Smiling but lying – if real estate agents won’t tell the truth, I will

Jenna Price (below) is a grumpy old thing.  She fails to realize that real estate valuations are very uncertain, which is why auctions are so often resorted to.  And note how often auction results are surprising.  There'a an old saying in real estate that you only know the value of a  property when the cheque clears.  I have bought and sold many houses and have generally guessed well but I have had disappointments too

Have real estate agents changed, or have I? You be the judge.

We bought our first house in 1984. It was previously owned by the kind of real estate mogul who knew which suburbs were on the move. It came with a needy neighbour, an outside dunny and was right under the flight path, but we loved it. We made our first baby there and then our second.

It became clear we needed a laundry, an indoor toilet and, spare me your judgment, a kitchen which had room for both a fridge and a dishwasher. I seriously felt I was more likely to survive without a fridge than without a dishwasher. And that was before No.3.

But real estate agents could tell us, more or less, what we should pay for a bigger house in the neighbouring suburb. News in Victoria that an agency is being charged for massive underquoting must act as a warning that all agents should be fair and, more or less, square.

If only warnings worked.

Here’s what I discovered this week. My kids are on the lookout. In fact, I’m friends with an entire generation of parents whose kids are on the lookout, both for their inheritance and the prospect of leaving behind the government-sanctioned malfeasance of renting. Which brings me to this predicament.

A couple of weeks ago, a long-time friend discovered we were planning to downsize. She told me her kid and the kid’s partner were selling their house and could expect to get, according to their local agent, $1.7 million for it. Yes, it’s in one of those newly groovy suburbs, but it’s small and perfectly formed. She sent me the address. Looked great. I’m too old for groovy but whatever.

Imagine my utter lack of surprise when it turned up on your favourite real estate site, with a buyer’s guide of $1.45 million. That’s a quarter of a million dollars less than what the agent guided the sellers. I even wrote to the real estate agent just to check on that buyer’s guide because, you know, glitches happen online. He confirmed $1.45 million as the buyer’s guide. God, you’d love to be issued the seller’s guide as well, right?

In my highest dudgeon, I called the only non-real-estate-agent-real-estate-expert I know – Macquarie University’s Cathy Sherry – filled with grumpiness directed at the real estate agent.

She reminded me that the duty of the agent is to the vendor. They are engaged by the vendor. That means they have to act in the best interests of the vendor.

It’s nearly impossible to get anyone defending real estate agents in Australia, but Sherry said agents can’t ever – really – tell how many people are going to show up at an auction and how much they are prepared to spend. She says the best way to prepare yourself for what you should pay is to look at all the houses.

“Once you’ve looked at five properties, it’s not rocket science,” she says. Mind you, she did agree that my example revealed a big gap.

Now, imagine my utter frustration when one of my own children thought buying it was a possibility based on the unrealistic (and indeed phony) buyer’s guide. If you pop in the top price you want to pay (as you can on these exhausting websites), it comes up as under $1.5 million.

The problem is not the underquoting exactly. It’s the sheer manipulation of the hopes of young buyers drifting around homes which are nearly identical because they’ve been styled. (Please – I beg you – no more white walls, cream couches and AI artwork. And turn off the lights in the middle of the day. We see you.)

Buying property, unless you are a hardened investor with no emotions in the game, is a nightmare. Conveyancers. Maybe lawyers. Building reports. Banks. All under the pressure of time and fear, of not knowing what comes next. It’s a crushing combination of mundane tasks under extreme pressures of time and money. Then you have to do it all again when you fail.

Now this is not a thing where everyone got overexcited at the auction. It’s before the auction. I’ve watched a few of those and understood what happened. I’ve even been the participating underbidder (relieved when unsuccessful). But this agent knows it’s likely to go for much more, has told his vendors it will go for much more, yet is luring people in with the prospect of a bargain.

And it doesn’t just happen to buyers. Vendors often fall victim to conditioning, the practice of being told the place is worth more than it is. It’s how agents win business. Please do not imagine that because an agent tells you they can sell your palace for a huge sum, that will actually come to be.

Likewise, there are no bargains in the groovy suburbs; there is no honour in the real estate market.

https://www.smh.com.au/national/smiling-but-lying-the-truth-about-unreal-estate-agents-20240325-p5ff5z.html

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