Homebuyers urged to do own research to dodge underquoting
By Scott Carbines and SSB
House hunters are being urged to base their comparable sales on monthly results to avoid falling victim to dodgy sales tactics.
Home hunters are being urged to base their comparable sales research on monthly results to avoid falling victim to dodgy sales tactics.
The Real Estate Buyer’s Agents Association (REBAA ) noted “some” agents used outdated results to stand-up their advertised price guides, which could be deceptively low.
Victorian laws allow results from the past six months and within 2km to be included among the three “comparable sales” - and 18 months and 5km in regional area’s — that must be provided in a listing’s statement of information.
But REBAA president Cate Bakos noted these can become quickly outdated in a rising market and could be used as a loophole to spruik a lower range.
“In a rising market, while we can’t predict the strength of the capital growth figure, we can factor in a heightened seller’s market when appraising a property,” she said.
“Underquoting is much easier to identify because the agent’s quote should be based on recent comparable sales. If the recent sales they are citing are inferior or too outdated, then a savvy buyer will spot this.
“If a buyer is in doubt about the relevance of the quote range, they should ask the agent to suggest which recent comparable sales they would consider reliable data points to base their pricing research on.”
Ms Bakos noted while underquoting was illegal, there were still many legal loopholes that existed in current legislation.
“Vendors are not required to state their reserve price for an auction until moments before the auction,” she said.
“And some offending agencies take advantage of this by pitching the property at a price lower than that of a reasonable price expectation or a realistically anticipated reserve.”
Underquoting can occur when a property is advertised at a price that is less than the estimated selling price, the price the vendor will accept or a price already rejected by the seller.
Any underquoting can be amplified in a rising market, where prices are naturally exceeding expectations.
It can be used as an underhanded tactic to get more buyers to emotionally engage with a property in the hope it will push up the sale price.
REBAA’s tips to avoid being a victim of underquoting:
1: Compare comparable properties by location, land size and condition.
2: Spend the months leading up to active bidding time, while obtaining finance pre-approval to inspect as many properties and neighbourhoods as you can.
3: Look at other similar properties in the area and see what the agent’s initial estimate price range was published at, reserve price and final recorded “sold” price is for those.
4: Consider consulting an accredited professional.
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