Interpreting agent’s price guides has become harder than earning enough money to purchase a property for many home buyers.
Each agency takes a different tact on how to position their respective listings to the market.
Some firms price accurately, some throw berley in the water and price well below market price in an attempt to bait prices.
Others price high, hoping to give their client (the seller) room to negotiate. One of the great errors that a buyer can ever make is to submit an offer solely based on the agents price guide or to assume the true value of the property is even loosely related to the guide given by the agent. These are sad but true facts about buying, as many will attest to.
Many buyers have learnt in recent times that it’s common for properties to sell for over 30% above the agent’s price guide.
Buyers who are conditioned to this style of selling can then fall into the trap of adding 20 to 30% to every agent’s price guide. In the process, they are unintentionally ruling themselves out of the running for homes that are priced accurately and are affordable.
The frustration doubles when a suitable property sells within your price guide that you did not even bid on, due to thinking it was going to sell ‘way over’.
The rule with price guides is simple – believe nothing and check everything.
Attend inspections and auctions of every home in the immediate area that you intend on purchasing.
Become an expert on the market, then form a clear view of what your target property is worth and what you are prepared to pay for it.
There is nothing wrong with assessing the value of your dream home and being prepared to pay slightly over the odds to secure it. Note, this is not a great strategy for investors though. Slightly overpaying to secure your dream home is fine. Being misled week in week out by agents who are simply lying to your face is demoralising. If the agent’s price guide seems too low, it probably is. If it seems too high, it probably is.
When the Department of Fair Trading claim they can find no evidence of underquoting, take note they are simply looking in the wrong place. The price guide is no guide at all.