Underquoting still in full swing

In the Sun-Herald the weekend before last, an article titled ‘Sellers’ touch of sadness for days gone by’ quoted a “pre-auction guide of more than $1 million”. In the very next paragraph the vendor said he “wouldn’t have let it go for under $1.1 million”. Bidders who had a budget of more than $1 million but less than $1.1 million didn’t stand a chance that day as the reserve was no less than $100k above what the agent was quoting.

The same thing happened to one of my clients last Saturday. A price guide stating "Bidding from $1 million" was on the advertising and we confirmed with the selling agent prior to the auction that the vendors were prepared to sell to an offer over $1m. The auctioneer in his preamble said "I am confident the property will sell today as the vendors are prepared to meet the market". I counted seven people holding bidding cards and four different parties made a bid during the auction.

The property was passed in to us at $1,071,000. I asked the agent why it was not on the market and he said “we haven't reached the reserve as yet". I asked him if he had been underquoting to me and all the other buyers and he became abusive towards me. I highlighted that he had advertised bidding from $1m and we were well over $1m and asked him to explain to me why the property was not on the market if underquoting hadn’t occurred... I got a blank look so I then asked him what the reserve was.

He went inside, spoke to the vendor and came out and told me that the reserve was $1,150,000 which you will need to pay to buy it today. I said that reserve proves that the property had been underquoted. I won't bore you with the exchanges after that but suffice to say I made it clear that he and his vendor had lied to me, my clients and all the other buyers and wasted everybody's time and thousands of dollars in building and pest inspections and having their solicitors review the contract in preparation for the auction. It didn't seem to bother him at all.

My clients are not happy and intend to write to the Office of Fair Trading (OFT) about the property being underquoted. I am looking forward to the OFT review of his actions as underquoting is a breach of the Property Stock and Business Agents Act although I’d question its effectiveness to date as it goes on every weekend.

If you have been underquoted to then write to the OFT because until more selling agents are fined for doing it, nothing will change.
Fair Trading
PO Box 972
Parramatta, NSW 2124

PS: I don’t think anyone has a problem if a property is sold well above the quoted price at auction as that is genuine free market competition. The issue I have and 99% of people I speak with is when a property is passed in above an advertised or quoted price guide as that suggests bait advertising or underquoting. From my interpretation when reading the Property Stock and Business Agents Act that falls under the heading of misleading and deceptive conduct which is a breach of the Act.