The mantra every new agent to the industry is told is \u2018Quote\u2019em low and watch\u2019em go. Quote\u2019em high and watch it die\u2019.<\/p>\n
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Overquoted to the vendor \u2013<\/strong> Since Adam and Eve sold their matrimonial home, agents have been overquoting the expected selling price in order to win the client\u2019s listing.<\/p>\n The major issue with overquoting the expected selling price is the agent needs a multitude of tricks to force the sellers price expectations back down to meet the market.<\/p>\n Agents will often weave price and process in together. \u2018Given the uniqueness of your home, if you put it to auction you could get $ (insert a crazy figure). Rest assured, the value of an asset is unrelated to the selling process.<\/p>\n A very common scenario on auction day is a vendor who expects a very high price whilst a group of aspirational bidders arrive expecting a low price as per the agent\u2019s advertised price guide.<\/p>\n The agents then aim to engineer a sale by bridging the price gap; either the sellers come down, the buyers move up or a combination of the two. The agents\u2019 primary objective is to get it sold on the day. Keeping the auction clearance rate intact is important\u2026 to the agent.<\/p>\n <\/p>\n Start low, scale up \u2013<\/strong> Mr Brack told REB \u2018Typically, what agents will do is they will go in and they will make it a 10 per cent price range that we have to put on the agency agreement.<\/p>\n They will make that 10 per cent price range as low as they can possibly get away with, and they say to the vendor, \u2018We will make that as low as possible \u2014 to attract lot\u2019s of buyers, and then we\u2019ll try to pull them up in price\u2019.<\/p>\n This strategy is why vendor\u2019s find themselves going along with the agents\u2019 advice. They are comforted in knowing the price escalates. Buyers should be wary about getting too excited at some agent\u2019s initial price guide.<\/p>\n <\/p>\n Bragging rights \u2013<\/strong> In the AFR article, journalist Michael Bleby wrote \u2013 \u2018Underquoting misleads some buyers into thinking they may have a realistic chance of securing a property \u2013 and into wasting money on pest and building inspections \u2013 but the outcome also gives agents bragging rights and publicity about apparent over-performance while also replenishing their lists of sales leads\u2019.<\/p>\n Every Sunday morning the papers are full of agent glorification. \u2018We sold it this much over\u2026\u2019 In reality, the reason the price went up so much is the agent started so low.<\/p>\n <\/p>\n Attract the best buyers \u2013<\/strong> make the competition look overpriced. Before State Government\u2019s consumer protection departments sanitised the tactic by naming it \u2018Underquoting\u2019 most referred to it as \u2018Bait Pricing\u2019.<\/p>\n Bait pricing is a far better description of the sales process because it describes the tactic and its purpose in two words. The owners think the agents advertising campaign is attracting the hordes <\/p>\n They made me do it \u2013<\/strong> a buyer\u2019s agent recently walked into a home in Newtown and said to the agent, \u2018you are kidding quoting $3.4 million for this property, we both know this is $4 million plus\u2019. The selling agent replied along the lines, \u2018but if I quote high $3 millions, buyers will think it\u2019s going to sell for over $4.5 million and not engage\u2019.<\/p>\n Agents have conditioned buyers to expect the final selling price to be 10% to 20% above the agent\u2019s artificially low price guide. According to the selling agents though, it\u2019s the buyers who made the agents underquote.<\/p>\n This lame defence reminds you of the naughty schoolboy who points to the prefect and says, \u2018Miss, he made me do it\u2019.<\/p>\n <\/p>\n
\nof buyers when in reality it\u2019s the low price on the advertisement.<\/p>\n
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