27 May Murky behaviour of agents – Darren Piper
Darren Piper is sounding a note of caution about a possible downturn in the market and the fact that this is bringing out some pretty murky – his words – behaviour on behalf of some real estate agents. We find out what they are.
Kevin: One buyer’s agent is sounding a note of caution about a possible downturn in the market and the fact that this is bringing out some pretty murky – his words – behavior on behalf of some real estate agents. Joining me from Universal Buyers Agents is Darren Piper.
Good day, Darren.
Darren: How are you, mate?
Kevin: Very good, thank you. Darren, you’re a bit concerned about some of the murky world of pricing tricks. Tell me what’s happening.
Darren: Yes. What we’re seeing in the market at the moment is more agents putting stock to market on the major portals without pricing on. So, what’s happening is it’s starting to confuse the buyers even more with methods like “by negotiation,” “for sale”, obviously “auction” is a pretty standard one.
What’s happening is the buyers who are actively looking to purchase are getting confused with where actually value or price points lie within the market.
Kevin: Always when you see agents do that, it’s always an indication to me, anyway, that the seller is probably are asking too much.
Darren: It’s a very interesting topic at the moment. The other one that we’re seeing is “offers over,” but it doesn’t mean that the vendor’s expectation is necessarily close to that, so to speak. So, it just goes to show the importance of doing your due diligence.
Kevin: Absolutely. That’s probably one of the things that we should cover for buyers, too, is that if they’re not real sure, they should get a valuation done.
Darren: Yes, that’s exactly right, or even look at getting a buyer’s agent on their side or a professional of some sort to guide them through the transaction and let them know where value lies so that they don’t over-pay, because in this market, in the market conditions at the moment, it is very easy to over-pay, and unfortunately, we are seeing that.
Kevin: Of course, the Office of Fair Trading really clamped down on this fairly heavily. They don’t like that practice. And I think they actually scrutinize a lot of agents, don’t they?
Darren: Yeah, they do. Unfortunately, it has been happening far too often, in my opinion. There was an agent recently that was fined for similar tactics, if you will. So, yes, it is happening out there, unfortunately.
Kevin: It’s been clouded a little bit further too by the fact that auctions don’t have prices on them, and that’s clearly been a debate that’s raged even between the states. You were in New South Wales. The McGrath Organization were in favor of price ranging. Whereas in Queensland, it’s actually been banned.
Darren: Yes, that’s exactly right. Queensland is the only state that the agents can’t quote a figure when their particular property is going to auction. So, going back to my earlier comment, it does make it hard for buyers to understand not only where the expectations of that particular vendor are but where it sits from a price point. So, they’re really just going to do their homework and be comfortable with what they’re paying.
Kevin: Is it any value at all, when you’re talking to an agent and they have a price range on it, to try and get a handle from them as to what would be acceptable?
Darren: Yes. I think the same thing is a lot of people get caught up in pricing. It probably sounds like a funny comment to make, but what I mean is a property might be listed, whether it’s a price range or “offers over,” whenever we sign a client, I always say to them, “The way we approach it is the pricing that is on the property publicly is secondary for us. First and foremost, it’s about understanding where we see value in it.”
Then that comes back to just really doing your homework, looking at comparable properties, square meter rates, understanding the vendor’s motivation, and then putting a plan in place to purchase it within those goalposts.
Kevin: One of the things we recommend when people go to auction is that they set themselves a limit and then make sure they don’t exceed it no matter what happens, because when you become emotionally involved, that’s when you run the risk of over-paying.
Darren: Yes, most certainly. There’s no doubt about it. Emotion is that the highest driver when it comes to price point. Especially in auction conditions where it’s tense on the day, there is a lot of pressure, you’re there, you’re bidding in front of everyone, so you can put your hand up one or two more times and you’ve paid another $25,000, $50,000, or $70,000 in some cases.
Kevin: Your comment, too, about a downturn in the market, Darren, is that actually what you’re seeing?
Darren: We’re seeing a bit of a correction. From a downturn point of view or lack of inquiry point of view, we’re seeing buyers actively looking to purchase but anything that has “by negotiation” on it or even “auction,” they’re not even making inquiry on it, which is an interesting conversation in itself.
I recently had a client who had been looking for a number of months. There was a property on the market that had no price on it, and they completely ruled it out because they thought it was going to be out of their range.
Kevin: Darren, great talking to you. Thank you so much for your insight. Darren Piper is a buyer’s agent.
Darren: Thanks, Kevin. Bye-bye.