How to arm yourself against bait pricing

Are your expectations constantly out of whack with the prices homes are selling for?

You’re not alone.

Inaccurate sale price predictions are rife - from agents either out of touch with the market or deliberately using low figures to lure more buyers. The latter is called underquoting, or bait pricing, and is illegal. It’s hard to prove and way too prevalent in real estate.

Let Jackson Jones show you how to get an accurate feel for sale price and avoid the underquoting trap.

Be real

The property market in Australia has experienced phenomenal growth in the past year. If your price expectations haven’t shifted seismically to match that growth, then you’re only fooling yourself.

It is soul destroying to keep enquiring about homes which are no longer within your buying capacity. It’s better to face facts and either downgrade your expectations, raise your budget or delay buying for now.

The tactic of throwing around cheeky offers and seeing if one sticks is just not effective in the current market. There are no crazy good deals when inventory is so low and demand so high.

Be wary

Feeling burned by the process of making a strong offer, only to see a property sell for way over the agent estimate?

There’s no doubt some agents are struggling with the speed of market growth and genuinely making mistakes when it comes to predicting sale price.

But buyers’ advocate David Morrell believes underquoting - deliberately pricing a home at less than the vendor will sell it for - is rife in Australia.

He told the ABC this month: "Unfortunately it's endemic. It's probably in the range of 60-80 per cent of all properties are underquoted.

“[Underquoting is] a grubby tool estate agents use to get people to view properties."

His words are backed by a recent Consumer Affairs Victoria audit, which investigated 29 real estate agencies highlighted through consumer tip-offs and found 17 were underquoting.

Check credentials

It’s worth checking out the reviews and results of the selling agent. A five-star-rated, award-winning agent is unlikely to risk their reputation by employing dodgy sales tactics. And they are far more likely to have a handle on the vagaries of the current market.

Quality agents understand that treating buyers well makes good business sense. After all, buyers tend to become sellers within a three-year period.

Richard Jones, director of Sunshine Coast agency Jackson Jones, said: “We often come across people really disillusioned about the buying process following inaccurate price indications

“There’s no excuse for a professional agent not to be capable of predicting the market within a ten percent tolerance.

“Just remember, real estate agents may be employed by vendors, but they are legally required to behave ethically with buyers. At JJ we have a dedicated buyer manager in each office and people are often genuinely amazed at how fast we get back to them and how well they are treated as buyers.”

Do your homework

Dealing with a quality agent will help ensure you have an accurate picture of a property, comparable local sales and the vendor’s expectations. But it’s also good to do your own research.

If you keep an eye on what homes sell for in your target area, you’ll start to get a feel for what properties are worth and what features attract premium pricing: low maintenance living, work-from-home space, pool etc.

You’ll also develop a sense of when something is listed too low and an understanding of what constitutes a realistic figure.

Which means when you come to making an offer, you’ll be confident it’s at the right price.