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Underquoting alert: How to avoid being fooled by ‘fake’ price guides
Buyers must watch for warning signs of underquoting and conduct their own research to avoid being taken advantage of in a competitive market, according to an industry expert.
With property prices continuing to rise nationwide, buyers must understand a property's value to avoid being misled by a price guide.
bRight Agent co-founder Aaron Scott said that by using a misleading price guide to generate interest in a property, buyers ended up being taken advantage of.
“When a price guide is wildly unrealistic, buyers aren't just disappointed – they’re being deceptively misled and losing valuable time in the market,” Scott said.
Scott said buyers should educate themselves about the area and the value of comparable properties to guard against underquoting.
“If you’re relying purely on the online guide price, you could be setting yourself up for a shock,” he said.
“Always look past the marketing number and understand what homes are actually selling for.”
“If all the other comparable properties are 10-20 per cent over the advertised price of the one you’re looking at, then the true value is likely to be that much higher as well.”
Scott said that when it comes to educating themselves about a particular property market, buyers can use online real estate portals to find relevant data, such as suburb medians and comparable sales.
He said that utilising all available tools would give buyers the best understanding of a property's actual value.
“There’s never been a better time for buyers to do their own homework,” he said.
“Knowledge is power, especially when underquoting is in play, so use as many free tools as you can to do your homework in advance.”
Beyond utilising online tools, Scott said that it was essential to ask the sales agent as many questions as possible to gain the most complete understanding of a property.
He said that buyers should identify information not presented in the brochure, such as past renovations, flood history or vendor expectations.
“It’s the agent’s job to put the property forward in the best possible light - so it’s all the things that aren’t mentioned in the brochure that you want to ask questions about,” he said.
“You can never ask too many questions.”
He warned buyers to watch for red flags and to dig deeper into market history when there were no clear comparable sales, a practice that was especially important for those considering interstate investments.
“If an agent is pointing to year-old sales or properties that are completely different, that’s a warning sign,” Scott said
“A good comparison should feel like it lives in the same reality.”
“Trust your gut, and if every comparable sale looks much higher than the guide, ask why.”
Additionally, Scott said that preparation was key to securing a quality investment, and that “hope was not a strategy in real estate.”
“We all hope to get a diamond in the rough that has been overlooked by everyone else.”
“But more often than not, there is a reason it is cheap or that everyone else has avoided it.”
“At the end of the day, you should be thinking about property as a 30-year commitment, so you’ve got to have more than just wishful thinking to rely on,” Scott concluded.