Sydney may have forgotten Natalie Jean Wood, but real estate agents haven’t forgotten to underquote: Edwin Almeida

Sydney may have forgotten Natalie Jean Wood. But Real Estate Agents haven’t forgotten to underquote; when it comes to auctioning a property.

I definitely have something to say about what I perceived may well be, blatant underquoting strategies used in the marketing of the Surry Hills property: 139 Kippax Street, the home once owned by Natalie Wood.

It will take more than a coffee to calm me down, particularly after my client spent $4,000 doing Due Diligence (DD) prior to the auction.

The price guide that was given to me and other interested parties I spoke with at the time, was: $550,000-$650,000.

First cab off the rank, and to immediately dispel any misconceptions you may have. Misconceptions about me being a disgruntled buyer’s agent and particularly since I didn’t purchase the property, on behalf of my client.

1. Part of the DD we undertook revealed that land in the area was worth approximately $10,000-$11,000/sqm.
2. There was some value in the building regardless of what the refurbishment works would cost, and
3. We were under no illusion that we would obtain the home for the lower end of the price guide which was given.

It’s not rocket science

It’s not rocket science to work out property (price-guide) values that are closer to true market values. To ascertain these we look at the following:

1. Land value as compared to other sales in the local area.
2. Value of existing structure/building (taking into account what is required or not required to be altered, changed or fixed) and integrity of existing structure.
3. Aesthetic values including but not limited to: visual appeal, location, heritage, charm or story behind the property, views and surrounding landscape and demographics.
4. Calculate costs to repair/refurbish/build and compare with current properties on the market and recent property sales. properties that would be of similar ilk.
5. If still in doubt? call a professional valuer for their opinion.

Therefore, for an agent or agency to hide behind the worn and dated argument of “no comparable sales” is just sheer ignorance or intentional use of sleight of hand tactics. I have written about these issues previously.

1) The what-if test.

2) Dumb to underquote and dumber not to know property values.

Dialogue with agency

Correspondence and conversations with the agent, all led us to believe that the agent truly didn’t know the value of the property. On the alternative, we also thought that there may be an underlying driver to draw a crowd. We know the latter to be under-quoting.

If other buyers were going to be persuaded by either one of the above premises, we believed that this would work in our favor.

The low-ball price-guide may actually keep the value of the property low, this is what we presumed anyway. We felt that the low price-guide coupled with the added features of the home; the circumstance of the deceased owner and the dilapidated condition of the property, was a mix that would work in our favor.

Nonetheless, our limit was set at $900,000 and this took into account our estimated land value as well as the intrinsic and heritage value of the property. Yes, and the history that came with the home.

Again, we knew that the agent was off the mark completely. However, the agent insisted that the “buyer’s feedback” was $550,000-$650,000 and with the interest obtained, it may reach the $700,000 mark. I beg to differ.

A professional agent would have done and assessed the value more along the lines of $850,000-$900,000 and thus presenting a correct price-guide. A guide that is not reliant on; “buyer’s feedback” nor left to ignorance. But, I was not engaged to teach them how to do their job.

Don't you just hate it, when you call an agent and ask for the 'price-guide' and they respond with: don't know at this point in time, once we hold a few opens we will gauge the "buyer's feedback". Get real !!! and moving on...

The outcome

Well, my buyer was not successful; as much as I tried to slow things down, there were others that wanted the property at all costs. The home sold for $1,105,000.

One may well say, ‘market forces’ were at play once the auction reached and went beyond the $950,000 mark. 

Warning to agents

Now, if you really want to accept the argument that: any so called out-of-line sale price is influenced by the lack of comparable sales to go by and play the ignorance card, or even take ill advice from vendors? Perhaps it’s time a Professional Valuer was called in, to assist you.

Obtaining and contracting the services of a valuer, is a better option to support and protect you as you. After all, you are the professional real estate agent. Don't hang your hat on statements such as: "market forces" nor "the vendor made me do it" in the belief that these will protect you from prosecution.

EDWIN ALMEIDA is licensee in charge of Just Think Real Estate.

He is also the creator of Oz Real Estate.TV and a presenter for propertyinvestingvault.com.