Property market: Underquoting accepted as the new norm

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Sarah Cabret and her partner Thomas Harvey have almost given up their dream of owning a home after spending more than a year chasing properties that sold for much more than their original advertised price guide.

The couple have become increasingly discouraged after 10 failed attempts to buy a home up for auction and countless wasted Saturdays attending open for inspections.

“I’m a heartbeat away from giving up,” said Ms Cabret, 36, who is now looking to Ringwood after being priced out of Blackburn.

Homehunters have long complained about underquoting – a strategy to get potential buyers through the door at open homes for properties up for auction.

But Ms Cabret says there’s a new underquoting game in town – “step pricing” – where agents are gradually edging the price upwards during the sales campaign.

“By the end of the advertising campaign, it’s gone up by $40,000,” the marketing manager of a computer software company said.

She also claims to have been the victim of more blatant underquoting, where a Nunawading home was advertised for $600,000, only to learn that the reserve was actually $780,000 when it was passed in to her for negotiations.

“We put in several offers before auction and the advertised price was not adjusted to reflect what we had offered either,” she said.

“This agent slightly adjusted the price during the advertising period, but it was well underquoted the entire time, even with step pricing.”

Buyers advocate David Morrell estimates that up to 50 per cent of agents in some Melbourne suburbs are “step quoting” to lure buyers.

He said agents were also increasingly opting to quote verbally at open for inspections rather than publishing a price on advertisements.

“It’s just grubby, misleading and deceptive,” he said.

“It gets them out of jail … so they can say ‘our last quote was within 10 per cent of the purchase price [when it's] 30 per cent more than it was three weeks ago.”

Sales agents denied step-pricing was a deliberate strategy to trick buyers. It was simply a case of keeping them up to date with offers and adjusting the price guide accordingly.

Jellis Craig Hawthorn director Richard Earle said it was the agent’s role to test the market, and there could be up to a 20 per cent difference between the estimated price and the final sale price.

“We’re not valuers, we’re negotiators and marketers,” he said.

“The agent is going to start conservatively, but as that campaign moves forward, the agent’s got to be progressive, and got to move that quote price up, or he is being seen as being unprofessional and unknowledgeable.”

Barry Plant chief executive Mike McCarthy said underquoting was definitely happening, and the perception of underquoting has increased this year because of the rising market.

Read more: Property market: Underquoting accepted as the new norm

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