For what it’s worth

THERE is no doubt that Victoria’s property market is showing signs of a recovery following a modest downturn over the past 18 months.

As Victorian Treasurer Tim Pallas stated at a recent REIV event, “I can say with a fair degree of confidence that we have hit bottom and the market is starting to show signs of correction.”

In a market that is picking up due to a range of factors it is likely that more properties will begin to sell for higher than what was originally expected.

This situation is very different to underquoting and it is timely to revisit the disparity as we expect the market to be fairly healthy going in to spring.

When a real estate professional researches the proposed listed reserve or sale price there are a range of tools they use and factors that they consider. The main indicator is what similar properties have recently sold for in the area. Real Estate professionals are required to base their estimated selling price on comparable property sales.

Naturally, when you are coming off a weak market period, and taking into account settlement times, those comparators will be lower than what a property in a resurgent market might be able to attract. The other element to consider is that a property is worth as much as someone is willing to pay for it – this is particularly apparent when two or more parties ‘fall in love’ with a home and engage in a bidding war.

No agent or vendor will knock back the highest price, simply because it was listed to sell for the agreed market value, which may have been much less.

Underquoting can occur when the property is deliberately advertised for less than the estimated selling price, is less than the seller’s asking price (so they have no intention of accepting an offer at that price) or the seller has already rejected an offer at that level.

Real estate professionals are bound by Victorian underquoting laws and Australian consumer law. REIV members must also comply with REIV guidelines to act ethically, honestly and fairly.

To find out more about underquoting, please visit the Consumer Affairs Victoria website at consumer.vic.gov.au.