Everyone loves to hate estate agents. It’s a national sport: like BBQs on election day and booing at Collingwood, hating estate agents is rooted deep in our national lizard brain.
It’s easy to understand why: they don’t answer questions properly, roll up at open for inspections late in their spivvy hotted-up cars with their sunglasses way back on their smarmy foreheads, and they stand between us and the property of our dreams. They pass in homes at auction willy-nilly for much more than they’re worth, and they’re so crooked on price it’s amazing they can walk properly in their Julius Marlow laceups. Who are these underquoting bastards, anyway?
Reader, I’ll tell you who these agents are. They’re a soft target for easy, lolling Saturday night media hate and a scapegoat for lazy governments. They’re also you and I every time we sell a property, their actions and approach to marketing and negotiation driven by their task: which is to sell your property for the most amount possible.
There are few industries less understood than real estate. The public perception of the industry: hijinks, dodgy greaseballs, genuine influence over the market and money – LOTS OF MONEY – is all complete rubbish. Most estate agents (and for the purposes of this article I’m referring to selling agents) are not successful, and make around 50k per year – working six days and evenings. Only the very few – the most talented, intelligent and competent – manage to eke out longterm sales careers and make good incomes. Most agents drop out after a few years of toil, and those that remain must become battle-hardened to help the Australian population transact housing.
Why? Because us Aussies are cheap bastards who hate estate agents, that’s why. As much as I hate to admit it, Australians are appalling when it comes to their attitude towards negotiation. They’ll kill you for a dollar – and if you need further proof of our disposition towards believing cheapness equals value, observe the race to the bottom undertaken by our supermarket monopolies. Down down, prices are down. Indeed. Except – when they’re not.
When prices are up and we can’t buy things at reduced prices (how very dare they!), our blood boils. In certain parts of Australia, real estate prices are absolutely on the up. When this occurs, media reports kick in with alarmist ‘prices on the up‘ Saturday evening broadcasts. As extraordinary results in hotted-up markets occur, discussion then turns to underquoting and the evil control that estate agents have on the market.
Reality check: estate agents have no control over the market. They are not selling their own property. Their vendors are, and their vendors are in control of the reserve they set and the price they’re ultimately willing to sell their home at. Once their property is on the market (i.e. it has reached the reserve at auction and is about to be sold), the vendor also has no control over the price their property sells for. Those in control are the buyers, who can keep bidding until they wish to stop. Value for these competing buyers is entirely personal: it has nothing to do with the price an advocate might recommend you pay for a property.
Most gallingly for disappointed buyers at auction, the price those willing to compete on property are willing to pay is disconnected from any quote range advertised, any vendor’s reserve or any council rates estimation of value. Of course, this is disappointing – particularly in a market which feels like it is spiralling out of reach for buyers. It sucks to be disappointed, it really does. The reality of a competitive market, however, is that there are winners and losers. And it hurts to lose, or to feel like you’ve been denied something that should have been yours. When this happens in an exponentially rising market, buyers begin to murmur about underquoting. Before long, this murmuring becomes a full-on village hunt with picks, lanterns and chanting that someone has to pay. And who’s that person – who deserves our blame for rising markets and competition?
Is it the government for failing to properly resource high-growth residential areas with the infrastructure to support families and small business?
Is it the Reserve Bank of Australia for setting our national cash rate at historically low levels, leading to a natural increase in the appetite for property because of cheap money?
Is it our swelling population wanting to live closer to areas of employment and enjoyment, making inner-city properties more hotly contested over?
Is it local councils for failing to demand better quality family-style apartment living options for an increasingly urban community, forcing those who require more than two bedrooms into the outer-outer-suburbs?
Is it Baby Boomers, for using the natural advantage of time of birth and large superannuation reserves to inflate the value of inner-urban property?
Oh, no, we say. It couldn’t possibly be. Rather, we turn our eyes from the actual market forces which are impacting on the way our community is developing and go the easy target.
Who’s to blame? Why, the agent of course. It’s them and their evil underquoting. What utter garbage.
You know who’s not crying underquoting? The vendor who sold their property successfully, the buyer who bought a property successfully. Those focussed on underquoting – and making it the scapegoat for problems of supply and demand – are those who did not actually participate in the transaction. Recently, the state government has announced legislation to change the way that estate agents quote – to prevent the disappointment of underquoting, to stop the dreadful agents hurting the feelings of the public who weren’t able to buy property in a successful transaction. If legislation against disappointment becomes a trend, I really do hope they create legislation against other disappointing things in life: jobs that go to less-intelligent candidates after long interview processes, George Lucas Films, fashion festivals that purport to be ground-breaking, and dudebros who pretend they’re your boyfriend when they’re actually lighting up Melbourne on Tinder.
This new legislation is just an easy smokescreen – a shifting of blame – for government. It assuages the mob. Rather than doing the hard work of legislating on new land releases, community housing schemes, appropriate planning permits that look to the future and the hard reform around negative gearing and superannuation, the government throws a bone to the disappointed and holds up new quoting legislation as true action on housing affordability.
It’s not action, you know. These changes will do nothing but confuse Victorian buyers for around six months, before well-resourced buyers learn the new pattern of negotiation and begin to buy with fervour again. Think carefully: it’s not the agent that’s to blame for market forces – no matter how spivvy their car or smarmy their Facebook page. The people to blame are ultimately you and I, and the economy and democracy we participate in.