Real estate: mistake or misrepresentation?23 May 11 05:00PM EST |
Real estate agents get a really bad wrap. As a journalist, who in the past has been on the receiving end of some rather offensive professional generalisations, I have always been conscious of avoiding the tarring of an entire profession with the one brush. I’m also somewhat sympathetic to the real estate cause: as a child, my Grandmother used to entertain me recounting glamorous tales of her time as one of the first female agents in Brisbane. There‘s history there.
That is, I was sympathetic, until my partner and I decided the time was right to enter the property market and a virtual comedy of misrepresentation ensued. Nowadays, I err on the side of caution.
It began one Saturday, when we walked into what we decided was our ideal property. Enough space for our future family to grow but quaint enough to comfortably feel like home. Prior to the afternoon viewing we had requested a price guide. The amount was a pleasant surprise but not unbelievable considering the area (think Redfern, a decade ago). Since the property was not going to auction - we had asked the agent at least three times prior to viewing and she had confirmed this to be so - we felt it was more than likely the price would end up in the ball park of our budget, which was $20k more than the asking price.
Rapidly rising price guide
After some discussion we decided to make an offer. The agent agreed to pass it on to the vendor but informed us there was a, “lot of interest in the property.” Less than 48 hours later we were informed that the vendor had “suddenly” raised the stakes and would not accept offers less than $70k above the still-advertised price. Our offer was now not even in the ball park.
After further discussion, and the some ill-advised emotional decision making, we decided to raise our offer a further $20k, taking us much closer to our spending limit. A week of radio silence followed. There was no news either way. I began to get annoyed. If nothing else, didn’t common decency dictate a yes or no response?
Price guide or false advertising?
Determined to find out what exactly was going on, and in an attempt to get some indication of whether we were still in the game, I had a friend email the agent and request a price guide. Low and behold the amount that arrived in her inbox was the original (and still advertised) asking price, despite the fact the vendors were clearly looking for offers in excess of $20k more.
Not only was this a blatant misrepresentation of the price, it was misleading to potential buyers. Why was the agent allowed to provide such a false representation of the price? Let’s face it, supermarkets’ are not permitted to mark a litre of milk as, “prices over $0.50”, so why is it ok with houses? During this period an automated email update informed me the property would be going to auction. Still no word from the agent.
Unsolicited legal advice
A week or so later, after we had struck the property off our potentials list the agent phoned to asked if we were planning on registering to bid at auction. We told her that we’d discussed the situation and decided it was not advisable to go to auction in a what we’ve been told was a buyers’ market. There’s also the upfront cost of bidding at auction: we had previously spent $700 to purchase and review the contract and reports for a different property, which we were not the successfully bidders on, and were not willing to fork out this amount again. Especially when it now seemed clear the property was out of our price range.
To our surprise the agent advised us to proceed to auction without having our solicitors review the contract and without having building and pests inspections done. Flabbergasted that an agent would give such potentially costly, bad advice I politely informed her there was absolutely no way we would enter into a binding contract without conducting the proper investigations and that I was thoroughly unimpressed with her suggestions. I was certain that would be the end of the matter.
A little over a week later, three days before the auction, the agent phoned again. This time the pitch was erring on heavy handed, playing on my presumed naivety as a first home buyer. Once again, the agent advised we go to auction without reviewing the pest and building inspections. Comments like, “It’s a brick house and there is no carpet, you’d be able to see pests if there were any.” And, “Don’t worry about your solicitor, just read over the contract yourself, it’s not complicated,” peppered the conversation.
Not worth the risk
I knew this was not the case as I had sought confirmation from our solicitor that we were on the right track after the first unsettling phone call a week prior. I was also well aware of potential costs that could be involved if something untoward did turn up. At the end of the day, my partner and I are in no position to make an informed decision about a building structure, whether or not it has a pest problem or potentially problematic clauses dotted throughout a contract for an old house that had been extended in the last 30 years or so, and we both knew as much.
I remained polite in the face of what I viewed a blatant attempt at manipulation and hung up the phone. Not before informing the agent that, should the property pass in, we would be open to discussion. What I didn’t say was that our offer would be much lower this time around.
My partner and I attended the auction, in a purely observational capacity. After some lacklustre two-and-fro bidding between two parties the property passed in for $1k less than our original offer. It had not met the reserve and so was not sold. We left, feeling somewhat vindicated. Negotiations ensued between the highest bidder, the owner and, we suspect, a third party. The house was eventually sold later that afternoon for $18k over our final offer – well out of our budget.
Have you or someone you know had a less-than-satisfactory experience purchasing a house? Have you been given bad advice, been pressured into bidding or moving on a sale before you're ready? Tell us about it in the comment section.
Are you on the hunt for your first home? Check back in next week to see our practical advice for first home buyers blog. Until then, see our Five ways to save on your home loan.