In an article titled “Determined auction goers defy grand final fever” Kate Nancarrow (The Age, Monday 26 September, 2005 p.4) quotes real estate agent Rodney Morley of TBM Real Estate as saying:
We’ve got the perennial problem of what we call ‘agents buying business’. They tell the vendors $500,000 more than we would. It’s nearly our best source of listings – disgruntled vendors who’ve gone to auction with someone else.”
What is left unexplored is the way in which estate agents, in circumstances of the most obvious conflict of interests, provide a vendor with what is known as an “appraisal”. As Mr. Morley demonstrates, estate agents can manipulate the “appraisal” so as to impress a vendor and win the right to sell the home.
The problem is that the “appraisal”, a figure that is often plucked from the same place the now frowned-upon “dummy bid” was plucked from, usually has no basis in reality – it’s purpose is to impress, not to inform.
An informed consumer, whether vendor or purchaser, will never rely on the “appraisal”, or for that matter, the appraisal’s close relatives, the “asking price”, the “price +”, or the “price range”. When using any of these figures in an equation that relates to real estate, remember the old school-yard game on which the “appraisal” is modelled, and don’t forget the TAKE AWAY THE NUMBER YOU FIRST STARTED WITH!