Agents under-quote the young, says agent

Frustration at yet another “sold” sign
Young buyers are struggling to negotiate house prices amid claims many are victims of misleading prices listed by real estate agents. Jessica Baum reports.

Young couples are missing out on Melbourne properties because a controversial practice by agents known as under-quoting is “very much alive and active”.

This is a view of an experienced real estate agent in the Bayside and Kingston area, who declined to be named.

The estate agent, who has almost 20 years’ experience in the industry, told The Standard some agents were known to use under-quoting methods to attract buyers to properties.

“It can take them out of their budget guidelines by placing them in a vulnerable position and [buyers get] swept away by their emotions,” the agent said.

The agent cautioned first home buyers to take advice provided on the Consumer Affairs Victoria website to do market research and seek financial and legal advice.

The agent said it was very disheartening to young couples who had their hearts set on a property only to find the properties had been under-quoted and they were outbid.

They might have a budget of $500,000 and attend an auction where the property price was quoted at $450,000 to $500,000 only to find the vendor (and agent) had no intention of selling it “at that level” and the reserve might be $600,000.

Among those concerned over practice, a Melbourne couple say they have been frustrated in attempts to enter the housing market by real estate agents “under-quoting” listed property prices.

Nicholas Cooper, 26, who with partner Brittany Jackson 23, have spent almost a year planning and searching, say their biggest problem was calculating what they can and can’t afford.

Ms Jackson said she believed this was largely due to real estate agents understating the original selling price. “They want lots of people to turn up to the auction so they under-quote”, Ms Jackson said, “and then they pressure you to spend more than you can afford.”

Ms Jackson and Mr Cooper have delayed their search for a home. “We are taking a break from the market, at the moment it is too hard for us to navigate,” Ms Jackson said.

A Consumer Affairs Victoria (CAV) spokesperson said it was difficult to prove cases of under-quoting which occurred when a potential buyer was misled by an agent about the price a property is expected to fetch.

“It comes down to what extent you have something in writing,” the spokesperson said.

The CAV website explains that “comparing the initial advertised price with the sale price is not evidence of under-quoting”.

The Real Estate Institute of Victoria (REIV) details auction trends, median house prices and conducts research concerning the Victorian housing market.

“Over the past year and a half, research and analysis conducted indicates that Victorian homes generally sell within 10 percent of the original advertised price,” a REIV spokesperson said.

The spokesperson said that in May 2014 the median sale price for Victorian properties was 8.3 per cent above the original asking price, which was within the legal guidelines outlined by CAV.