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Step Quoting is Underquoting

Step Quoting is Underquoting
March 26, 2015 Josh Rowe

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

Last Saturday the team ventured out to Melbourne’s Eastern suburbs – a known hot spot for underquoting – with a television crew to witness the practice first hand.

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!

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 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 predictions.

The average difference between their original public quoted price and the sold price was 21%, the predictions were just 7% off on average for this particular agency.

Street Suburb Sold For Original Agent Quote Sold vs Agent Quote Predicts Sold vs
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%
AVERAGE 21%   7%

Further reading on step quoting:




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