I had an interesting conversation with a buyer recently (not my client) who was so sick of missing out at auctions they have now decided to avoid them altogether. Not so common really- lots of buyers do this already as they prefer transparency in pricing. However, it turned out that this particular buyer was avoiding auctions by a couple of particular agencies due to their very history of underquoting price guides and often being 10-15% under the final price result. No surprises there either- I agreed with him as I've often found these particular agencies to quote low.
The trouble arises, however, when the informed buying public realise that such agencies underquote as a matter of common practice (thus ignoring the property) causing the strategy to backfire for the agencies in question. One agent told me recently that he was really surprised a property of his was passed in with no bids when a very similar one was sold by PT some weeks earlier (by a different agency) at the same price guide he'd been advertising. The agency is high profile and known to underquote- when I pointed this out to him, he was defensive initially but then admitted that it may well have been the reason why the property didn't attract as much interest. Jaded buyers have had enough, in some circumstances, and I thought it was well illustrated in this particular circumstance.
Insider info from another party (seller) told me the same agency (but different area) approached them with a listing presentation and suggested a price guide of $820K+ for AUCTION but with a written price estimate of $900-940K on the sales agreement. Other private treaty agencies provided suggested prices ranging from: Offers over $890K, $939K and Range $890-950K. The seller eventually went with the agent who appeared the most experienced in the area (and demonstrated the likelihood of achieving early $900K's- most realistic price) and was disgusted in the AUCTION agency's suggested tactics for collecting buyers with a price guide that she had no intention of accepting. If only more vendors were like herself so the industry could be cleaned up here. It's no good just blaming agents for underquoting- vendors are often willing partners in the process and it ends up simply leaving a sour taste in the mouths of buyers.
The trouble arises, however, when the informed buying public realise that such agencies underquote as a matter of common practice (thus ignoring the property) causing the strategy to backfire for the agencies in question. One agent told me recently that he was really surprised a property of his was passed in with no bids when a very similar one was sold by PT some weeks earlier (by a different agency) at the same price guide he'd been advertising. The agency is high profile and known to underquote- when I pointed this out to him, he was defensive initially but then admitted that it may well have been the reason why the property didn't attract as much interest. Jaded buyers have had enough, in some circumstances, and I thought it was well illustrated in this particular circumstance.
Insider info from another party (seller) told me the same agency (but different area) approached them with a listing presentation and suggested a price guide of $820K+ for AUCTION but with a written price estimate of $900-940K on the sales agreement. Other private treaty agencies provided suggested prices ranging from: Offers over $890K, $939K and Range $890-950K. The seller eventually went with the agent who appeared the most experienced in the area (and demonstrated the likelihood of achieving early $900K's- most realistic price) and was disgusted in the AUCTION agency's suggested tactics for collecting buyers with a price guide that she had no intention of accepting. If only more vendors were like herself so the industry could be cleaned up here. It's no good just blaming agents for underquoting- vendors are often willing partners in the process and it ends up simply leaving a sour taste in the mouths of buyers.
