Hello

I guess by posing the question like this, I am assuming that real estate agents underquote properties. Most people would agree that in Melbourne most auction properties either sell at the top end of their price range or over, and often significantly over. But why do agents do this? Do they enjoy upsetting buyers? There must be a reason!

There are if fact multiple reasons and I will outline them below.

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• Some agents consider the quote range like an insurance policy against lack of bidding on the day. That is if they quote low, they will at least have bidders at the auction, rather than a sea of blank faces if they quote too high.
   

• Often a real estate agent quotes a high price to the vendor to help secure the listing but knows that their “vendor price” will turn buyers off because the house isn’t worth that much.
   

• An excuse I often hear from agents is that “if I quote a more realistic figure then the buyers will bypass my listing to pursue other lower quoted houses”. Unfortunately, there is some logic to this thinking.
   

• A lower quoted property makes getting buyers to the house a lot easier, therefore doing the real estate agents’ job for him/her. I’ve heard agents make the analogy that buyers are like sharks and a low quote is akin to blood in the water.
   

• Agents will never admit to this one! From experience the agent knows that the price that he/she quotes is not acceptable to the vendor at the start of the campaign, however after 4 to 6 weeks of non-stop activities and inconvenience, the vendor will most likely come down in price and accept the top end of the quote range.
   

The government can legislate as much as they like but they won’t be able to stop this practice. Anything that they do is simply playing politics as agents will always find a way to quote houses the way they want to. The only agents that face punishments are the one’s that are extra arrogant or just sloppy with their paperwork.

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So, what’s my advice if you are a buyer? Forget the quote range and do your research. If you have zoned in on a particular type of house in a certain area there is a decent chance that you know prices better than the local agents do. Afterall, you have probably visited all the comparable houses in the area.

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What about if you are the vendor? Have a proper conversation with the real estate agent. Prior to signing a selling authority ask them “what would you like to quote the house at to the buying public?” Don’t be the house that no one inspects because the quote is too high but don’t be the house that is worth $200,000 more than the top if the quote range. You will lose all credibility. There is some middle ground and if you select the right agent you should have a successful campaign.