There is a common expression amongst real estate agents: “quote it low watch it go, quote it high watch it die”. This refers to auction sales campaigns and this thought process leads to frustration on the part of property buyers. Talk to any buyer in an auction area and they will be able to regale you with many tales of woe, where an agent underquoted the expected sale price and the property ended up selling for more than they could afford.
I have written many Buyers Tips on the topic of underquoting, so I won’t go into the technicalities of what is right and wrong in this tip. But it is important for buyers to know and understand that a selling agent will quote the lowest price they can get away with. They do this because buyers unfailingly respond by competing for property that is underquoted and rarely fight over a property that has been promoted with a realistic (or high) price expectation. And remember that a realistic price can be perceived as high if you are comparing it with other properties where the agent is low-balling the price guide.
As buyers, however, I believe we need to take responsibility for our participation in this dance. Put quite simply, if we didn’t behave like sheep there would be no motivation for the agent to underquote. A buyer who has a good understanding of the market and relative prices should not fall into this trap. But emotion and wishful thinking often get in the way of rational thought and it never ceases to amaze me how many people behave in this way.
So next time you hear a price expectation and you think “tell ‘em they’re dreaming”, stop. And think carefully. Is the quoted price that unrealistic? If so, you can pretty much guarantee that there won’t be many (or any) buyers competing for this property. So here’s your chance. If you end up being the only buyer ready to buy at the auction, you may get to negotiate yourself a great deal.