PHOTO: Real Estate Agent. FILE
According to THE DAILY MAIL two houses that sold for hundreds of thousands of dollars above the guide price have drawn outrage from Australians.
A property in Burraneer, 26km south of Sydney CBD, sold for $3.801million – a massive 31 per cent more than its guide price of $2.9million.
The other, in Epping, 18km north-west of Sydney CBD, sold for $2.11million – an enormous 51 per cent over the guide price of $1.4million.
One Australian was left fuming over the massive sale taking aim at real estate agents telling them to stop ‘underquoting’.
Underquoting is when an agent advertises the price of a house that is lower than what they believe the property will actually sell for.
The intention behind the tactic is to generate a high level of interest and competition among buyers, which may result in multiple offers and potentially a higher final sale price.
This property in Burraneer, 26km south of Sydney CBD, sold for $3.801million – a massive 31 per cent over its guide price
Laws have been brought in to protect buyers so they don’t waste money and time on property inspections for houses that are actually out of their price range.
Real estate agents are also stopped from drawing in buyers by deliberately advertising a much lower price than the one they expect the house to sell for.
Pulse Property Agents co-founder Ben Pike, whose company sold the Burraneer property in April, shut down accusations of underquoting.
He explained the final sale price was determined after two buyers became locked in a bidding war with each other and became emotional.
In NSW, real estate agents must set the auction price guide that is roughly around the amount they expect the house to sell for.
They are allowed a 10 per cent wiggle room meaning a property with a guide of $3million might sell for $3.3million.
Mr Pike said the 31 per cent difference in Burraneer came as a surprise.
‘The reserve was in line with the guide price and we had eight registered buyers and two people bid for the home and that’s where it went above the reserve,’ he told Daily Mail Australia.
‘There was two people that were fighting over the home. The home on the other side of the street sold about a month earlier for just on $2.6million.
‘So there was no reason for it to get as high as it did,’ Mr Pike said.
The real estate agent said two homebuyers became emotional during the bidding.
‘You had two people who got very emotional in the day and competed for the home,’ he said.
This home in Epping, 18km north-west of Sydney CBD, sold for $2.11million – an enormous 51 per cent over the guide price of $1.4million
‘You take one of those buyers out and it sells around the guide price.’
Property expert Bryce Yardney said it was important for buyers to separate their emotions when going in to buy a house.
‘It’s important to draw a distinction between underquoting [where the quoted price is far below the expected sale price and or auction reserve price] and a situation where competitive bidding results in a sales price way above the vendor’s reserve,’ he said.
‘I’m often surprised how high an emotional buyer pushes up the price of a home in their eagerness to [buy] it.
‘So it’s not unreasonable to expect that agents occasionally get it wrong.’
WHAT IS UNDERQUOTING?
Underquoting is a practice in the real estate industry where a seller or their agent advertises a property for sale at a price lower than the expected sale price, in order to attract more potential buyers.
The advertised price is typically set significantly below the property’s estimated market value or the price the seller is willing to accept.
The intention behind underquoting is to generate a high level of interest and competition among buyers, which may result in multiple offers and potentially a higher final sale price.
However, underquoting can be misleading and deceptive for potential buyers who believe they can purchase the property at the advertised price, only to find out that it is significantly higher.
Underquoting is generally considered an unethical practice and is illegal in many jurisdictions.
It undermines the transparency and fairness of the property market by giving false expectations to buyers. To combat underquoting, regulatory bodies and real estate authorities often have guidelines and regulations in place to ensure that properties are advertised at realistic and accurate prices.
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