Buyers hate underquoting because it results in hopes dashed as well as wasted time and money on searches. But did you know agents also detest the increased cynicism of the real estate industry.
I work in marketing and I can tell you unequivocally that no product or service is promoted without conflict. Businesses need to sell products and services honestly because it reflects on hard earned reputation. However, all businesses want their clients to feel like they will get and great deal and that can come with risk.
Risks that include misjudging the use of either human, physical, financial or technical resources and in real estate a great deal often looks like underquoting because:
- purchasers want a bargain -they simply are not interested in the correct price – ever;
- if a property is at the ‘correct’ price buyers don’t believe the vendor will accept that price -this is why ranges are used to allow the buyer to offer a price they think is reasonable;
- if the vendor wants a high price, they limit the pool of buyers that will be interested in the critical early stages. Agents work for vendors so agents need to advise the vendor that price is the commercial signal;
- the last point leads back to the first point that frustrates the vendor and makes vendors angry at the agents and
- low pricing that is from damage, financial circumstances or contractual issues.
A cynical market is extremely frustrating for ethical agents as buyers assume all pricing is dubious. Now there are social media vigilantes that troll agents without checking why the price is low price with the agent. Leading to threatening posts and reviews on agent websites that are illegitimate and harmful. Underquoting is not always as blatant as it appears – sometimes low pricing is correct but assumed as underquoting. The zeal by some buyers to punish unscrupulous agents online often leads to trolling agents and ironically this is as unprincipled as underquoting.
To highlight that the frustration is experienced by agents as well as buyers I think a good analogy might be drugs used in sport. Good athletes are frustrated by the use of drugs to enhance performance by dishonest athletes. This obviously creates an unfair playing field. Clearly honest athletes want the world to know their wins are from hard work and training but all the public is interested in is the winner.
Ethical agents also want to be respected for their transparent services and to be distanced from less ethical agents. However, the consumers of real estate want a bargain or a good deal and don’t care if a house is worth more than they want to pay or more than what it’s worth. How do you fix that?
Thankfully in Victoria it is mandatory to include a Statement of Information. A price range within 10% if the top price that the property can be sold for. All good agents like this protection because both vendors and purchasers with their conflicting interests are guided to the comparables.
So as buyers and sellers of real estate you need to know that there are conflicting goals in real estate transactions. Whilst sales agents work for vendors, good agents want buyers to like what they see at the selling transaction. Making both parties happy is a skill and deliberate underquoting can never achieve that goal.