How many times have you asked a real estate agent what the price of a property is, attended the auction to bid, only to end up missing out as it sells for hundreds of thousands more than what you were quoted? Not only is this frustrating, but also a waste of time for any serious property buyer.
Why is it so difficult to know the selling price of a property?
So why do agents quote you the price they do for the property? This has been a controversial topic in the media and there are many reasons why this occurs, and it is not always the fault of the agent!
1. The more interest the higher the price
The job of the agent is to sell a property for the highest price possible, and one of the tactics used is to generate as much interest as possible through quoting a lower price. Buyers will think they have a chance of securing the property within their budget and will attend the Auction. The Agent hopes that the competition on the Auction day will drive the price up to a reasonable level in order for the Vendor to sell.
2. Buyers are not disclosing what they will pay for the property
There are some agents which quote the level that Buyer interest is at, in order to avoid quoting a price range themselves. The problem with this is that just as the agent does not disclose how much the vendor will sell for, the buyers do not disclose how much they genuinely will pay for the property and will name a lower figure.
When you are quoted a price of a property by an agent it is important to be able to form your own judgement and assess the true value of a property. The way I do this is based on my years of knowledge and experience in the industry
3. Genuine competition drives the price up
There are times that even when a reasonable price range is quoted, genuine competition on the day drives the price up beyond the agent’s expectations. Buyers are often driven by emotion and are willing to pay a premium in order to secure the property they have fallen in love with.
4. Market conditioning
Often when an agent quotes a realistic selling price range for the property the Buyers expect the property to sell for an additional 10 to 20% more than quoted. In the Buyers eyes the property then becomes overpriced and gathers no interest even though the correct price has been quoted!
How should Buyers approach a quoted price?
Buyers should always be aware that underquoting does exist and do their own due diligence. There is a lot of information readily available and Buyers should always do their own research. If they are unsure it is always wise to call in the experts to assist through the services of a Buyers Adovocate.
The Property Garden are Buyers Advocates and Feng Shui consultants and have over 19 years’ experience in the real estate industry. We take a holistic approach to assisting our buyers buy property in Melbourne, Australia.