A seller’s lawsuit against her agency for allegedly overvaluing her property has sparked a fierce debate over agents’ responsibilities when offering market appraisals.
Real Estate Business reported on Monday that Victorian agency Bekdon Richards Estate Agents was being sued by a client.
Pamela Ruth McAlister claims agent Jonathon Graham told her he believed her property in Glen Iris would sell for between $1 million and $1.1 million.
Ms McAlister went on to purchase another house for $1.39 million but when her property was put on the market, only one offer of $850,000 was made. She later sold the property through another agent for $890,000.
Some commenters criticised the seller for acting on the advice of the agent and purchasing another property before her home was sold.
Geoff wrote: “Why in hell would you go and buy another property until your own went under the hammer. Owners need to realise we are not registered valuers and we can only go on what similar properties in the area sold for to give our appraisal."
Dave said it was common practice used by struggling agents who wanted to build their profile.
“Most vendors want to hear a high price ... it is practices like this that give the industry a bad name, maybe instead of the whole industry being blamed an example should be made of the actual offending agency."
According to managing director and chairman at PRDnationwide Tony Brasier, agents need to explain to their sellers that any appraisals they give are just opinions based on market evidence,
“Valuating a property is not an exact science. It’s just an opinion based on what was sold in the area,” he said.
Mr Braiser said sellers were ultimately responsible for the valuation of their property.
“I would have thought that the vendor would have taken much more care over what they thought their property was worth.
“There’s no harm in getting two or three agencies’ opinions and it’s hard to believe someone would not have done that.
“It’s quite unusual to take one opinion and say that must be right. I thought they would have taken more care. To be truthful, the vendor might have been a little bit naïve in this case.”
Mr Braiser advised agents to back up their price ranges with evidence but to clarify that it was not a formal valuation.
“Quite frankly human nature tells you most of the time vendors have an over inflated view of what their property is worth.”
National manager at Propell National Valuers James Freudigmann said any agent’s assessment of a property was just an appraisal and different from a professional qualified valuation.
“There’s no agenda for a valuer so the value is not personally invested into that property the way a selling agent will be.
“Some selling agents will inflate what they think they can get for the property to the seller so they get the listing and secure that listing whereas a valuer is just paid on a fee for service to provide a report and an estimate of the property.
“The valuation is only for period of three months from the date of valuation and obviously if anything changes to the property in that time the valuation will need to be revised. We don’t provide any recommendation around where we think they should market the property or what sale price.
"We just say what the market value of the property and that’s where the buyer’s advocate division benefits the buyers that are looking to purchase a property."
Mr Freudigmann said agents had a responsibility to their seller but sellers also needed to do their own research as to whether their agent was experienced in their area.
“You want someone who specialises in the area that you are actually selling for property in, so someone who knows the ins and outs of the area and can provide a more accurate appraisal.
Like Mr Braiser, Mr Freudigmann said sellers should obtain two or three different agents’ appraisals.
“This will eliminate anyone who’s completely different to the other two or if all three are very similar then it could give a good indication on what you’ll sell your property for.”