In the past two months, my daughter and her husband have been looking for a property in Victoria to purchase as their home. I have accompanied them in this process and would like to comment on our experience.
We understand that underquoting is illegal in Victoria. But our experience indicates that it might still be operating. Specifically, my daughter and her husband were interested in two townhouses which were up for auction. Both properties were not sold during their respective auctions. For each of these two properties, my daughter put in a private offer close to the top value of the original quoted range, but was only told the vendor was now looking for a price above the original range. Since our offer was close to the top range, we thought it must be above or close to the original reserved price and so we should be able to get the property. But it seems that we were too simple-minded. We were wondering how the price could have gone over the original quoted range in a short period of time. Although our experience is not exactly the same as what is reported in a recent ABC News article on underquoting (please see https://www.abc.net.au/news/2019-12-30/are-real-estate-agents-underquoting-hot-property-market/11829060), our sentiment is certainly similar.
We feel that auctions are really buyers’ minefields, primarily because there is no cooling-off period. The point is that many buyers (like my daughter and her husband) cannot afford to pay and have the contracts and properties checked before the auctions for every property they are interested in. So they would need to go into some auctions ‘blind’. Also, it seems that many auctions start the bid at a low price. To us, the starting bid should be the reserved price because this is the minimum price at which the vendor is willing to sell – why waste everyone’s time at bids which the vendor will not accept. Also, to be fair to the buyers, if the highest bid has reached or gone over the reserved price, then the highest bidder should get the property. But, currently the reserved price is not disclosed and so I suppose the agent could go in and change the reserved price with the vendor without anybody knowing. So the whole process lacks transparency.
Certificate of property worthiness
When a car is sold, the seller needs to prove that the car is road worthy such as producing a road worthy certificate. Why don’t we have a similar system for selling properties? Instead, currently it is up to the buyers to find out whether there are any problems with a property. So each interested party will need to individually pay someone to inspect a property. It is possible that multiple inspections are done on the same property – a clumsy process. Wouldn’t it be much simpler and much fairer to the potential buyers if the seller was required to produce a certificate to show that the property is fit to live in and has no major issues?
I have requested CHOICE to look into these issues. Hopefully they can do something. In the meantime, are there anyone who have similar experiences to share or comments to make?