A war of words has erupted on Twitter about the alleged prevalence of underquoting in the Melbourne auction market.
The debate, between a number of industry professionals and the Real Estate Institute of Victoria (REIV), was sparked by a posting from investor, researcher and writer, Terry Ryder.
“A Property Observer survey finds 75 per cent of Melbourne auctions involve underquoting. It's illegal but still common, thanks to weak enforcement.”
Mr Ryder, who writes regular columns for Property Observer, made the comment on October 5.
His posting prompted responses from Edwin Almeida, managing partner at Parramatta-based Just Think Property, and NSW-based industry trainer, George Rousos, director at Industry Training Consultants, pointing to what they claimed was the prevalence of this activity.
Mr Rousos referred to an episode of TV programme Hot Property as an example of his claim.
The REIV entered the Twitter debate at this point, saying that “the vendor can set any reserve they want”, to which Mr Rousos replied. “Not if it misleads the market. Two wrongs don’t make are [sic] right either!”.
The REIV replied that, “No, the vendor is allowed to sell their home for what they want”, and that “the vendor instructed the agent”.
Mr Almeida told Real Estate Business in an email statement that the practice was “distasteful", designed by real estate agents "to pull attendee numbers to auctions and create an emotional frenzy, to drive the property price upwards".
“It can also be said this practice is used to impress the vendor at times. This practice is illegal both in NSW, as well as many other states; but authorities seem to shy away from enforcing this practice, as Terry alludes to in his original tweet.”
Mr Almeida said his main concern is around the financial and emotional expenses that this type of practice leads to, which are irrecoverable by the misled purchasers.
“Life would be so much easier if we as professionals, with licences to perform a role, were able to shrug [off] our responsibilities and duties all because vendors tell us to do it,” Mr Almeida concluded.