What will it take to eradicate underquoting for good? Edwin Almeida

What will it take to eradicate underquoting for good? Edwin Almeida
What will it take to eradicate underquoting for good? Edwin Almeida

“Price it low, watch it go” is another real estate industry (REI) mantra. It's a saying that is more prevalent among real estate agents (REA) that heavily promote auction campaigns.

And it's a mantra that is more damaging than the one I wrote about before: “buyers are liars and vendors are cheats”.

For years now, I have been very vocal about "underquoting" with respect to the damage and aftermath it causes among well-intending buyers. Damages and costs are being borne by purchasers in the form of emotional expenditure and financial burden.

Yet agents and auctioneers are well aware, some are even well entrenched, in the seemingly unlawful use of deceptive and tactical advertising to draw a bigger crowd. This illusion and make-believe, created by the REA’s to convince buyers the property will sell at a low price.

A crowd drawn by the notion of low pricing, creates in the potential buyers mind, a greater sense of urgency. A belief of missing out if they don’t attend and bid. Consequently, the fear of missing out and the competition on the day spurs on emotional bidding, rather than rational common sense, placing people in financial over commitment.

The industry makes admissions, why not listen?

I have had a few chats over coffee with my peers, both REA’s and auctioneers, and I can categorically and emphatically say my peers have admitted that this practise goes on and the affect it has on buyers is well known. In fact both camps will go as far as saying that it is wrong, but simultaneously, question my reasoning and my hard line stand on this topic. Yet, in public view, the REI seems to believe it is “squeaky-clean”. A thought perhaps far removed from John McGraths mind?

I have been accused of not playing the game, “bagging the industry that pays me” and even as far as turning my back on the industry. Why? All because, when rogue auctioneers and REAs beat their chests in glory for achieving 20 to 25% over the reserve, I question their initial price guides given to the buyers. Price guides that were well below their figures achieved on the day. Once you add the true difference, the figures show more of a 30% separation from values given (i.e. price guides), to those actually achieved on the day of the auction.

I hope for the sake of the REI, Mr Baird’s campaign to address this cancerous practice of underquoting isn’t a political stunt. I hope it doesn’t fizzle in the desert of forgotten political promises like the one in our sister state of Victoria.

Where are the heavyweights - Where are our guardians?

In all this, where are the so called heavyweights - the guardians of the REI both in NSW and Victoria? It appears that one of the institute bodies has become mute on the subject matter altogether. Particularly after its long support of political campaigning in Victoria.

Perhaps, both the REIV and REINSW are more entertained with the notion and ambition of their pursuits in politics than they are in the dubious and borderline behaviour of its members. Or is their lack of action stemming from fear of losing membership support? Clean up the membership base; I’ll remain a member and so will the majority.

Ironically, Tim McKibbin’s explanation of the reasons behind the REINSW’s political pursuits has some of the merit required to introduce positive changes to the REI. Changes that will only begin when the REINSW cleans out its own house before trying to sweep the streets.

Here are some suggestions to creating notable policy for the political branch the REI NSW desires:

  • Deregister from REINSW membership; agents and agencies that are practicing underquoting.

  • Push for the introduction of pest and building inspection reports to form part of the contract of sale.

  • Push for the introduction of independent valuations to form part of the contracts of sale.

What will it take for the awful taste underquoting leaves in buyers' mouths to be controlled and eradicated once and for all?

Most definitely, the answer is not going down the path of the REI's being converted into political parties. We can only wait and see if the REIQ got it right.

For more property discussions join me on Twitter @justthink1and you can contact me on edwinalmeida.com.

EDWIN ALMEIDA is licensee in charge of Just Think Real Estate.

He is also the creator of Oz Real Estate.TV and a presenter for propertyinvestingvault.com.

Edwin Almeida

Edwin Almeida

Edwin Almeida is managing partner and licensee-in-charge of Just Think Real Estate.

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Underquoting Edwin Almeida

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