What does it mean when an agent says an owner will accept “offers above” a certain price? If you’ve been involved in looking for a property recently, you will realize it can mean almost anything. You might think that “offers over $800,000” should mean that an offer of $810,000 will be given serious consideration. In Melbourne, you will more likely be laughed at.
As a result, from 1st May, this term, along with “Offers Above” and say $800,000+ will be illegal. This is because of the widespread abuse of these terms by agents, where these seemingly clear-cut expressions resulted in underquoting of up to 40% and typically 25-35%. As we have argued before, this is either deliberately deceptive or astonishingly incompetent.
The new laws therefore will forbid this language, which means that an agent who genuinely wishes to consider any offer over a certain price cannot market this. A far simpler solution to stop this trickery would have been to simply require a published reserve price. This does not mean that the property has to be sold at this price but simply makes clear the minimum price the owner would consider. The best offer over this amount would represent the figure that the owner would clearly be happy with and no lies or deception involved.
Agents have strongly resisted changes that will make them accountable (some still deny there’s a problem), although the REIV has supported change. It was not hard to see it was necessary; it’s just unfortunate a simple effective solution wasn’t adopted, instead of this rather circuitous means of dealing with the seemingly unstoppable problem of underquoting.
Please note that the following article on the topic incorrectly notes that an acceptable alternative is to advertise say $900,000 to $1 million. In fact even this would be illegal; the range cannot exceed 10%, so $900,000 to $990,000 would be an approved option. In reality, most agents will still be unwilling to be clear about price expectations and will opt for “Contact Agent” or “Price on Application”. Let’s hope their verbal advice provides genuine expectations.