26 May Why you shouldn’t worry about underquoting
Recently there have been a few media stories about underquoting. (If you’re not familiar with this term it is when the agent’s estimated selling price is well below the seller’s reserve price).
The estimated selling price, indicative selling price and agent’s price guide are pretty much the same thing. It is the agent’s estimate of what an apartment will sell for. It is regulated by law and must be included in the statement of information which you will find on the website advertisement. However in a rising market the bigger concern is what price other buyers will pay.
An apartment may sell above both the estimated selling price and the owners reserve because buyers compete and bid the price up but this is not underquoting.
If you are in the market to buy an apartment here are a couple of quick tips to help you understand and deal with this issue.
Firstly, it is important to remember the selling agent is just that. They are acting for the seller and their job is to encourage as much interest in the apartment as possible to create competition and negotiate or bid the price up.
Secondly, when you buy your ideal apartment you will invest a lot of money so assess its value to you carefully rather than relying on the selling agent’s estimated price. To do this you may wish to get independent value advice or better still, follow a process to compare and adjust the sale price of several similar apartments to the one you like and make your own value assessment. This way you can negotiate or bid with confidence at a value you know is grounded in market evidence.
Lastly don’t leave your heart out of the calculation. If you find a place you love, then (assuming it’s in your price range) go and buy it. For both investors and home buyers, owning the perfect apartment is too important to let your calculator be the only determinant.
For these and other reasons try not to be too focused on the agents estimated selling price and research an apartment’s value based on your own needs and priorities.