The New Underquoting

Noticed the number of listings starting to come on line now that are fixed price? An agency will list a property at a fixed price online or send you an email with an “off line” listing that is supposedly ready to go without the need for an auction and all that competition. You instantly think “great! I’m in with a chance here”, and immediately book an inspection and ask for a section 32 and contract of sale. This is where things start to go a little sideways.

Strangely, no paperwork is available and the agency blames the vendor, the vendor’s solicitor or whomever else is involved and now you have to wait patiently for it to show. In Victoria an offer is only ever real if it is in writing accompanied by a signed acknowledgement that you have seen the section 32. It’s only binding as a deal when the vendor signs that offer. Just so you know, those “verbal” offers you have been putting in are not even worth wasting breath on. But that’s a topic for another day.

So as you wait for the paperwork the agency shows more and more people this private, off line, quiet listing and when the paperwork finally materialises 3 weeks later your agent tells you to get your offer in ASAP as there are now 5 other people doing the same thing. AND make sure your offer is super strong as everyone gets only one shot at it. Oh, and that price we were talking about 3 weeks ago, well due to the unexpected competition the agent now believes it will go for much more than anticipated. It’s not his or her fault it happened like that though. The vendor was happy to sell for the original price, but competition just happened to come along in this market. So now you are involved in an envelope style, one shot offer auction where you don’t get to see your competition, you don’t even know if they exist, you can’t read their faces and expressions when the bids get down to the $500 mark and you have no idea if your one shot will be strong enough. All of a sudden the auction looks good doesn’t it?

The agency can’t be accused of underquoting because the vendor would have sold at that original price IF the deal could have been done on the spot, but that paperwork was delayed and THAT caused the competition. This envelope offer sales system, which I was told was developed by and man named Jenman, is supposed to be the most fair system of sale based on the fact that everyone gets one shot and the vendor decides. A sales agent would say that though. It isn’t really that fair for purchasers, because the fear generated to push prices up and the fact that you can’t effectively read the market leaves you bidding blind and afraid and THAT’S what drives up price. The fear of missing out. My suggestion? If I can’t put an offer in now, don’t show me, I’ll go buy another place. Or get the vendor to sell it to me on a letter of offer subject to section 32 approval….but that will never happen, it would short circuit the process wouldn’t it.