We haven’t heard much in the press lately about under-quoting, which is strange given how strong the market is, and how often the sale price is exceeding the quoted price by some margin. So during this void of media hysteria and half truths about under quoting it’s timely to review it rationally. It’s a tricky debate that will continue forever I suspect. It is firstly important to remember under-quoting is promoting a price well below what the seller will accept, and it is not, quoting a price below what the property sells for. In strong markets, sometimes the price exceeds everyone’s expectations. If the seller wants $800,000, and the price guide is $800,000, but it sells for $950,000, it looks like it was under-quoted when it wasn’t. Often buyers never know what the seller’s reserve price was so they can’t tell if it was under-quoted or not.
Most of the media hype blames the agent for misleading a buyer and luring them in to paying a price well above their initial expectations, however both the seller and buyer are just as much a party to the problem. Sellers sometimes play their own game with the agent on what price they will accept, or change their mind during the auction campaign, and buyers are naive to think an agent, who is acting solely for the seller, is the best person to provide them with impartial advice.
If you are about to spend $1 million dollars on a property, why would you rely on advise from the person who is acting for the seller? I’m in no way suggesting the agent is not using their best endeavors to help a buyer, but if you are going to spend that much money, you should get independent advice on many things, especially market value and bidding strategy. There are some great buyers advocates which is money well spent. Property value advice is also readily available. Wood Property Partners can provide you with a free market comparison report on any property showing recent comparable sales, what is for sale, rental value, and suburban stats.
If regulators are committed to eliminate what the public perceive as under-quoting they would need to prohibit all forms of price guides or quoting. We are much better off to educate the market, and have a rational discussion so everyone understands our great Auction process better.