We’ve had enough.
The underquoting to buyers, over-promising to sellers, the dummy bids and imaginary offers. They’re all fictions which have become standard practice among too many real estate agents; and every one of them costs buyers or sellers time, money and stress.
It’s time to stop them. Now.
It’s time the government acted.
When an estate agent – in person or through an advertisement – suggests a price that is unrealistically below what’s really expected, prospective buyers are hurt and hurt again.
They go to the trouble and expense of building inspections. They often arrange finance and may consult lawyers. Then they go to the auction only to see their future home sell for way above what they have been led to expect.
Disappointed? Yes. Angry? Why not?
They have been used to build up the numbers; to kid other bidders into believing there is more interest than really exists and the vendor into the mistaken belief that the agent has done well.
Over-promising is when an estate agent quotes a prospective client an amount which is above what can be reasonably expected, only to win that client’s business:
“I can get you more than any other agent.”
And then the open-for-inspections start and what the agents call “conditioning” begins. There will be stories about lack of interest, or about the people who came just being tyre-kickers, or of faults that have come to light.
It’s a process to lower the vendor’s expectations; to make the sale more certain. The agent, now, is less worried about what price a property may sell for than whether it will sell at all.
The agent has a contract, the vendors often believe they have little choice.
Dummy bidders make false bids with the intention of driving prices higher than a fair market would achieve; they are recruited by agents or vendors to create the false impression that there is more interest – and therefore more desirability – than truly exists.
They raise the emotional temperature at auctions. They make buying more expensive. There are laws against them (we helped prompt those laws) but they are difficult to enforce and largely ineffective.
Imaginary offers – those which exist only in the minds of selling agents – are the dummy bidders of private sale or post-auction negotiations. Their only purpose is to panic prospective purchasers into paying more than is reasonable.
Buyers, sellers and the reputation of the industry are all affected. All because too many bad apples are getting away with practices which are illegal and/or unethical and which are not being controlled.
These people take advantage of a moment when both buyers and sellers are usually under great emotional stress and too-easily manipulated.
Simple. Remove the mystery around prices, because it’s only that mystery which gives those unscrupulous agents their breathing space.
Make two simple changes to the Estate Agents Act:
Overnight, underquoting, over-promising, dummy bidders and phantom buyers will disappear. And it won’t take an army of ineffective inspectors to enforce.
And then ask yourself who would defend a system which is so open to abuse.
Some agents and, regrettably, some buyers’ advocates will insist that you cannot prevent underquoting in a rising market. That is, they can’t keep up. They really don’t know what a property is worth. (Then how, with rare exceptions, do we do that, every day, for our own clients?)
Agents will say that reserves should not be published; that auctions will be choked.
If a reserve is low, bidders will go above it; as they do every weekend after properties are declared on the market. If it’s high, bidding will die. As it should.
OK. It’s in our self-interest. And we are angry.
We buy a lot of property and we waste far too much time getting to the hidden truth when it should be there for all to see.
We are also very very tired of too-clever-by-half agents who have been in the industry for about 10 minutes and who think we have not seen it all before.
Kids, it’s time to clean up your act.
Do You Need Us? | Tactics | What happens? | Right house, right price | What we cost | Brief us on-line | Our Town: Australia | Expat/overseas buyers | About Morrell and Koren | News archives | War Stories | Order a book or brochure | Contact Morrell and Koren | Top End Trends 06/10
