Went on a two hour trip today to look at a property with a pricetag of $ 450 K.
I did my homework and it just didn’t stack up.
I made an offer of $ 360 K AND explained to the agent how I arrived at the conclusion that at $ 450K it just isn’t worthwhile to anyone to take it on.
I went to a great deal of trouble (explaining) as I thought the agent would be in need of some facts when he goes to see the vendor.
I was told that the problem was that two other agents had placed a value of $ 450 K on the property whilst the agent I was dealing with had suggested a value of $ 420 K to the vendor.
I am certain that none of them could justify their suggested value.
I thought that recently a new law had been brought in existence where an agent could be penalised if they give inflated opinions of value to the vendor.
Does anyone know anything about that particular new bit of legislation ?
Thanks,
Pisces
Pisces,
I tend to think that overinflating value is only a problem if the agent doesn’t sell at that price. So quoting 450k is ok if the agent can get that for the vendor (after all, a house is “worth” whatever the market will pay).
I think the problem is when agents “condition” the owner- giving them a high valuation, but then trying to get them to accept a lower offer, which might in fact be what the agent thought it might bring in the first place. When I sold a place, the contract stipulated that the property could not be sold below a particular price that was agreed between the agent and myself. I guess one problem is the “range” selling method.
I think vendors should never accept under what the RE quotes. Then the RE has to do the hard work to get that value. But I also think it’s been a long tradition of RE’s to give a market appraisal for higher than they might truly believe, to get the vendor’s business.
kay henry
Well said, Kay.
There was a good idea in the recent ACA magazine (I think it’s national throughout Australia) which suggested that sellers should get the agents to agree on a price below which the agents will not get a commission. Makes sense.
I subscribe to it on the net and have posted a brief piece of the article below.
Cheers
Bec
Overquoting expected sale prices to prospective sellers — to gain their business before they sign up with an agency — and/or, later, pressuring them into accepting a lower offer also enraged our readers.
State in your agency agreement the lowest sale price you’ll accept, rather than a price range that could attract buyers who can’t afford the price you want. And make a note in the agreement that no commission will be due if the house sells for less.
Thanks Bec..
Not that i expect to sell in the forseable future , but, it’s worth remembering and will make the Agents back up a bit..
i’ve seen it time and again where an agent has quoted friends a high price, then over time the properties sold for less..one not to long back , when the market was still rising.. beware of Greed, go for qualityyou’d like to be happy with the experience, not resentfull !
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Good morning Redwing and Bec! Givcen that I slept 20 hours on the plane and then a few more at home, I have jetlag- and what’s YOUR excuse, redwing? :o) Bec, you’re safe on this one- you’re an English lass..
By the way, Bec= are you REALLY Neil Jenman? The wrappers seem to think so- hehehe….
kay henry
Yea, I saw that! What a hoot.
Loved it.
Bec [^]
Hi Kay..
Working Nights at the moment..log on every now and again to check up and ‘learn’ something new, nights also nice and quiet, gives me research time etc.. inbetween duties [
]Anyway..Good morning [8D]
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Oh what the hell am I complaining about ? If it wasn’t for the fact that so many agents are dumbwits it would be a lot harder to find bargains.
Most agents are actually working very hard trying to make a living and are just too busy to make life easier for people like us.
I find time and time again that they haven’t got a clue about what exactly it is that they are selling.
I usually ask ‘what are the dimensions of the block’ (or, ‘what is the area of the land’) and they just don’t know and it isn’t so unusual, if they think they know, that they finish up with providing me with incorrect information.
Ask them what the zoning is and what you can do with the land and you will find that they have been too busy to have bothered to make it their business to know such very relevant facts.
Well, good on them really, I actually appreciate it very much dealing with people who aren’t aware of the full facts. [:o)] [:o)]
Pisces
Bec, what are you saying ?
>>And make a note in the agreement that no commission will be due if the house sells for less.<<
I would hardly think that the agent will bother to bring a buyer along if he (the agent) knows he wouldn’t earn anything out of doing it.
So what is the aim actually ? To have the house sold as quickly as possible (at a reasonable price) or to avoid the agent making a living by doing him out of some commission ?
We (including myself) may from time to time sometimes
have a moan about agents but, remember, they do supply a valuable service by establishing a value for the property, put our minds at rest by re-assuring us and liaison with prospective buyers (which is ALWAYS better for us).If you are thinking that you may be like to be selling it yourself as well during the period you have signed up for with the agent that is fine though the agent normally would be entitled to a fee anyway.
Fair is fair, don’t let us turn into a scrooge.
I have also worked as an agent and would walk away from such a stingy small minded owner as I have better things to do than to be unfairly treated by an owner.For example I spent almost three months actively being very busy trying to sell a property on an openting basis with the vendor rejecting all offers ‘as they were too low’ (which they were not, actually).
The owner eventually found a buyer himself and finished up paying me $ 20 K commission anyway because (he judged) that I had worked so very hard for him. (I think he is a good judge by the way [:o)] )
Pisces
Bec = Neil Jenman?
Warm Regards
ChanDollars
[The bridge between where you are right now & where you want to be tomorrow is knowledge]Hi,
I believe the agents need to show how they came to a valuation with comparible sales in the area. On the agency agreement there is a section for their opinion on market price and then what the property is to be offered for. This way if the owner wants to list it higher than thier market opinion it is clearly stated on a legal document. A lot of owners want more than what their property may be worth because they are emotionally involved in the property…ie memories, what they have done to improve etc, etc.
I would suggest sitting on it for a while to see where it goes. Owners tend to realise that they have it listed for too much when nobody is interested in looking and everyone is making lower offers. Thats when you can come in with another offer.
If you’re selling be aware that there will be agents overpricing your home just to get your business. Then they’ll hit you with the “let’s lower the price a little line”. Anyone can know what there house is worth by looking at what is selling on the market around them of a similar standard. I always suggest researching first yourself and never taking what they say to be gospel. Go for the middle value, always get at least 3 agents opinions.
Sorry so long,
Rachel.
Rachel
When I sold an IP, I was given a market appraisal from an agent of $XXX. Then when he suggested I sell for a range of which the lowest price was $XX below what he had first quoted me, I said, no, that he had quoted me amount, and I wanted to sell for that amount. I said “If you think it is worth that amount, then that’s what I want you to sell it at”. Fair enough, I thought. We ended up putting a price on it of $XX above what he had quoted (the appraisal was given to me a few months before that), to allow for negotiation. I ended up selling for the original amount, plus 5% more.
Whilst I think it’s good to be aware that RE’s will conditoin us for our business, I think they have a responsibility to back up their claims. Turned out to be win/win for us. I think if they write an appraisal on paper, and say it is from past sales etc, then they have to do as they say.
kay henry
Ah, the joys of REA! Such love and warmth exudes from them (similar to used car salesman, politicians, journalists, and American CEO’s)
My 1c worth.
If an agent appraises a house for say 300k sales price, 10k commission, and you agree, then how does this sound? If the agent can get you an unconditional offer of 300+K, then you owe them their commission of 10k, regardless of if the house is sold (ie you accept their offer or not). If the house sells for 299.99k then they are not paid their commission, and refund any of your advertising expenses
I know, I know, this is airy fairy stuff that the vast majority of both vendors and agents would never even contemplate to agreeing to.
If it was done, agents would really have to appraise houses at their selling price, not their “I need your listing” inflated price.
Vendors would get a fair deal, if a 66w comes along above the quoted price, the agent still gets paid if you knock it back.
Agents would have less time wasters – Ill just wait another few weeks for another offer people
I remember reading about some agents in western sydney who said they’d sell houses at a flat price- I seem to recall it was somewhere around $2500- because that was what they knew it would cost them to sell it. I remember reading that they got death threats from other agents!
kay henry
Pisces, here’s an article which refers to underpricing and overpricing legislation (although not sure if the Acts they refer to are Federal or Qld State):
http://www.sunshinecoastdaily.com.au/data/full_stories/march04/01/7.html
kay henry
How much is too much … the Agent must provide evidence in the form of recent sales to be able to justify the price tag … all agents have RP Data which gives up to date history of all recent sales in that area … the only other variable would be things like water views, larger land etc etc, I suggest that you request the agent to provide you proof of comparatable sales history. Phil
Thanks Kay.
Phil, you said : “I suggest that you request the agent to provide you proof of comparable sales history.”
That was done allright Phil. The problem was that the asking price didn’t allow for any profit in the deal.
The property consisted of a house on a block of land large enough to be subdivided.
The problem arose because the agent hasn’t got a clue as to what costs are involved in the subdivison process, the cost of the renovations and the holding charges nor did they appear to have a concept that whoever undertakes such a project expects to be able to make a profit.
So we had three idits putting a value on without knowing what it is all about.
Not that I mind that happening as long as they err on the opposite site [:o)]
In fact, the same agent introduced me to a commercial property deal in the same town which appears to be ‘a goer’.
Pisces
So Pisces, the asking price was justified? is that correct? … I don’t believe it is the job of the agent to provide you with analayis and costings renovating, subdeviding or what ever you choose to do with the property, that is your responsibilty.
An agent can be suied for giving advise and their main function is to list and sell property.
I deal with agents every day as a developer and investor and warn the agent strongly not to tell me its a good investment unless they want to enter their comments into the conditions of the purshase contract, you want to see an agent run when you suggest that.
Example; I am in the process of purchasing a DA approved 70 lot subdevision the agent said 4 weeks ago you had better put a $200k deposit down by next monday because 5 other people are hot to trot because there is a 2.5 million dollar profit in it.
My advisors told me to do a soil test, the result is that it has Black soil which meas that every slab needs unerpinning at $15,000 each times 70 lots, you work it out, needless to say they are very gun shy at the moment and we are still negoiating.
My summary; AGENTS are not ADVISORS and if they teel you the deal is a great investment try using this line … if you are telling me that this ______ is a good investment are you willing to put your comments into the conditions of the contract.The money you have today comes from what you did in the past … the money you have tomorrow comes from what you do today.
Originally posted by Pisces:I thought that recently a new law had been brought in existence where an agent could be penalised if they give inflated opinions of value to the vendor.
Does anyone know anything about that particular new bit of legislation ?
Thanks,
Pisces
I think the legislation you are referring it is the changes that have been made in NSW to the Auction system.
From the Dept of Fair Trading website:
“More realistic real estate
The issue of selling price estimates has long been a sore point with consumers and ethical agents. In the past, some agents gave consumers inflated estimates of the value of property in order to obtain a listing.
It is now an offence for an agent to quote to a property owner an estimate of the selling price that does not reflect their true estimate. It is also an offence to publish an advertisement or a make a statement in the course of marketing a property that falsely understates the estimated selling price to potential buyers.
The Commissioner for Fair Trading has the power to ask an agent to justify any estimate given. The purpose of this reform is not to penalise agents in a situation where the eventual sale price exceeds the agent’s genuine estimate, but to ensure that agents do not deliberately understate their estimated selling price in order to deceive hopeful buyers.”
Shushar
“All our dreams can come true, if we have the courage to pursue them.” – Walt Disney
Thanks Shushar!
Must be hard being a RE agent. given that even valuers get it wrong at times (look at some of the shonky inhouse valuations done on some apartments), it means RE’s now have to be valuers too! Think i’ll stick to my job
kay henry
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