Overcoming Underquoting Frustrations.
Advertised Price $490,000 plus
Actual Sales Price: $650,000
Does this look familiar?
It is a frustration in the Melbourne real estate market that you can find the property you love and it seems affordable, but then you find out on auction day that it is not. You walk away annoyed and despondent that you were never even in the race for the home of your dreams.
So how do you know when a property is being under quoted?
The market will always determine the price and so the best way a buyer can know what a property is worth is to look at what else is selling. If you see a deal that looks to good to be true, then maybe it is. Another way to determine if a property is likely to sell well over the quoted price is to go to an open for inspection. The old law of supply and demand will quickly show you if there are far too many buyers at that cheap price and tell you if it is likely to sell well above the advertised price.
Why do agents underquote?
It is a catch 22. In some areas, underquoting is so prevalent that the market has come to expect it. So when a property goes 20% above the advertised price, no one is surprised. This practice causes problems for the vendors of the agents who are trying to do the right thing. If they advertise at $600,000 plus hoping for a $650,000 result as in the above example, many buyers won’t even look at the property assuming it will sell for $750,00 and therefore exceed their budget. Despite trying to do the right thing, the agent is almost forced to underquote to find the right buyer for the property.
Other less flattering reasons that agents under quote include a desire to look good to the vendor with a larger turnout to the auction or that they want to say the property sold for a record amount over the advertised price (when that price was under to start with).
At Market Share Property we are against this practice and believe in quoting a fair price so vendors know where they stand and buyers are not tricked into wasting time.
For all your buying and selling needs give us a call and the team will tell it how it is!
26th February, 2015