False Advertising? Real Estate Quoting

nadan on 28/02/2017 - 12:51
Last edited 28/02/2017 - 13:12 by 1 other user

What is your view on this?

I have been searching to buy a house and have come across what I believe is false advertising. The realestate agent advertises a price but the house goes for a lot more than their advertised price.

Example where I made an offer on this house as well however was unsuccessful. I am disappointed that I lose on the house however my issue is not just losing on this house but wanting to know if it false advertising?

The house is listed for between $630 to $690K, however it has been sold for more than $720K, the final price wasn't revealed by the agent but said it was more than $720K. Looking at sold houses in the area they go for anything above $700K to $850K.

Another house that was listed a few weeks ago for $650K sold for more than $730K.

I really feel like this pattern is common and you have no idea where to start with your offer, in my case the agent will only let you make your best and final offer and there is going back and forth.

Is the above false advertising?
Can I make a complaint if it is?

Home & Garden

Comments

  • drdolphin on 28/02/2017 - 13:01
    +8

    Are you new to buying a house in Australia? This is how it is, and its only getting worse. While there has been some attempts at cleaning up the industry, and some real estate agents have been fined for having "misleading prices". Its almost impossible to prove, and the ones fined have been (from memory) on houses priced in the millions.

    Basically, when buying a house, don't believe a word the real estate agent says about anything (especially price) and do your own research on the area.

    • mick123 on 28/02/2017 - 14:28
      +3

      TLDR…
      basically..
      "don't believe a word the real estate agent says"

  • CyberMurning on 28/02/2017 - 13:01

    are you in VIC? if so there you go, right timing

    http://www.news.com.au/finance/real-estate/buying/new-laws-t…

    and dont be surprised. those agents, are seller agent, work for the seller not for you. dont forget this. and they have terrible reputations.

    thats why in USA we have buyers agent that work for buyers.

    • altomic on 28/02/2017 - 14:36

      unfortunately it is a sellers market here.

    • nadan on 28/02/2017 - 14:58

      I live in VIC, I bought a property back in 2006 but not since. I really hope they implement these rules asap.

    • djkelly69 on 28/02/2017 - 20:00

      thats why in USA we have buyers agent that work for buyers.

      Presumably you are then paying your buyers' agent a fee or commission? Not much motivation to get you a good price if they are working on commission…

      FYI there are buyers' agents in Australia, just not very common.

  • QW3RTY on 28/02/2017 - 13:05
    +2

    An indicative range is not a price floor and ceiling. In the scenario that you're referring to, a $30,000 increase on the estimated price range "ceiling" ($690,000), isn't even 5% over and above the agent's estimates. You'd have a very difficult time justifying that this was a case of deception and under quoting.

    That being said, there are stricter rules in NSW in order to combat underquoting — see NSW Fair Trading link. Have a read of this for more information about Underquoting. Page 12 is most relevant.

    In short, I don't think you have a leg to stand on if the sale price was only 4.3% over the agent's expectations.

    • nadan on 28/02/2017 - 14:59

      I agree and understand that, but when they quote a range you would normally think the price is within that range and you make your offer based on that.
      However they won't tell you that this will sell for a lot more than the high range listed. I wonder if they will have a contract with the seller like mentioned in the news article.

      • Freitag on 28/02/2017 - 15:39

        In Sydney a lot of real estate agents have just stopped putting a price on property so it's basically a silent auction between the buyers… you might ask the agent and they could give you a guide but you never know what the other buyers are willing to pay, or if there are any other buyers at all…

        • CyberMurning on 28/02/2017 - 15:44

          yeah really not sure if the agent is honest or not when they said "sorry seller want more than that" most of the time, i dont believe the agents.

        • Richardc on 28/02/2017 - 15:48

          Thats why I prefer auction, at least I know when it ends also I can see some real people.

        • nadan on 28/02/2017 - 15:57

          @chenrenchun:

          Yes, but not every house gets auctioned though :)

        • nadan on 28/02/2017 - 16:00

          The issue with this particular agency is that they only give you the one opportunity to only have the one offer, and essentially compelling people to put their best and final over which could be a lot more than the market rate.

        • Richardc on 28/02/2017 - 16:09

          @nadan: But I do believe one off offer is much fair than silent auction.

        • nadan on 28/02/2017 - 16:13

          @chenrenchun: Agreed when you know the price range, but not when you don't.

        • Euphemistic on 28/02/2017 - 16:41
          +1

          @nadan: In reality if you've done your homework and know the local market you should be able to predict the price it will sell for based on other sales and a property inspection.

          If, as you say in the OP the price for other property in the area is $700-$850 you shouldn't be surprised at the final price for the two you mentioned.

          If they are only accepting one offer from a buyer then the agent is ensuring a quick sale knowing that the seller will accept one of the offers presented. If the seller wants more there would be further negotiation.

        • nadan on 28/02/2017 - 16:49

          @Euphemistic: I do know the average price and the range is huge, it also depends on a number of other things and there is no way for an average buyer to work out if a particular property falls within that range. There are so many variation from house to house in terms of build quality, material, size and so on …

          My offer was above the high end of the advertised price but still didn't get anywhere close to what it might have sold for.

        • Euphemistic on 28/02/2017 - 16:57

          @nadan: I know what you mean. When we last bought we knew the market. Put an offer in on a house and missed out by around $50k. Would have happily paid an extra $40-$50k if it had already been renovated. Someone just had more $ than us (and less sense).

          We bought a similarly specced home in the same neighbourhood that had all the work done (new bathrooms, paint, kitchen) cheaper than they paid without all the renovation costs not long after, and there were others similar. Kinda glad we missed out on the other one too, garage/man cave is heaps better in this one.

      • snook on 02/03/2017 - 11:28

        Looking at sold houses in the area they go for anything above $700K to $850K.

        Think you answered all your own questions.

        This has been happening for years. Nothing unusual. Sellers market, so if you want something you have to go high or go home

  • Euphemistic on 28/02/2017 - 16:01
    +2

    We have sold two houses in the last 2 years. Both times our trusted agent told us two figures. One 'reasonable', and one 'if we were lucky'. Both times the final price was over $20k above where the agent thought 'if we were lucky' and we initially advertised at the 'reasonable' price, about $20k under what we were told was 'lucky'. Buyers would have seen the advertised price and been over $40k off the final. One house we even listed over his initial 'reasonable' valuation.

    NSW market is silly and has been for a couple of years, but it's good if you are a seller.

    • cameldownunder on 28/02/2017 - 17:02
      -4

      There is:
      Price is composed of Land Size + House + Pool + close to shop + close to public transport into cbd + close to schools
      Land Price you have to calculate from previous sells
      House: price is 400K for Excellent condition or 200K shack ( the house does not contibute more then this )
      Pool: between 60K and 100K
      Close to shop: 60-80K
      Close to transport: 80 - 100K
      close to school: Depending on school up to 100K per kid

      if the houses you are looking at are around 800K and no pool, then I think you are looking at
      Land 600K, house 200K, no pool, not close to transport, only primary school

      If you want to buy a house in the vicinity with pool and Excellent condition your price will be
      Land 600K, house 400K, pool 80K total 1080K

      If the house is closer to school and tranpsort
      Land 600K, hosue 400K, pool 80K, transport 100K, school ( 2 kids in good high school ) 200K. Total 1380K

      • cameldownunder on 01/03/2017 - 12:04

        Down vote me as much as you want. This is the fact. Ignoring these points is just as going to an auction blind and deaf.

        • snook on 02/03/2017 - 11:30

          I didn't down vote you but get real … it's all to do with the area and recent sales, has NOTHING to do with your formula.

        • cameldownunder on 02/03/2017 - 14:31

          @snook: Recent sales determine the land price: "Land Price you have to calculate from previous sells"
          "it's all to do with the area" —> "close to shop + close to public transport into cbd + close to schools"
          You are saying I'm wrong but you are saying the same as I do.

        • cameldownunder on 02/03/2017 - 14:45

          Say I'm going to an auction of House, 40 years old, no pool, 800m2. House 2 numbers down ( same place really ), great house, 1100m2 with pool has just sold for 1,8M. 1800K - 100K for pool - 400K for house = 1300K
          1300K / 1100m2 = 1.2K ca. per m2
          The house I am going to auction is 800 m2 * 1.2 + 200K for the house = 1'160K

        • snook on 02/03/2017 - 17:45
          +1

          @cameldownunder: lol, no … the 'area' meaning a specific suburb.

        • snook on 02/03/2017 - 17:46

          @cameldownunder: I for one would not pay extra for a pool. In many cases, people actually don't want pools. Have you any idea how much extra this adds to your electricity costs during the year?? Not to mention, the work and supplies required to maintain it. Pools are completely overrated.

          And you are wrong again. Say these 2 houses are the first in the street to be for sale in the last 12 months and it's a popular 'suburb' (that's it, nothing else) and people want that as their address. Just say. First house gone. Likelihood of of next one selling for even more … higher.

          I'm telling you, it is not a formula. Houses are emotion based, if not investment properties in the sticks.

          Here you go - 2006
          http://www.smh.com.au/news/national/tiny-bondi-block-sells-f…

        • Baysew on 02/03/2017 - 17:50
          +1

          @snook:

          lol, no … the 'area' meaning a specific suburb.

          Agree.

          It's all Location, Location, Location

        • snook on 02/03/2017 - 17:53
          +1

          @Baysew: location as in suburb, NOT services. The beaches in Sydney are car miles and impossible traffic from good services and shopping centres and yet, the most expensive real estate in Australia.

          They certianly have no trains, buses are messy, traffic is shot, schools are expensive and mostly private

        • cameldownunder on 02/03/2017 - 18:55

          @snook: That is given by the price of the previous sold house in the same suburb

        • cameldownunder on 02/03/2017 - 19:00

          @snook: True, for some the value of the house can be more then for others, depending on what they want. But you are bidding against the person who has the highest value for that house, and it is likely that the person who bought the previously sold house in the suburb, was also the one who had the highest value for the house, and those 2 people who's value is the highest are the similar buyers / bidders.

          The pool might not add value for you, but for the highest bidder, probably yes. So If you don't value a pool, you're in a loosing position, when bidding for a house with pool, because someone else will add another 100K on top.

          Like there is much more value to a house in a suburb with excellent school, for a family who has a lot of kids, vs a family who has no kids.

          P.S. Beaches are overrated.

        • snook on 03/03/2017 - 10:12

          @cameldownunder: the only way I would buy a house with a pool is if I had won a lottery and wasn't concerned about the expense of the upkeep.

          100k? Come on. What a waste of money.

          You either have a never ending pot of cash or have never had a pool.

          Anyway, if you're in Sydney, in a popular inner suburb, and you think a property is worth X, no matter what X is, add another 100K just for the hell of it and only then will you be, even remotely, in the ballpark.

          And jeez, most of the time there is ZERO value on the house and any ancillary structures. I've seen people pay a million dollars and proceed to raze the whole lot to the ground and build again, AND I've seen this happen 20kms from the city. Here you go - this for $940k https://www.realestate.com.au/sold/property-house-nsw-north+… …. has been replaced by some 2 storey architectural monstrosity.

          When you go to bid, the only thing that matters is WHO has the MOST MONEY.

  • pjetson on 28/02/2017 - 16:19

    I think the worst problem is when the auction reserve (ie "on the market") price is way above the range the agent quotes. These are the agents who need to be jailed for fraud to stamp out the practice.

    • nadan on 28/02/2017 - 16:53

      Agreed, I attended an auction in Williams Landing where the agent told me the price range for the house was between $700k and $725, on the auction day the vendor's daughter was on the phone to her mom in China, and before the auction started I asked her what was her Mom expecting and she said above $800k.
      The auctioneer started with a bid of $725K and everyone there remained silent and there was no bid on it. I am sure most of the people were very pissed off but there is no law to do anything about it. I had driven around 70Kms to attend the auction and probably other people too …

      • cameldownunder on 28/02/2017 - 17:03

        To piss the vendor / auctioneer off, offer 720K.

        • HeWhoKnows on 01/03/2017 - 09:10
          +1

          Obviously the advertised range was correct since nobody bid. It was the greedy vendor that stuffed it up for EVERYONE including the agent. Cant blame the agent for that.

        • nadan on 01/03/2017 - 10:19

          @Amayzingone:The agent knew it all along that the vendor wanted $800K plus but he didn't want to reveal this info. He instead advertised it for $700 to $720K to bring in potential buyers and only to start the auction at $725K. I asked the agent very directly in front of the daughter of the vendor, why did he advertise it for that price and he couldn't say a word and looked embarrassed.

        • HeWhoKnows on 01/03/2017 - 10:23

          @nadan: Fairr enough if that is true. In that case it was deliberate. However look what happened. Total waste on money advertising the auction on their part. I would just move on and avoid other properties listed by this agent

        • cameldownunder on 01/03/2017 - 12:07

          @Amayzingone: The vendor is being told by the agent, that 800K is no problem, to get the contract, and spend in advertising and auction. If no-one bids, the agent does a 180 degree turn, and tells the Seller she/he has to lower expectations.

          The system in other countries is different. The agent takes on the costs, and if the house does not sell, the Vendor does not have to pay the agent. If the house sells, the agent takes a ( bigger then here in AU ) commission.

        • nadan on 01/03/2017 - 12:59

          @Amayzingone: I have moved on and told the agent that he was dishonest and should do better than that. I also told him not to call me again. Funny enough, the property is listed again with an asking price of $735K direct sell and not auction.

        • cameldownunder on 02/03/2017 - 14:34

          @nadan: Offer 720K, don't be pissed of. If you want it, now is the right time.

        • HeWhoKnows on 02/03/2017 - 15:17

          @nadan: Agree with cameldownunder. Offer $720K and not a cent more. All you have to say is that the auction couldn't get a bid at 725. Hence 720 is a generous offer.
          All agents will tell you that the true market price is set at auction. So its somewhere south of 725 by their own admission.

  • HeWhoKnows on 01/03/2017 - 09:08
    +1

    Definitely NOT false advertising. Thats well within 10% of the advertised price. Also you cant blame the agent because some fool wanted to pay more in this stupid desperate property market.

  • HeWhoKnows on 01/03/2017 - 09:17

    We just sold a place at the first inspection with NO PRICE ADVERTISED.
    2 highly respected agents quoted us between 350K to 380K. A third agent quoted 390K to 420K but we thought they were over-quoting to get the listing……
    Anyway The first offer came in at 410K and we grabbed it. Agents definitely NOT misleading buyers. Its just a crazy market.

    • DisneyPrincess on 03/03/2017 - 23:48

      I'm not disputing your experience, but I think there are DEFINATELY agents out there deliberately misleading buyers. We went to an auction recently where we spoke to the agent earlier that day, flat-out said "we're only looking for properties less than this amount", we were specifically told "you're in the right range", bidding started at 30% higher. The room was silent, not even an opening bid. Everyone just left super cranky that we had all wasted our time!

      There's one real estate office in Bris, all their properties are about 50% higher than the advertised price. You can find it in realestate.com in searches for less than "amount", phone the agent & "they'll only consider offers over amount+50%". Btw, this is all happenning before I even go look at the house, cuz I just know it's a waste of time as soon as I see this agency. I wish I was kidding!!

  • Archi on 01/03/2017 - 11:01

    most comments are looking at the point of view of a purchaser.. if you were a seller/vendor in the scenario… you would want the highest possible price at auction or offer. lower your price guide to draw in more potential buyers who may buy emotionally after seeing your home. the more people you get interested in your listing the higher the change to get the money you want.

    if everyone listed their houses for the money they wanted… you'd either sell it really quickly or have no interest in it at all.

    the fact is if you as vendor insisted the agent list your property at a certain price they will do it. whether it gets sold or targets the right audience is another story.

  • GangGang on 04/03/2017 - 22:03

    Why is this the agents fault? $630 and $690 is just a guide. Did this go to auction when it went for $720? If it did. Then it's competition. If it didn't go to auction. They might of been several buyers that made offers competing against each other before the auction date just like you did. Only yours was lower. Obviously the seller doesn't want $690. It's only there to bring in competition and it looked like it worked.

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