Step quoting is a form of underquoting. Some real estate agents use this dirty, grubby and misleading tactic of gradually increasing the quoting price throughout a marketing campaign to lure in unsuspecting home buyers.
Buyer’s advocate David Morrell, speaking with The Age, 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.
Source: The Age
The auction of 67 Doncaster East Rd, Mitcham VIC was publicly quoted by Noel Jones – Mitcham real estate agency at $520,000+ on 22 February 2015. The week prior to auction the price guide was no longer available on the public real estate listing for the property.
Home buyers who contacted the real estate agency the week before the auction were told by email “we currently have buyer interest in the high $500,000’s to early $600,000’s”. That’s a 15% or $80,000 increase on the original public real estate agency price quote.
On the day of the auction after a vendor bid of $560,000, the real bidding started at $570,000.
At $620,000 I asked the auctioneer if the property was on the market – the answer was a quick NO!
630k on the market
— realAs.com (@getRealAs) March 21, 2015
Once the bidding reached $630,000 the property was then declared on the market. This was 21% or $110,000 above the original public real estate agency quote.
The bidding continued and the property sold for $715,000 which was 38% or $195,000 above the original real estate agency quoted price.
The realAs.com prediction of $651,000 was 10% or $64,000 off the final sale price.
The real estate agency was interviewed by the television crew and suggested that the reason for getting the price guide wrong was because of the rising property market.
Unfortunately that excuse falls on deaf ears when home buyers experience the frustration of wasted time, money and broken hearts from missing out on the homes they thought were in their price range to buy.
However, it’s not fair of us to only refer to one case for this particular real estate agency, so here are their auction results from February 2015, the original agent quoted price, and the realAs.com predictions.
The average difference between their original public quoted price and the sold price was 21%, the realAs.com predictions were just 7% off on average for this particular agency.
|Street||Suburb||Sold For||Original Agent Quote||Sold vs Agent Quote||realAs.com Predicts||Sold vs realAs.com|
|56 Heatherdale Rd||Mitcham||$815,000||$600,000||36%||$724,000||13%|
|29 Husband Rd||Forest Hill||$801,000||$590,000||36%||$689,000||16%|
|17 Kingsley Ave||Vermont||$765,500||$590,000||30%||$689,000||11%|
|56 Heatherdale Rd||Mitcham||$762,000||$600,000||27%||$724,000||5%|
|7/15 Orion St||Vermont||$680,000||$540,000||26%||$615,000||11%|
|1/8 Halls Parade||Mitcham||$638,000||$520,000||23%||$613,000||4%|
|1/5 Linlithgow St||Mitcham||$630,000||$520,000||21%||$613,000||3%|
|10 Glenburnie Rd||Mitcham||$700,000||$580,000||21%||$681,000||3%|
|1/21 McGhee Ave||Mitcham||$589,000||$500,000||18%||$599,000||2%|
|11 Browns Rd||Nunawading||$815,000||$720,000||13%||$848,000||4%|
|14 Eram Rd||Box Hill North||$826,000||$740,000||12%||$868,000||5%|
|58 Creek Rd||Mitcham||$1,055,000||$950,000||11%||$1,083,000||3%|
|13 Quarry Rd||Mitcham||$795,000||$720,000||10%||$848,000||6%|
|22 Toomey St||Vermont||$688,000||$650,000||6%||$758,000||9%|
Further reading on step quoting:
- Property market: Underquoting accepted as the new norm – The Age
- A smart buyer’s guide to step quoting – Property Observer
- The buyer’s guide to underquoting – The Age