The heading read “ Real estate agents busted for low quotes” on news.com.au this week and our first reaction here at Beach & Bay was “finally they catch those dodgy agents that ruin the reputation of the industry”.
Amongst ethical agents it is a source of never ending frustration that some agents continue to list auction properties that on the agency agreement with the seller are at a much higher figure than what those agents quote to buyers.
In 2003, the State Government introduced the Property, Stock and Business Agents Act, banning underquoting but we as agents have not seen much change, the same offenders continue to do the wrong thing. In principle it was good to hear that the Office of Fair Trading was inspecting and fining agents for this breach.
On closer inspection of the reports in the news, we were slightly alarmed. From what I read it seems that real estate agents need to throw caution to the wind and forget about being conservative in giving an owner a price for what their property is worth, in this very uncertain market or maybe we need to study palm reading.
The news.com.au article mentions the McGrath agency at Lindfield’s case where they have been fined for the following:
They quoted on the agency agreement $820,000 to $920,000. This means the owner agreed with the agent that their property was worth somewhere between these 2 figures. Then the article says “But Fair Trading investigators found buyers were told of a likely selling price of over $820,000”. Now surely the cisn’t getting narky over the wording of this? Should they have quoted to buyers “$820,000 and over”, rather than “above $820,000”?
The property later sold at auction for $1.1 million. Now this doesn’t seem to have been an issue, at least not the way the article was written. And really this can not be a problem because it is an auction and people are supposed to get carried away, auction properties are properties that are unique, that can’t be compared, are scarce and are auctioned because they are difficult to price. I am hoping the problem does not lie in this final price because from now on if the price goes way above our agency agreement we might have to stop the auction and tell people they are getting carried away and they must stop?
If I was John McGrath I would be fighting this case too, if these are all the facts. The main point with this example is that the owner/vendor/seller has agreed with the agent as to what they think their property is worth. If the buyer thinks it is worth more, that is the buyer’s problem.
Real estate agents in NSW are the most regulated industry you can find and yes I agree that there are agents doing the wrong thing all over town. But the above case is just going to make us as agents scared to open our mouths with any quoting. Maybe for auction properties we should just tell buyers to go and do their own research.
And one other point I would like to make is we are working for the seller, they are the ones who pay us. Mind you we wouldn’t make any money if we didn’t have any buyers.
In USA they have buyer’s agents and seller’s agents and both get paid. Maybe this is something we need to think more about because as a real estate agent in NSW we have a very conflicted job.