Sound Too Good To Be True? It Probably Is.
Regulation around price estimates and price guides in the real estate industry is managed at state level and varies drastically around the country.
In NSW new legislation was bought in in recent years in a bid to stamp out underquoting and to make it fairer for the buyer. Agents and agencies who are now found to be doing the wrong thing are being fined tens of thousands of dollars. Ambiguous terms in price guides such as “more than $x” “over $x” “about” are not allowed and I don’t think there is an agent in NSW that would now be brave enough to list a property online with these kinds of terms.
Agents in NSW are defined to a 10% price variance – that is, when providing a price guide it must be within a 10% range, for example “Price Guide $500,000 – $550,000”. Furthermore, the price that the agent states as the estimated selling price to the vendor on the Agency Agreement must match what they are publicly saying to the buyers. It’s not a fool proof method but it is going some way to keep the agents in check.
Unfortunately, in Tasmania there is no such regulation. Most agents are doing the right thing however many buyers are finding themselves disappointed when becoming emotionally attached to a property, only to find it sells for a price that far exceeded their budget.
The best thing to do is to protect yourself, and by that, I mean education. Take time to research property sales in the market and be equipped with that information when you inspect properties. If the comparable house down the road sold for last month for $50,000 more than the guide price on the new listing, chances are this one will sell for a similar price.
Agents can use low price guides to ensure foot traffic and they think it makes them look good to the vendor when they can say they had 50 people come through an open home. But the reality is this wastes the buyer’s time and can make the process of finding your next home stressful.
In the agents’ defence, it can be difficult to price a property. Market conditions are constantly changing, and things such as view, aspect, style of renovation etc can drastically change the level of competition in a property and ultimately affect the sale price.
Remember that the real estate agents are employed by the vendor and are working in their best interests to obtain the highest possible price. The solution? Ask the agent questions. How does this property compare to the one that recently sold? How did they come up with their price guide? What has the buyer feedback been? If they don’t answer frankly and honestly, they could have something to hide. Agents may not appreciate this line of questioning in front of other buyers at an open house, so I suggest saving it for a follow up call and ensuring you do not sound accusatory, otherwise you’ll likely get an unhelpful response.