Underquoting. It’s epidemic. It is cheating and it hurts buyers, sellers and the reputation of the industry. In the words of the REIV:
“The commonly held view is that a 10 to 15 per cent margin of error is reasonable given that the market is so volatile . . . if there are a string of results of 15 per cent and higher, then agents have a case to answer and it is not enough to say it is a fickle market at work”
Problem is, those words date back to Ian Carmichael, then president of the REIV, as reported in The Age in August, 1998* Things were bad enough then to be making the papers and, even in the face of changes to the law since, it’s now even more outrageous.
Consumer Affairs Victoria, despite their protests that they have inspectors out there, are toothless. Expensive hot air. As a taxpayer, you should ask for your money back.
The ACCC, maybe prompted by a complaint we lodged last week, is being very public about huge fines. Good. But finding the proof will still be the problem.
People, we have been in the industry for a very long time. We have seen and exposed more scams than most agents have even dreamed of. We have one simple rule change that would end this nonsense now and forever; and it doesn’t need inspectors and it won’t need court cases:
Make the publication of reserves mandatory.
Overnight, underquoting ceases. Overnight, dummy bidders disappear.
With time, the reputation of the industry will be restored. Over time, the many, many people who are unwilling to play blind man’s bluff at auction will return.
The week just passed?
There was some top-end action off-market and about that we must remain silent.
We’re also hearing reports of vendors going off-market; simply asking a number of agents to come up with their best offers and letting them compete for the sale. A neat reversal when it works.
Something like that finally did work for 10A Power Avenue, Toorak. An eight year-old 2-storey townhouse on 5000 sq ft, it finally sold for $3,125,000 after being on the market for six months at $3.5 million. Ouch. (They were offered $3,150,000 not so long ago; was there a hurry to settle elsewhere?)
Investors were also swarming, especially below $700,000, but it looks like many had missed the bus. There’s just too little available in that bracket to be buying well.
Next weekend looks like being Spring’s first real stress test. From what we have seen at inspections (are the footy crowds down this year? Is everyone inspecting houses?) the competition will be hot. Those who bought between August and November last year had first-class crystal balls.
David Morrell
* It’s a good article. If The Age gives us permission, we’ll reproduce it.
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Bayside: Underquoting? We can do that.
Despite the blowtorch being applied to those agents who consistently and systematically mislead buyers on the likely sale price of auction listed properties, the Bayside market continued to perform strongly across all price categories.
Most activity was in high turnover Bentleigh: 11 sales from 12 offerings; including some of the most blatant examples of underquoting we have seen in Bayside.
- 90 Parkmore Road, Bentleigh East Quote $490,000+. Result. Sold for $630,500. Analysis: $140,500 over (28%).
- 13/27-51 Charles Street, Bentleigh East Quote $460,000+. Result. Sold for $600,000. Analysis: $140,000 over (30%).
- 42 Lahona Avenue, Bentleigh East Quote $750,000+. Result. Sold for $1,000,000. Analysis: $250,000 over (33.33%).
When challenged over those whopping discrepancies, the common response was that everyone and everything else was to blame, but never the agent. No. Not me. Always something/someone else.
Why are we not surprised ?
Elsewhere in Bayside:
219 Beach Road, Black Rock sold for $2.82 million after the close of an expression of interest campaign
Beaumaris had three sales at more than a million:
- 15 Banksia Avenue: $1,040,000,
- 1/60 Reserve Road sold privately for $1,090,000
- 18 Cromer Road also sold privately for $1,240,000.
Brighton continued a kind of recovery at its top end:
- 23 Dawson Avenue finally sold for $4 million (the earlier expectation of the vendor?s was in over of $5 million – a truckload of painkillers may be in order).
- 19 Dawson Avenue, two doors down, had a prior to auction offer of $3.425 million accepted although this property was initially presented to us with an expectation closer to $4 million. Was that the only offer in sight?
- 22 Cadby Street also sold prior to auction. The agent initially anticipated over $3 million. It went for $2.675 million.
- 1/12 St James Park Drive was listed at $2.3 million and changed hands in a private sale for $2 million. Ask and it shall be given?
- 75A Halifax Street, a new townhouse (one of two) was auctioned for $1.83 million.
- 32 Grandview Road also sold; realising $1,390,000 against a quote of $1.2 million+
Hampton was quieter. Just two auctions:
- 38 Grout Street sold for $1,081,000
- 1/17 Kerferd Street sold for a more modest $493,000
Following Graeme Samuel’s ACCC headline over the weekend whereby new legislation due next January provides massive fines of up to $1 million to agents and vendors found guilty of underquoting, it will be instructive whether this sledgehammer will finally convince agents (and complicit vendors) to clean up their acts. Has Mr Samuel has been reading this column?
Damian Taylor
Morrell & Koren in the news:
- on underquoting in the Herald Sun
- on Dirty Secrets in the Sydney Morning Herald
- on land banking in The Age
- on unfazed buyers in BusinessDay
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