How to avoid underquoting, and overquoting
No-one benefits from underquoting or overquoting – even real estate agents.
Buying and selling real estate would be a whole lot easier if bricks and mortar came with a recommended retail price, but in reality property prices are dictated by the basic laws of supply and demand.
Knowing what asking price to put on a home is a specific skill and an experienced, reputable agent can guide a vendor through the maze of market movements. To be sure your greatest asset is being presented in its best possible light, be sure to understand the damage that can be done by under or overquoting.
What you need to know about underquoting
It’s the dirtiest word in real estate. But although a lot has been done in NSW to stamp out this dodgy way of dealing with buyers, underquoting still happens.
In a rising market, like Sydney’s Inner West, unscrupulous agents can often get away with various degrees of underquoting because they can claim the final sale price took them by surprise. Not to mention, comparable sales from six months to one year ago could very well have achieved lower results, therefore backing up their story.
At first sight a vendor might agree with an agent’s extremely modest advertised price, or price range, believing it will do the trick and get buyers through the door. But realistically, many of those keen buyers might never have been seriously in the game to begin with because they were unwittingly house hunting outside of their budget.
As a vendor you should be aware that the Department of Fair Trading NSW implemented new regulations around underquoting in 2016. An agent is now no longer allowed to promote your home with a price that quotes “more than” or “above” a certain amount or by using expressions such as “plus” after a figure.
If you both agree, you and your agent can decide not to publish any price guides at all, instead, leaving the buyer to do their own price homework.
Ultimately, as the vendor you should know that an agent must always provide evidence of their price estimate for your property.
How sellers can avoid overquoting
We’ve all heard about the pitiful practice of underquoting, but little time is devoted to the very real and just as harmful practice of overquoting.
While underquoting can boost (and then ultimately crush) the hopes of a buyer, overquoting can have the same effect on a vendor.
Also known as “vendor conditioning”, overquoting happens when the agent inflates the suggested selling price as a tactic to win a listing in a very competitive marketplace. The agent (who often knows they cannot achieve such a high price) then slowly and steadily “conditions” the seller into agreeing to a lower sale price.
Although overquoting is considered unethical, it does still happen.
As Sydney’s property market enters a rebound phase, the climate is ideal for the unscrupulous practice of overquoting. Many vendors who feel they missed out when prices peaked a couple of years ago, are now focusing on a drop in their home’s perceived value and could fall victim to over quoting in the fear of missing out.
Not only does overquoting lead to a property languishing on the property shelf without a buyer in sight, it could also lead to devastating financial woes if a vendor then starts house hunting, or even purchases a new home, based on an expected sale price they may never get.
So savvy vendors need to look beyond what price an agent says they can achieve – especially when that figure is at odds with comparable local sales.
NSW Fair Trading has outlined the expected rules of conduct for real estate agents, so you know what to expect.
Be sure to do your own independent homework on recent comparable sales and beware of unsupported promises from agents telling you what you want to hear.
Are you thinking of selling or buying in the Inner West? Contact us at Urbane Property today.
At Urbane our reputation is everything to us.
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