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Real estate underquoting rules unenforceable

Real estate underquoting rules unenforceable
October 6, 2014 Josh Rowe

In the popular real estate auction markets of Melbourne and Sydney there is no shortage of underquoting horror stories from frustrated property buyers.

What is underquoting?

Underquoting is when an agent indicates a price that a property will sell for, but is well short of the market and the owner’s expectations.

This example illustrates property buyer frustration where the final bid was above the real estate agent’s quoting range but did not reach the vendor’s reserve price.

Here’s how traditional and social media reacted to the underquoting issue.

103 Tinning Street, Brunswick
Passed in $805,000
Agent Barry Plant
Price range $700,000-$770,000 = 19% off reserve price
#realAsPredicts $828,000 = 1% off reserve price
Reserve $835,000

The Age reported:

One woman caused a stir at the auction of this renovated four-bedroom house, after the auctioneer rejected her $1000 rise. She queried why he wouldn’t take her rise of $1000 when the price was in the quoted range, but he still refused to take it, instead accepting a $5000 rise from one of the two other bidding parties. A vendor bid of $700,000 had launched proceedings, and three parties were soon in the race, however the reserve of $835,000 was not reached and the house passed in at $805,000.

 

The rules in place designed to stop underquoting are ineffective. Real estate agents simply do not (officially) agree the reserve price with the vendor until the day of the auction, so they can market a lower price range pre-auction then move to a higher reserve price on auction day.

Underquoting wastes the time of property buyers.

Some critics of underquoting have asked for reserve prices to be advertised in advance of auctions.

In the mean time, http://realAs.com delivers accurate price predictions for hundreds of thousands of homes Australia-wide for free.

Josh Rowe, CEO realAs.com

 

 

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