A tired home hunter who has missed more than 20 auctions says buyers have false hopes they can afford homes beyond their budget.
But the real estate industry is defending the agents’ actions, saying they can only give price guidelines and ultimately have no way of knowing how much a house might sell at auction.
Monique Hodgson said she and her partner had a “horrific experience full of disappointment” after visiting more than 50 open houses and making seven unsuccessful bids since October.
She called for tougher laws after claiming an agent urged her to go to a Mount Albert home auction, saying other buyers were looking to pay around $ 1.5million. dollars for the house.
Still, at auction, the house appeared to hit its reserve – the minimum price at which the seller was willing to sell – only when the auction approached $ 2 million, Hodgson said.
The agent told the Weekend Herald that she acted appropriately, following all rules of business conduct, including one that prohibited her from telling buyers the seller’s reserve price.
But the young couples wondered why they had bothered to come when the auction was instantly out of reach, Hodgson said. “We just don’t like our time and money being wasted when it can be easily avoided by agents and salespeople giving more accurate price estimates,” she said.
House hunters face soaring Auckland prices.
The city’s median price hit a new high of $ 1.15 million in May, jumping 27% in 12 months, the Real Estate Institute reported this week.
This was $ 150,000 more than October’s median price of $ 1 million when Hodgson started looking.
Such wild jumps have made house prices difficult to predict.
Hodgson said it was ridiculous for agents to encourage people to search for homes that sold for half a million dollars over their budget.
She felt the agents were just trying to get as many people as possible up for auction to generate interest.
Yet buyers typically had to shell out more money on legal and building inspection fees at every auction they attended or every offer to buy they made.
She hoped tougher rules could be introduced, saying the Australian state of Victoria had banned estate agents from “undercutting”.
This meant agents could not advertise or advise buyers for a price lower than the auction reserve price, a seller’s asking price, or a written offer that the seller had already rejected because it was too much. low.
The agent who sold the Mount Albert home said she sympathized with Hodgson, but said the issue was a delicate one for officers as well.
Under their code of conduct, agents could only reveal the reserve price after an auction began.
Sometimes agents didn’t even know the reserve price, the agent said.
This is because sellers might not decide what price they wanted to sell at until the start of an auction.
Even then, sellers were free to change the reserve at any time during an auction, if, for example, the bids were lower than expected.
Agents were also required to present sellers with a written estimate of the price before the homes were put up for sale. This resulted in an estimated price based on recent sales of comparable homes.
Yet agents were once again prohibited from sharing this information with buyers.
Sales agents were allowed to tell buyers, however, what they heard from the “market,” the agent said.
It meant the price other buyers said they were willing to pay.
So when the agent gave Hodgson a $ 1.5 million directive for the Mount Albert house, she said she was passing on the typical price that other buyers had said they would be willing to pay. for it.
The Real Estate Institute, the agent lobby group, backed this claim, saying agents could not disclose the reserve price and “certainly” had no way of knowing in advance how much a home would make at auction. .
“This is even truer in a rapidly changing market, like what we have seen over the past six to 12 months,” said institute CEO Wendy Alexander.
But the Real Estate Authority, the government body overseeing the sector, said agents could be penalized for providing misleading price expectations. This included advertising properties at prices that did not reflect what the seller wanted.
Managing Director Belinda Moffat referred to a September 2019 REA Complaints Assessment Committee decision to fine an Auckland agent of $ 1,500 for advertising a house for offers starting at $ 700,000 then that the seller expected a sale closer to $ 880,000.
Hodgson said she had encountered similar problems when offering homes that weren’t up for auction.
On two separate occasions – once for a house in Mt Eden and another for a property in Waiheke – she had offered around $ 1.4 million based on what agents said the seller wanted. Yet both times the sellers rejected the offers and ultimately withdrew the homes from the sale.
In another case, a private seller advertised a separate Waiheke home for sale online for $ 1.25 million.
Hodgson made an offer at that price, but the seller delayed and emailed her back a month later, saying he had received a new offer of $ 1.3 million and that she would pay more.
She did not do it. But the seller kept raising the price in this manner until he now listed the house for $ 1.5 million.
Alexander of REINZ said agents must give all written offers to a seller, even if the price was lower than the owner would sell. “Most agents will do their best to explain to buyers that this may not be enough to get the seller to sell.”
Alexander also said private sellers were not governed by the same REA rules as licensed real estate agents, meaning buyers were not protected by his code of conduct.
REA’s Moffat urged buyers to do their own research when bidding on homes.
This included “finding a saved appraisal” and looking for sales of similar properties.
Moffat acknowledged it could cost extra money, but said it would likely be worth it in the long run.
Hodgson wants agents and sellers to be obligated to give better price guides. “I feel like it’s the Wild West out there, and there are no rules.”
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This notice was published: 2021-06-18 17:00:50