What is under-quoting and is it still happening ?

 

This week I lost a listing to another agent & it absolutely devastated me! Could I have done anything different? Sure, but it would not have been legal!!! Instead, I worked my butt off, holding several open homes a week and calling buyers like there was no tomorrow. 

Obviously when things don’t go to plan, vendors blame the agent for not achieving their desired price – as a small business owner, my business (and therefore my family) is now at a financial loss in excess of $4000 for marketing expenses incurred throughout the process and emotionally it is a huge hit to my ego and my reputation. 

On this particular occasion, when both myself and the new agent originally appraised the property in February, I was cautiously optimistic that the market would stabilise post the Christmas period (like it had in the 5 years prior) and I appraised the property at $680,000 – $720,000, similarly the other agent quoted $690,000 – $710,000 with a confidence of achieving $700,000.  

Sadly, in March when the property launched, the market continued to decline and competing properties were having their prices slashed week by week. We unfortunately rejected a $665,000 offer, then weeks later a $655,000 and then finally a $650,000 (Another $660,000 offer was expected within days however buyers are struggling to get timely pre-approval at the moment due to tougher lending conditions as a result of the royal commission). 

My instructions were clear, the vendors had committed elsewhere and they NEEDED $675,000 minimum. At no time was I lead to believe that the vendors would accept any offers below this and so I marketed the property with this in mind.

Mid-way through the campaign I spent an entire day re-styling their property with my own items and then proceeded to have all new photography and videography undertaken in order to bring some appeal to the dated and tired interior. I showed the property at the drop of a hat – all times days and night and I hustled hard to no avail… 

Throughout the campaign, I informed the vendors of the declining market, I offered comparable listings to prove we were over priced, I informed them of the growing trend of first home buyers having a reluctance to spend in excess of $650,000 due to the first home buyer grants… it didn’t matter – they had already committed elsewhere with little to no financial buffer for the declining market (The worst thing you can do in a falling market).

The other agent was in their ear throughout my campaign with promises of $700,000 which not only undermined my advice and my ability to look after my clients but also made them doubt that I was acting in their best interest.

The property was taken from me two months into my 3 month agency agreement and re-listed less than a week later with the other agent.. (still with my styling – glad I was useful for something). Yes I could have held them to the 3 month period but I would honestly rather work with clients that trust me and put their faith in me. 

Can you guess the new advertised price???? Go on, give it a try!!!!

The property is now listed for $649,950 – $689,950 

The vendor is upset at me and questioned why I didn’t advertise the property for lower “just to get buyers in the door and create competition like their new agent”… the answer is simple… IT IS ILLEGAL AND CALLED UNDER-QUOTING!

Do I expect the agent will achieve $700,000? Hell no! I believe the market has dropped 5% since the initial appraisal (have you seen the news?). What I believe will happen is that the vendors will get desperate as their deadline approaches and the new agent will benefit from their desperation and get the sale across the line. 

How is this illegal? According to Fair Trading; “If the seller wants to sell the property for more than your estimated selling price, the agent can legally choose to:

  • advertise at a higher price that meets the seller’s instructions.
    or
  • decide not to disclose any price.

You should also let the seller know that the following pricing statements may be considered false or misleading under the Australian Consumer Law:

  • quoting the estimated selling price where the seller has advised that they will only sell for a higher price
    or
  • advertising a property at a price that is less than a previously rejected offer (unless the seller is now prepared to accept a lower offer)”.

I don’t know, maybe it is me… maybe I need to loose some morals and pressure my vendors into accepting offers like the peers around me do. It is not the first this very same agent has done this to me, I am sure it won’t be the last… 

Sadly, that is the industry I am in and rather than stoop to their level and act illegally I will focus on my clients that are loyal to me and appreciate my efforts and hope that this agent does the same going forward rather than continue to chase after my clients.

So how do these rogue agents get away with it? Pretty easily actually! As long as they talk their way through an agency agreement and ensure that their written “estimated” price is equal to or lower than the “advertised” price Fair Trading will do sweet F*ck all. If the seller is on board with the illegal activity and happy to sign the agency agreement or signs the agency agreement without understanding what they are signing then the agent is protected. 

The losers? Well the vendor eventually when the deception finally becomes apparent, me (the ethical agent not wanting to break the law) and the buyers who are duped into attending the open homes (you know, the whole reason why under-quoting legislation was created). 

For more information on under-quoting head to the Fair Trading website  Fair Trading website

 

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