40 Forsyth Street in Glebe was sold at Auction this past Saturday in front of a packed crowd of about 150 people.
I first inspected this property several weeks ago on behalf of my clients when it was advertised as “over $500,000”. Within minutes, it was obvious to me that this property was worth much more. Although it was extremely run down, the 2 bedroom terrace on over 100m2 of land was only metres away from Blackwattle Bay and so close to the city.
In the update I wrote for my clients several weeks ago, I noted that this property was likely to fetch over $700,000 given the significant interest.
Indeed, during the Auction, this property was sold for $760,000. A staggering 50% over the price guide quoted by the selling agent!
It must be said however, that the selling agent may not breaking any law if the Agency Agreement specifies a price range of around $500,000. The selling agent would only be in breach of the law if the Agency Agreement mentions a price range which is significantly higher than the advertised price guide. This would then be considered intentional under-quoting.
Unfortunately, under-quoting is extremely difficult to prove as the Agency Agreement is not open for public verification and only the Office of Fair Trading can compel the selling agent to disclose the price listed in the Agency Agreement with the vendor.
Under-quoting aside, while a selling agent can never be 100% certain of the interest a property is likely to generate, in this particular instance it was pretty clear from week 1. The price guide should have been revised upwards immediately (it was changed to “P.O.A” but only a couple of days prior to the Auction) to avoid misleading hopeful buyers.
It seems the strategy of “quote them low and watch them go” is still very much in practice by selling agents in Sydney.
About Oliver Stier
Oliver J. Stier is the Director of OH Property Group, a leading Sydney buyers agency. He studied Quantitative Economics and Finance at Cambridge University (UK), University of Toronto (Canada) and Princeton University (USA). In addition to being a licensed real estate agent, Oliver also holds the Chartered Financial Analyst (CFA) designation.