Should I Report This REA for Underquoting Property Price to Attract Interest?

Homr on 16/03/2024 - 15:07
Last edited 16/03/2024 - 19:05

Hi Bargainers,

Hope you're all having a great weekend.

Long story short

  1. We offered $XXX (which was also their asking price) for a property and the price was accepted via email with confirmation sales advice. We transferred 0.25% holding deposit noting 5 day cooling period.
  2. REA called us 3hrs later after sending email saying, someone offered $XXX+$10k, however we may still get the property if you match that price but with better conditions like no cooling period (WTF?) or a higher offer.
  3. We said no, walked away. The ad has now changed to $XXX+$30k

I feel like we've been deceived as we spent $550 for a contract review and wasted 1.5days for various things like strata report, financials etc etc when in fact we were never going to get the property for the original asking price. It was there to attract interest.

Now according to the ACCC - https://www.accc.gov.au/consumers/specific-products-and-acti…

When advertising a property’s price, real estate agents must:

  • advertise a selling price based on either a reasonable market appraisal or what the seller will accept
  • not advertise well below the selling price to attract interest
  • not advertise below a price the seller has already rejected (unless the seller is now willing to accept a lower price).

Real estate agents must not mislead consumers to encourage higher offers.

Should I report this REA? I have all supporting documentation ready on hand (text messages, screenshots with original pricing, sales advice)

Thanks all.

EDIT: Just to clarify, $XXX was also the vendor's asking price!

Poll Options

  • 585
    Yes
  • 9
    No
  • 37
    LOL, this is how Sydney property market works n00b. Get good
Home & Garden

Comments

            • Homr on 17/03/2024 - 18:45

              @Euphemistic:

              If you were a REA and got a few percent of that increase and it took 2 hours of work to organise inspections, deposit etc would you think $500 was worth it?

              Why would they need to organize more inspection? I've already inspected the place.

              Deposits? No one has made a deposit yet, otherwise the property would've been off the market.

              So really, I don't see any additional work required to be done.

              If they require work to be done, well tough luck. They wasted my time and money, I waste theirs!

              • Euphemistic on 17/03/2024 - 18:50

                @Homr: Perhaps were talking at different points. If youre asking if you resubmit an offer of extra $500 it could be worth it to the seller, unless the other buyer has paid deposits etc that would need refunding. I was under the impression you'd walked away though.

                If you're a new offer for the vendor, $500 isnt worth the effort of arranging access to the property for a new building inspector, mucking around with refunding deposits etc.

  • Brianqpr on 17/03/2024 - 16:17

    All the agent has to say is there was bigger interest than they expected. Nothing will happen to them.

    Id probably have gone the extra 10k. Did that when I bought our current house as in the grand scheme of things it doesn't make much difference.

    • Homr on 17/03/2024 - 16:29

      Id probably have gone the extra 10k. Did that when I bought our current house as in the grand scheme of things it doesn't make much difference.

      I'm planning to go 20k more, with 6hrs expiry and I'll be hand delivering my signed contract directly to the vendors home address.

      We're in no rush of buying, plenty of properties on sale around the same area. There are currently 5-6 apartments on sale in the same building.

  • THICKnSLOW on 17/03/2024 - 19:02

    GREED distorts everything.

  • Camelface on 17/03/2024 - 20:05

    Acceptance of an offer is not a legal binding, so not sure how this will work. Also, first time heard about paying a deposit without signing a contract of sales.

  • Relapse on 17/03/2024 - 22:06

    Don't value the property based on the advertisement - value it on your own research. The advertised price really doesn't mean much other then a guide for starting negotiations - At the end of the day you need to find a value you are at peace with as your max.

  • 42 on 17/03/2024 - 23:22
    +1

    A holding deposit means nothing. Unless you put down a 10% deposit and exchange contracts, the property is still on the market. Happen to me years ago when looking for properties before the market went crazy. REA accepted our offer, took holding deposit. Used our offer to get more from another buyer and returned our holding deposit. It's just one of their tricks they use. Since then I don't do holding deposit. If they are happy with the price then exchange contracts.

    • Homr on 17/03/2024 - 23:25

      Damn, what scums

      How exactly do they "use" your offer, do they send screenshots of your email/text messages to another buyer?

      • Camelface on 18/03/2024 - 07:15

        No they can't show your offer to other buyers. They can tell other buyers that there's a higher offer. All the offers are presented to the seller.

        • Homr on 18/03/2024 - 11:24

          The REA showed me a screenshot of an email (could be fabricated) from the other buyer offering XXX + $10k

          So that is illegal?

          • Camelface on 18/03/2024 - 13:46

            @Homr: I don't think it's illegal, but an offer has.buyer information, so not sure REA has the right to provide that to someone else. I haven't seen it's practiced in the state I live. Note sure about NSW though.

      • 42 on 18/03/2024 - 15:59

        I don't know the intricacies of how they do it but I assume they tell the other buyer there's a higher offer and they have put a holding deposit, if you want the property, you need to offer more. We weren't told there were higher offers, just told to put a holding deposit and they would take the offer to the vendor

  • Cartmanizm on 18/03/2024 - 00:58
    +3

    I'm a real estate sales agent so let me offer a scenario where OP's situation could have happened without it being the fault of the agent.

    1. The OP submits the offer which was accepted by the Vendor. Another written offer comes through which the agent presents to the Vendor as there is no signed contract by the OP hence the acceptance of the offer is not legally binding on either parties. The agent does this because while the OP has expressed interest and put a small holding deposit, he can still walk away without penalty.

    2. The Vendor, while still in his honeymoon period with the newly listed property, suddenly believes his property is worth more than his asking price and instructs the agent to play the 2 buyers for a higher bid, and now states that he won't sell for less than the original asking price + $30k. The agent goes to OP and asks for more, then it was rejected. The agent then goes to buyer 2 to get him to up his bid and maybe buyer 2's max price was original price + $25k.

    3. Agent now has exhausted both buyers bids and is left with nothing. Legally, the advertisement cannot underquote a property and if the Vendor has rejected an offer at a certain price, it cannot be advertised at that price anymore so the agent is forced to amend the advert to original price + $30k.

    4. Agent now goes home and wishes he would of just told buyer 2 that the property was under offer pending signing of COS and went to OP to ask him to sign within 24 hours as there was another interested party that has bid above him.

    • Homr on 18/03/2024 - 09:21
      +1

      Agent now goes home and wishes he would of just told buyer 2 that the property was under offer pending signing of COS and went to OP to ask him to sign within 24 hours as there was another interested party that has bid above him.

      REA will have a better rep if they did this

  • ratman on 18/03/2024 - 07:29

    Sounds like you'll have to report every rea ever to exist. Standard practice ime.

    • CyberMurning on 18/03/2024 - 11:07
      +2

      yep. its part of their job description. rip the buyers while pretending as their friend

      • flywire on 20/03/2024 - 08:04

        Well, no. Stuff the sellers, support the first real offer, collect commission, and move on.

  • smoothymcmellow on 18/03/2024 - 09:20
    +1

    I just sold a property in Melbourne and can see how the buyer could feel mucked around by the agent taking offers.

    We told the agency managing the rental that they could start exploring the market, we want to push for 800k. Next door was arguably a worse property and sold for $835k, we acknowledged market conditions in area and it being an off market campaign, the price seemed very realistic.

    A couple wanted to buy it, told the agent their max was $780k, sent offer in email, I said to the agent that we want to get $800k, she was very keen to get a 780k offer on a contract and then negotiate up. Turns out they couldn't even get pre-approval for $780k anymore and the deal fell through, so were never going to get to our price.

    We eventually got another offer at our price but when I think from the buyers side, they might have thought we were mucking them around but it was the agent's tactics, not our desired price. To an agent, the commission difference between 780 and 800 is minimal, so limited incentive to push it up

    • Toph Beifong on 22/03/2024 - 22:07

      That's why I have noticed so many owners choosing to sell their property without the REA. Less communication, less stuffing around, no commission. Of coarse a bit of effort is required on a owners part to market the property and negotiate with potential buyers which imo is the most tiring part

  • knobbs on 18/03/2024 - 09:53

    What about auctions. I know they can't give indicative pricing but they put a price on the listing on realestate.com.au so it comes up in searches. Had one place list @1.8 in the search but selling @2.4

  • surg3on on 18/03/2024 - 14:12

    Id report them. Its a waste of time but id do it anyway. I actually have when the same thing happened to me .

    • Homr on 18/03/2024 - 14:17

      Please share your experience.

      • surg3on on 18/03/2024 - 14:23

        Was told the owner would consider $1.1m, the advertised top of the range. Got pre approval from the bank taking may hours of our time and the banks time and offered that. Was then told the owner would only consider $1.2m. I doubt the owner ever saw the offer. Newcastle NSW, the mob that were on 4 Corners arent the only dodgy (profanity) up here.

  • deepdag on 18/03/2024 - 15:41

    Hi OP,
    Consider a buyer's agent to avoid headache and some peace of mind.

    • Homr on 18/03/2024 - 15:47

      buyers agent cost more money

      • deepdag on 18/03/2024 - 16:04

        You are right OP. But definately, saves lot of headache with price negotiations and sometimes can also get access to stock first with them.

  • frugalftw on 18/03/2024 - 15:50

    Worth a watch https://m.youtube.com/watch?v=K62MxrUHDj4

    • Homr on 18/03/2024 - 16:11

      That will be a very good watch. Thank you.

      • frugalftw on 18/03/2024 - 16:26

        In short, buyers agent isn’t what they cut out to be. Underquoting cannot be fined for more than $2k or so and become the cost of running the business, and there’s a dubiously warm relationship between accc and rea.

        • Homr on 18/03/2024 - 19:37

          Just finished watching, god that Zed guy is cringe. He does have pretty assistants though

  • SpaceNinja on 18/03/2024 - 21:55
    +1

    If you want the property you need to pay what the owner wants. There will be plenty of people, happy to buy it. You are just distracting yourself by focusing on noise rather than what matters. Good luck.

    • Homr on 18/03/2024 - 22:19
      +4

      If you want the property you need to pay what the owner wants.

      I did pay what they wanted!! and they accepted and then they backflipped DCE style

      • elgrande on 19/03/2024 - 11:49

        Any updates on your house call?

      • rambao9 on 19/03/2024 - 17:25
        +1

        Probably repeated a trillion times - They accepted your offer and its the REAs job to present the offer to the owner.

        That doesnt mean the owner has to accept it.

        I actually voted Yes to troll (and waste more of your own time as im sure most have) because you honestly havent got much to stand on…

        You quoted it best yourself

        advertise a selling price based on either a reasonable market appraisal

        And it also sounds like they followed the guidelines you highlighted by updating the price guide?

        I think you'll understand when you sell a property in the future.

      • cadwalader on 19/03/2024 - 18:16

        You also have to be the highest offer unless there are two of the same property. No way the owner would know what the highest offer would be any any point of time.

  • quasio on 19/03/2024 - 15:08

    my advice is defo report them, all real estate agents should be reported, they are all scum, the new offer was likely fake.but… they are doing their job.. your one report will not do much..

    While doing this go back to the agent and offer your original price (that's if you actually like the property)… swallow your pride and distaste with the agent and get the property you want…

    In the end they are easily forgotten when you're enjoying your own house a few yrs later..

    • Homr on 19/03/2024 - 15:21

      In the end they are easily forgotten when you're enjoying your own house a few yrs later..

      Unfortunately not, its a tenanted property so the REA will also be the property manager.

  • cadwalader on 19/03/2024 - 18:12
    +1

    So lets go through this one by one.

    advertise a selling price based on either a reasonable market appraisal - XXX+30k does not seem to be unreasonable unless the original price was <200k. Anything above 300k would still be +/- 10% around the original listing.

    or what the seller will accept - the seller did accept your original price

    not advertise well below the selling price to attract interest - XXX+30k does not seem well below the selling price yet unless the selling price will be <200k. Anything above 300k would still be +/- 10% around the original listing.

    not advertise below a price the seller has already rejected (unless the seller is now willing to accept a lower price). - the seller did modify the ad to reflect the new market price based on the market response.

    https://www.fairtrading.nsw.gov.au/housing-and-property/buyi…

    It is expected that a professional, experienced agent would be able to approximate a property's price within a 10 percent range.

    While agents cannot be expected to predict exact sale prices, their profession is responsible for making informed assessments about a property's likely selling price.

    The agent is not required to disclose the estimated selling price to potential buyers, whether in advertising, in writing or verbally. This situation could arise if you instruct the agent not to reveal the estimated selling price

    Market demand is just one factor agents need to take into account when determining the estimated selling price for property they are marketing. If there is a change then the agent will need to also look at any other evidence of the likely selling price of the property to decide whether they need to revise their estimated selling price.

  • rentonc on 20/03/2024 - 09:14

    REA potentially fined for underquoting recently:
    https://www.theage.com.au/property/news/real-estate-agency-c…

    Paywalled but basically:
    A real estate company has been charged for allegedly underquoting a townhouse in Melbourne’s north-east that sold at auction for 40 per cent more than the highest estimated selling price.

    The townhouse at 3/27-29 Kenilworth Parade in Ivanhoe was initially listed last year for $900,000 to $950,000, but that estimate was raised to $1 million to $1.1 million after a few days following buyer feedback. It sold in July for $1,538,000.
    The Kenilworth Parade townhouse sold for $1,538,000.

    Following an investigation sparked by complaints from buyers, Consumer Affairs Victoria filed criminal charges against Manningham Sales Pty Ltd – trading as Barry Plant Manningham – for failing to provide a reasonable estimated selling price on two separate occasions.

    Barry Plant could face a fine of more than $38,000 for each breach under the Estate Agents Act. Higher penalties can also apply under Australian consumer law for actions including misleading and deceptive conduct.

    • Homr on 20/03/2024 - 10:35

      Thought the maximum penalty was 2.2k?

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