Real estate agents presenting inappropriate comparables

Property investors who are relying on real estate agent's comparables are in trouble when it comes to purchasing at fair value, according to a renovation expert.

Renovating for Profit's Cherie Barber told Property Observer that she sees real estate agents using inappropriate comparables all the time to justify the price they want the buyer to pay, and it's those who trust them that will get bitten.

"With my level of research I have specific details about a property, whereas agents will quote a price for a property that has sold with the same bathrooms and bedrooms, but makes no mention about the interior condition or quality," Barber said.

Selective choice of comparables leaves buyers vulnerable to aspects that are ignored, such as the slope of the block. 

"If it's a level block comparable and the block you're looking at is sloping, then you won't know," she said.

Even the number of rooms is up for debate. Ensure that the four-bedroom property you are looking at, and being given comparables for, isn't really a three-bedroom with an oversized study.

"Most people dont have that level of detail and are benchmarking on number of bedrooms and bathrooms," she said.

The difference can be tens of thousands of dollars, depending on the suburb. In Sydney's Balmain for instance, Barber points out that there are six distinctive price pockets. In the majority of suburbs there's a minimum of two - often called a 'good side' and a 'bad side' to the suburb.

Property investors must ensure they are not being given comparables in the more expensive areas.

"A lot of people put far too much trust in [real estate agents] than they should. The agent is working for the vendor. Most are very friendly to the buyer but really they're screwing you over so to speak. You need to remember that that's their job - to get the best dollar for the vendor."

If you're relying on their comparables, then you're off the mark.

"You should have the knowledge yourself. Otherwise, your in trouble," she said.

Jennifer Duke

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

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