obvious case of misquoting when it’s later seen advertised for much less than what the seller expects ...

or much less than it’s market value.

Here is one documented instance known to me and which is being repeated constantly:

A property was on the market with an asking price above $600,000. There was interest on the property from buyers under $600,000. The property did not sell and the vendors went to another agent who started the marketing of this property with an estimated selling range of $480,000 to $550,000. This is a price range which the vendors refused to sell in. Either the buyers are being mislead or the vendors have lowered their expectations.

As a seller don’t think that this does not affect you. This type of misleading marketing has a negative affect on the ? nal selling price of your property.

The real estate industry needs to be cleaned up. Misleading consumers is an unacceptable behaviour and harms the industry’s reputation. Not all agents behave this way but those who do give the industry a bad name.

Regulators should be courageous and prepared to act to enforce the law and stop agents from misleading consumers.

As a buyer wouldn’t you rather have an honest indication of what you have to pay to purchase a property?

Misquoting by agents is bad for our industry

Written by Paul Kounnas | Monday, 21 May 2007

Misquoting on house prices by agents continues despite the introduction of state laws to clamp down on the practice. The law requires estimates to be based on what “a willing but not anxious buyer” would pay. It is also illegal for agents to advertise a property for less than their own estimate.

It is unrealistic for agents to claim that the difference between the advertised price and the sales price is the result of a rapidly moving market. Although the market is very strong, REIV’s published sales data shows that Melbourne’s median house prices for the March quarter fell by 3.3%. The overall growth for Melbourne in ...

the last twelve months has been 7%.

A professional agent wouldn’t underestimate the sale price of a property by more than 20% when prices over the whole year have only increased by 7%. The question has to be asked whether agents deliberately and knowingly underquote prices and why?

There are some rare cases when an agent may not anticipate what a property may finally sell for, but this excuse cannot be used as an explanation for the widespread and consistent underquoting across the board.

It’s unacceptable in any other industryto advertise prices that are misleading. it is also not fair to expect buyers to know that they have to add another 20% or more to the advertised price, particularly when the agent knows the vendors would not sell at the advertised price anyway. this practice is costing many buyers, who set their hearts on a property, hundreds of dollars in building inspections and legal costs with little or no chance of buying at the advertised price.

There is no doubt that low quoted prices raise buyer’s expectations, as well as attracting larger numbers of buyers to properties, creating a false sense of high demand and making the agent look good. i believe it is morally and legally wrong to be advertising properties for less than the vendors are willing to accept.

Real Estate sales is a service business and agents who treat potential buyers with contempt are causing damage to our industry’s reputation.

How to choose a selling agent

Written by Paul Kounnas | Monday, 04 December 2006

Selling a home is not something you do often so knowing what to look for in an agent is not easy. You want the best agent, but how do you choose? Is it the one who quotes you the highest price, or the lowest commission?

Every agent wants to be the agent to sell your home. If you choose an agent purely on quoted price, you could be making a huge mistake. Many sellers have learned from costly experiences that the price some agents quote and the final selling price can be very different.

If you are not sure about the agent ask them if they are prepared to guarantee their price. If it’s accurate they will.

Remember, ...

the agent is not the buyer of your home. They are the person who finds and negotiates with the buyer. So you are looking for the best negotiator to sell your home.

Selecting an agent is similar to a job interview. The job description should be: you want an agent you like, who presents well, who genuinely likes your home, who you believe will act in your best interest, be honest with you, who will work hard and has proven negotiation skills to get the highest price.

Choosing an agent who quotes you the lowest commission can also be a big mistake. The cheapest agent may turn out to be the most expensive. If they cannot negotiate a fair fee for themselves how are they going to negotiate a good price for your home? You may save a few dollars in the fees they charge, but they may cost you thousands on the price they get you.

A good agent will charge you a fair fee on a successful sale with no hidden costs. You need to be more discerning if you want to sell at the best price in the shortest time.

The right agent will match your job description and care about you. You will feel comfortable with them. Follow your instincts.

Picking the right agent could easily make a difference in the final selling price of your home, so choose wisely.