House price problem plaguing Sydney

PHOTO: Aussie homebuyers are facing a ‘frustrating’ problem.

An expert has revealed a sneaky tactic being used by some real estate agents, and its causing a major headache for potential homebuyers.

Homebuyers are being faced with a “frustrating” problem that is making the already difficult task of purchasing a property nearly impossible.

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A recent ad for a house for sale in Sydney has highlighted one of the key issues buyers are having to navigate when looking for a new home.

When looking to buy, many people rely on the provided price guide on the listing to determine whether a particular property is within their budget.

Makes sense, right?

Well, unfortunately, it seems these guides aren’t always the price a seller wants.

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A home whose listing has brought this issue into focus went to auction last weekend, with buyers given a guide of $1.5m to $1.6m during the campaign.

The property was then passed in, meaning the top bid did not meet the vendor’s expectations.

The listing was then changed to include what was branded a “realistic guide”, which had increased by more than a hundred thousand dollars.

The listing now displays a ‘realistic’ price guide.

Chief executive of real estate mentoring business The Property Mentors, Luke Harris, told news.com.au a realistic price guide and a regular guide can actually mean the same thing in the real estate world.

“By law, a price guide should be realistic anyway to avoid underquoting. Agents will often use whatever terminology they feel suits the vendors requirements, market conditions and buyer demand,” Mr Harris explained.

“For example, if they know the seller is very keen to sell, the agent may emphasise the ‘realistic’ component to tell buyers that the vendor is serious at that price range, rather than other sellers that might be holding out for a higher price.”

Unfortunately, changing price guides are something that potential buyers are having to continually navigate through.

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There could be a number of reasons for price guides to change, but buyer’s agent John Carew of Mayfield Property Buyers told news.com.au the situation is “very frustrating” for buyers.

Mr Carew said a sudden price guide change could indicate a seller changing their mind about the price they want, but there are also agents that have been using lower price guides to their advantage.

“In many cases, agents are still significantly under quoting or under guiding a property in regards to where the vendor wants to be and where likely fair or market value is,” he said.

“This is a constant battle and frustration to many buyers. And it causes many of them to dollar up on building and pest inspections, conveyances other checks for a property that actually is never going to be within their budget.”

The buyer’s agent said using more conservative price guides could be a tactic to bait more potential buyers in order to build competition for a property.

The practice isn’t illegal and Mr Carew said, in some cases, properties are being under guided by up to 20 per cent of their realistic fair value.

Mr Carew said the opposite can also occur.

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There have been recent cases where some properties are being over-guided relative to their fair value and, as a result, selling well below the original price guides.

“So it’s quite a maze for buyers or potential buyers to sort of work through,” he said.