People are always wondering why real estate agents constantly underquote prices of properties and can never receive an answer. Our buyers agents reveal the top reasons as to why they underquote properties:
- Thriving Market Conditions
- Buyers Fault
- Sellers Fault
- Inadequately trained real estate agents.
Thriving Market Conditions
- With the market increasing in demand it can be extremely hard to determine the exact price for a property, as someone may value the property a lot more then someone else, and the willingness they are prepared pay more for a property.
- Currently the auction market has been the strongest that it’s ever been in 32 years.
- If a real estate agent understands and knows a particular area and know houses for a long period of time, then they will be able to quote a property quite accurately. However, many do not understand it completely as the market conditions are changing and the needs and wants are also changing all the time.
- People need to understand that in the real estate market the price is determined by what people are willing to pay, and the people value houses are differently.
- While it can be difficult for agents to put an accurate price on a house, it has been said that if they cannot provide an estimation within 10 per cent of the selling price, then they should stick with selling cars.
- The interaction of buyers and sellers are the ones who end up determining what the selling price will be. As it is all about the willingness to pay.
- It is quite often that home sellers give the agent instructions including; increasing the reserve price to a certain figure, and advertising the reserve price only at the auction.
- Many real estate agents can often get quite frustrated when they are given instructions on how to do their job, as many real estate agents have worked in the industry for many years and understand the going price for properties in a particular suburb. Therefore, if prices seem to be underquoted it could be a result of being instructed by the property owner.
Inadequately trained real estate agents
- Many experts have said the poor pricing quoting is an indication of the whole industry. That the problem lies with the educational qualification, and the way people are taught.
- However, it is wrong to think that it is solely the educational department fault for under-pricing of properties.
- Many people to this day use the expression that a ‘fish rots from head down’, well in the real estate industry it is quite common for long established businesses to purposely underquote in order to bring as many potential buyers as possible. Meaning that we should not just blame real estate agents for the prices, however look at the business as a whole.
By Mark Ribarsky