Posing as a potential buyer, a Sunday Telegraph reporter phoned 85 real estate agents and asked for a price guide on a property. Almost one in three of those agents turned out to have significantly underquoted.
The NSW Minister for Fair Trading responded "A blitz on under-quoting and dummy bidding earlier this year uncovered no evidence of under-estimating prices." One wonders how the OFT failed to find any evidence at all, when the Telegraph found one in three agents doing it.
She also said "The onus should be on the buyer to do their price research instead of relying on real estate agents." Thanks Virginia. All the buyer wants is that the agent be required to tell something approaching the truth, isn't that the definition of Fair Trading?
The problem is the conflict under which the agent operates. If he underquotes to the owner, he won't get the listing. So the agent puts an optimistic price on the agency agreement, just to get that precious listing, and then starts "conditioning" the vendor to accept less.
Meanwhile the agent quotes below the likely price to prospective buyers, to persuade them to invest in a building survey before going to the auction. Having made that investment, buyers are more likely to bid up rather than throw away that initial expense.
There is an easy answer for this. Vendors have to display the contract at the sale property during Opens. Why not also require them to display the Sales Agreement?
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