August 13, 2025 • 32 mins
Hosts Ciaran O'Brien and Peter O'Malley break down the Reserve Bank’s 0.25% interest rate cut — the third in 2025 — and what it means for property buyers and sellers. At the same time, Sydney’s real estate sector is reeling from a major underquoting investigation, with high-profile agents and systemic practices under the microscope.
We also discuss:
- Sydney Morning Herald exposé on widespread underquoting practices
Four-month suspension for top agent Josh Tesolin - RBA decision to lower the cash rate to stimulate a slowing economy
- Impact of three consecutive cuts on borrowing capacity and buyer sentiment
- NSW Fair Trading’s crackdown on misleading price guides
- “Auction bunnies” and the psychological toll of repeated buyer disappointment
- Auction clearance rates holding steady at 52.6% amid rising spring listings
As always if there is a specific topic you would like for us to cover, please reach out and let us know!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
All down, all silent, going, going, going, gone.
So congratulations.
Speaker 2 (00:07):
Welcome to the Current Market Insights podcast
brought to you by HarrisPartners Real Estate.
Each episode we chat with realestate author and industry
leader, peter O'Malley, todiscuss the current property
market conditions and provideinsights to assist you on your
property journey.
Speaker 3 (00:30):
Hello and welcome to another edition of Current
Market Insights.
I'm your host, kieran O'Brien,and with me, as always, is Mr
Peter O'Malley.
Peter, hello.
Speaker 1 (00:36):
Kieran, great to see you.
Speaker 3 (00:38):
Great to see you for another week, my friend.
We've got a big episode today,so let's just get straight into
it.
Since we spoke last week, theRBA met yesterday, as we're
recording this, and the boardand the governor made their
statement and made a decision onthe interest rates, which I'm
sure most people have heard bynow.
But, as you always do with thestatements, take our listeners
(00:58):
through what was said and whatyou think the messaging kind of
indicates from here for the nextcycle, when the RBA do meet in
six weeks.
Speaker 1 (01:06):
Yeah, thanks, kieran.
So we got a 0.25% interest ratecut of course no larger, which
some people would have liked tohave seen, and some will argue
that could have been justified,yep, but we did say last week
whatever the RBA did at thismeeting, they had data to back
up their decision and they didfinish their statement, which
(01:28):
we'll pick apart quickly beforemoving on.
But they did finish theirstatement by saying that today's
policy decision was unanimous.
That's interesting, becauselast month, when they were on
hold, it was 6-3 to hold versuscut, but it was unanimous today.
Speaker 3 (01:45):
I wonder just very quickly whether they were
unanimous to cut or whetherthere was unanimity around the
extent of the cut.
You know, was it unanimous?
Yes, we all agree we should cut, but did they actually agree on
the numbers?
Speaker 1 (01:55):
Oh, it says today's policy decision was unanimous.
So I think there was only one.
There was only two options onthe table hold or 0.25.
Yeah, so even though wespeculated, would they go higher
?
Would you know, with a high, alarger cut, not higher.
But would they go with a largercut?
Last week was never consideredlooking at this and there wasn't
anything in their statement tosuggest yeah they were looking
(02:18):
at anything other than a hold ora 0.25 cut.
Yeah, the statement um issometimes very insightful,
kieran, which is why we pull itapart, and then sometimes it's
very bland, and I saw a lot ofmedia commentary on this
statement before I read thestatement and when I look at the
statement and read it, theydidn't say too much other than
(02:38):
we're cutting interest rates by0.25% and reiterated some of the
key data points and thethinking and the key points in
the statement that they came outis that interest rates,
inflation rates, are moderating.
We're happy with that.
We're on a sustainable path.
Inflation has fallensubstantially since the peak in
(03:00):
2022, as higher interest rateshave been working to bring
aggregate demand and potentialsupply closer towards balance.
So that's all prettystraightforward stuff.
One of the journalists did pickthis up and he was right to do
so In every statement.
It feels like maybe not, but itfeels like every statement for
(03:21):
the last six meetings hashighlighted the risks in the
global economy, in financialmarkets, and the RBA's
preparedness to stand behind andsupport the Australian economy
and Australian jobs if they needto.
Speaker 3 (03:38):
Yeah.
Speaker 1 (03:38):
And it's in this one again.
Speaker 3 (03:39):
Yeah.
Speaker 1 (03:40):
And it was David Taylor, the fellow from the ABC,
who wrote along the lines onex-Twitter that it's pretty
obvious.
The RBA look like they arepreparing for a global market
event.
Speaker 3 (03:56):
Yeah, look, I think that's probably a very astute
insider assumption.
I can't help but think thatthey all of the statements you
know have been quite bland.
I feel like they're justkeeping their cards close to
their chest and they're givingthemselves room to make rash
decisions in whatever directionthey need to, in the event
something happens.
I mean they, you know they'vebeen proselytising that the
(04:19):
global economy is in strife fora long time, you know, with all
the things that have beenhappening wars and government
changes and all those kinds ofthings.
But I do wonder whether they'rejust hedging their bets to try
and avoid the level of scrutinyor disdain that can come with
making an unpopular decision.
Speaker 1 (04:37):
I think they're capable of unpopular decisions.
Their statements are normallybland, but you can sort of read
between the lines to juice it upa bit.
But this one, as I say, wasparticularly bland.
They went on to say withunderlying inflation continuing
to decline back towards themidpoint of the 2% to 3% range
and labour market conditionseasing slightly, as expected,
(04:58):
the board judged that a furthereasing of monetary policy was
appropriate.
This takes the decline in thecash rate since the beginning of
the year in 2025 to 75 basispoints.
The board nevertheless remainscautious about the outlook,
particularly given theheightened level of uncertainty
about both aggregate demand andpotential supply.
(05:18):
It noted that monetary policyis well placed to respond
decisively to internationaldevelopments if they were to
have material implications foractivity and inflation in
Australia.
So it's saying it'll actfurther if it has to, but it's
by no means promising more ratecuts in that statement.
What does that mean for theproperty market?
As we touched on last week,vendors think it means higher
(05:42):
prices, wrongly or rightly, andthey very much welcomed the news
.
Buyers are not so impacted byinterest rate cuts, although
there will be an element ofbuyer who says rate cuts will be
good for the property market,so I'd rather buy sooner rather
than later.
What buyers are really lookingfor is a broader base of supply,
(06:02):
because stock levels are verytight still.
Speaker 3 (06:05):
Yeah, yeah, look, I think that's a pretty reasonable
assumption.
The only other comment I'd makethe way they frame that ability
to react gives me theimpression they feel like
they're kind of in the midpointof where they should be.
You know they could go a littlebit lower, they could go a
little bit higher, but they feellike they're, you know, in the
middle of the seesaw and if theyneed to switch one way or the
other they can, which you know,if I'm reading between the lines
(06:28):
tells me that we've kind of wemight be at a point an interest
rate setting or a cash ratesetting where, uh, they feel
it's there's a bit of long-termstability.
Potentially they could, theycould adjust either way, but you
know we're not going to expecta two percent cut from here.
We're kind of at a nice levelfield where things are coming
down the right direction.
Speaker 1 (06:45):
But we could adjust either way if we need to yeah, I
think it was anz are predictingthree more rate cuts yep down
to a low of 2.85 by february,march next year.
Um remains to be seen if, ifthat's the way it unfolds, the
rba would be very, veryconscious not to front run their
thinking and have expectationsof further rate cuts in the
(07:08):
system Because, as we've seen,at the beginning of 2023 or was
there was this sense that theRBA were going to start cutting
rates imminently the marketbehaved and the economy behaved
as though those rate cuts were alock.
Everyone got excited, pushedproperty prices up 5%, 10% and
then the rate cut didn't come in2023, and there was a deflation
(07:30):
there.
So carefully managed messaging.
There's no doubt.
Speaker 3 (07:33):
Certainly Look.
Moving on then, I know wenormally spend more time on the
interest rates and the RBAstatement, but pretty juicy
topic I want to talk about today, peter, the overarching topic
under quoting.
We have spoken about adinfinitum and we will continue
to talk about it forever whileit's in the industry and we have
a podcast.
(07:54):
It is a topic that ourlisteners are no doubt aware of
if they've listened to us before.
But in the last few weeks tomonth we have spoken in detail
about some stories coming outabout a particular agent, josh
Teschelen in Western Sydney andsome of the investigations from
journalists and fair trading andother you know complaints from
(08:16):
consumers around some of hisactivities and we have said
throughout all of those episodesthat he is most certainly not
alone in his conduct, in the waythat he conducts business.
Just this week there's been apretty major investigation come
to light in the.
Speaker 2 (08:32):
Herald.
Speaker 3 (08:33):
Now, I know you are intimately across this piece,
but also you know obviouslyyou're a subject matter expert
on.
You know the dealing itself.
So I'd love for you to talk toour listeners about, firstly,
what the the follow-on is fromthe teslan story in particular,
but then what is the the kind ofbroader conversation that's
come out with this large-scaleinvestigation.
Speaker 1 (08:54):
Yeah, thanks, kieran.
So look, uh, we all woke onsaturday morning to uh, under
quoting and the agent inquestion on the front page of
the herald.
The other thing that we havesaid over the last few weeks is
Joss Teslin did not deserve, nordoes anybody deserve, to be
trialled by media.
Yeah, which is what washappening.
Yeah, of course, andintelligently or not?
(09:17):
Joss Teslin's only response toall of this is I've been under
investigation for three years.
If I've done a crime, tell mewhat it is and I can defend
myself.
But, at the moment, it's allthis smoke around me.
My word's not his, the smokearound him.
But there's all this innuendo,but there's no charge put to me.
(09:37):
So how can I respond to that?
So on Saturday morning, well,we must go back.
It would seem that him whetherit be my mutual decision or one
party cut the cord, but Teslonand the Ray White Network went
separate ways over this issueand the coverage.
Read into that what you will.
And then, shortly thereafter,teslon rebadged his business and
(10:06):
then, within a week of there-badged business commencing
operations, he was hit with afour-month suspension of his
license, with furtherinvestigations to take place.
Underquoting was not the onlycharge put to him.
Dummy bidding, underquoting,high, high-pressure sales
tactics and this one, if foundguilty of, I think, will have
(10:29):
major ramifications andproducing false documents to
fair trading are among theallegations being levelled
against one of Australia'shighest earning real estate
agents.
Yeah, so anyway, he's now gotcharges to defend um and if he's
innocent, that'll come throughum.
(10:49):
But yeah, this is he's.
Speaker 3 (10:53):
Unfortunately for him , wrongly or rightly, he's
become the poster, the posterboy for all that is wrong with
sydney property, when it is anindustry-wide problem under
quoting yeah, yeah, look we uh,as you say I I should have said
uh, alleged, because again, youknow he does now have a case to
answer for with fair trading, uh, and I think I have to agree
(11:13):
with you that if there is uh,you know, wrongdoing is one
thing, uh, but then you knowperjury perjury not that it's
perjury in this case,necessarily, but uh, you know,
delivering false documents,lying to a court, lying to an
investigation, whatever thosethings do bode very poorly and
certainly don't give as areporter, don't give any
confidence to anyone readingthat that in fact he has done
(11:34):
the right thing and maybe he'sjust a victim here, but maybe
the first cap to fall in whatcould be a much larger issue.
We know it's like a system-wideissue, but the Herald goes on
to talk about a much largerproblem.
Speaker 1 (11:50):
So if you can talk us through what the article kind
of goes into, what theinvestigation itself kind of
comprises of or what it didcomprise of, and what really
this does mean, yeah, so,whether it be the Herald or the
Department of Fair Trading orboth, but it's very, very
obvious, based on the content inthis article, that agents
(12:14):
probably unknowingly for many ofthem have been getting
monitored for the last few years.
Yep, instead of the regulatorzeroing in on isolated
incidences where the agent saysyou know, I support your
attempts to clean up theindustry with underquoting, but
the market just took hold onthis one and it beat all
(12:36):
expectations and my file's inorder.
Have a look at it here.
What they're doing is they'retracking franchises, individual
agents, individual firms andgetting data sets on the price
performance of those respectiveagents, firms and franchises
over a greater period of time tosee who the systemic
(12:59):
underquoters are.
And they've mentioned firms inhere and I don't want to start a
war with the real estateindustry or individuals.
It's all there in the articleonline for anyone who wants to
read it.
But there are agents who havesystematically underquoted the
likely selling price of theirlistings and they systematically
(13:20):
sell for 20% to 25% more thanwhat they've quoted the consumer
.
Now, if it's a one-off, I'vehad that happen in isolated
instances and that's great forus and it's great for the vendor
and we've got to say to theunderbidders we never saw that
coming.
So I'm not saying we've neverhad that happen, but what the
what the herald article did withall of the data is?
(13:42):
You can only blame the marketonce or twice before it becomes
a tactic.
And agents are now even in ourmarketplace in the inner west
are suddenly really responsiveand really compliant suddenly
with the way they're managingprice during their campaign.
But if you look, if you readbetween the lines in this
article in the Herald, it's toolate.
Speaker 3 (14:05):
It makes me wonder we spoke about to be honest, I
can't exactly remember when theepisode was, but we talked about
some of the changes and howfair trading was starting to
issue what I said on the podcastat the time ridiculously low
and pointless fines to agenciesfor what appeared to be cases of
underquoting.
I now wonder, and I'd love toget your insight on this do you
(14:25):
think that that was a verydeliberate kind of drip feed of
notice to agencies to in someways draw them off the fact that
they were heavily, heavilyinvestigating with a much more
punitive action in mind?
And you did say at the time, tobe fair, that this will likely
result in something more extreme, but I wonder whether that was
(14:46):
a bit of a red herring oh look,you know we might come and check
on your documentation to makesure you're compliant when in
fact, they were building anenormous case which, if this
data is correct, is exactlywhat's happened.
They have built a massive dataset that shows some pretty
consistent, broad, likemisleading conduct, which is,
(15:06):
you know, unfortunately confirmsa lot of what consumers have
said to us over the years, thathow do you trust any of these
agents?
The pricing's terrible, itdoesn't make sense.
You know it's the wholeindustry is cooked.
Speaker 1 (15:17):
Well, it is, and we've spoken on other podcasts
where if you're an honest realestate agent with a $2 million
listing and two of yourcompetitors down the road have
got a competing $2 millionlisting but they're quoting 1.6,
you can quote an honest priceof $2 million, but the reality
is all the buyers who might beinterested in your listing are
(15:37):
down the road in the open housesat 1.6.
Yeah, of course, and that is howit's a rush to the bottom with
underquoting.
Where the agent that goes thelowest, he's setting the tone
for all of their competitorswithin that respective
marketplace.
So there's many agents, kieran,who will find themselves doing
(15:58):
a compliant version or anon-compliant version of
underquoting or pricing belowexpectations, because when they
quoted market price, no oneturned up to the inspection of
underquoting or pricing belowexpectations.
Because they have to, becausewhen they quoted market price,
no one turned up to theinspection.
Speaker 3 (16:12):
Yeah, look, I agree with you entirely.
But I also hate that viewpointright that they have to do it to
be competitive, because I justthink again, that's a systemic
issue.
But if the regulator didn'tpolice the issue.
Speaker 1 (16:24):
This is what the agents had to do to survive and
this is what the vendors wereprepared to do to sell.
Yeah, so it's.
It's actually the side effectof no regulation or no over
proper oversight.
Speaker 3 (16:38):
This data match that we're talking about here is
going to clean that up very,very quickly so from a before we
actually get into a bit more ofthe nitty-gritty around the
data itself, because I'd love tojust get some rough figures.
But in reality, let's say thisinvestigation is reported by the
Herald but is going on very,very thoroughly through Fair
(17:00):
Trading and they decide to comeout with a bunch of punitive
actions here.
What do you think the actualeffect is?
So let's say, agency X that'slisted and has 45% or 50% of
their properties going 30% aboveguide very clear cases of
underquoting.
Do you think it's a scenariowhere Fair Trading will use
financial?
Speaker 1 (17:17):
I'll just answer the question because two people
within the industry that havemore insight well, three people
actually, who have got much moreinsight than me have all said
the same thing over differentperiods of time.
So there is a real estate agentin surrey hills who, um, whose
target market or his specialtyis real estate agents right, and
(17:39):
he has said publicly at aseminar two years ago the
department of fair tradesinvestigation into real estate
agents on underquoting is realand agents are going to lose
their licences.
If you're doing it, stop, andif you're not doing it, don't do
it.
Speaker 3 (17:54):
Yeah.
Speaker 1 (17:55):
This week on a podcast, John McGrath and Tim
McKibben of the New South Wales.
President of the REI both saidreal estate agents are going to
lose their licenses over thisissue and on the front page of
the Saturday Herald star, agentTeflon Josh has license
suspended pending furtherinvestigations so that is where
(18:16):
it's going.
Speaker 3 (18:17):
Do you think that will be the end of the line and
obviously you don't know theanswer to this but obviously
license cancellations,suspensions, whatever that is
the punitive action for theagent or agencies involved.
But do you think there'll beany financial implications here
other than loss of business as aresult of losing your licence?
Speaker 1 (18:34):
I think they've been handing out warnings and
administrative fines.
Speaker 3 (18:42):
They're the ones we've talked about before.
Speaker 1 (18:44):
Yeah, which for a long time.
But the blatant cases, thefirms we're talking about that
have miraculously and I say thatsarcastically miraculously been
achieving 20%, 22.5% above thelisted guide for all of their
listings, or essentially all oftheir listings, for the last
three years.
They've got major problems andthe thing is they don't have
(19:06):
problems that go away by doingthe right thing next Saturday.
Speaker 3 (19:10):
Yeah.
Speaker 1 (19:11):
The digital footprint is recorded and there for all
time it's.
You know, the long hand of thelaw moves slowly, justice moves
slowly, but it's coming for allthose home buyers that were
blatantly misled into bidding atauction and you know, we've
spoken about it before.
You were one of those, yeah,yeah.
Speaker 3 (19:30):
Through Ray White, happy to name drop.
They were dreadful and refusedto take accountability and, you
know, tried to put the blame onus for being unrealistic in the.
You know all of the tacticsthat get used, right.
Speaker 1 (19:40):
Yeah.
Speaker 3 (19:40):
Which is anyway.
It's a sore point for me.
Speaker 1 (19:43):
Yeah, well, I didn't want to bring that up for that
reason, but a journalist fromNew Zealand Herald rang me today
and saying hey, we've got thisgoing on in New Zealand.
Could you share some of yourexperiences with me?
And we got onto talking aboutthe auction bunny.
It's like what's the auctionbunny?
And the auction bunny is thebidders that have maxed out in
price before the properties evenhit the vendor's reserve.
(20:07):
Yeah, and the reason they'vemaxed out on price and they're
at the auction and they thinkthey're a chance is because
they've listened to the agent onthe agent's price guide.
Speaker 3 (20:15):
Yeah.
Speaker 1 (20:16):
So to bring specificity to that, you've got
an auction guide of $2.2 million.
You say, hey, we could pay$2.45 for this, count us in.
But everybody in every realestate agent in the suburb knows
the listing's worth 2.8.
And you're bidding in goodfaith to 2.45 million, thinking
you're a chance, and it's noteven on the market and then it
(20:37):
eventually sells for around 2.8.
And it's that stage that youwork out.
You're a stooge, you've beenplayed and you are the auction
bunny for the day.
Speaker 3 (20:45):
Yeah, and to anyone who hasn't listened to our
episode where we actually talkabout my case, it wasn't on the
market until I think from memoryit was 48% above the guide, the
guide given on the morning ofthe auction.
48% above.
That is when it finally went onthe market and it sold for over
60% above the guide, which youknow.
(21:06):
Obviously that's an extremecase but it certainly happens.
I guess, looking a little bitcloser at the data itself, in
terms of where the data suggeststhis is happening, I guess two
questions.
Is it happening at a particularrange in the market, you know,
is it the lower end, the higherend, the middle?
Speaker 1 (21:26):
That's the first question.
It's right across the industry,it's right across the city,
it's right across every pricepoint.
Speaker 3 (21:33):
Okay, that was my follow-up question.
Is there any particular regionsyou know?
Is this an isolated issue toQuakers Hill and the Ray White
kind of agencies out there?
Speaker 1 (21:40):
or are we seeing this all across?
Speaker 3 (21:42):
Sydney, absolutely not Okay.
Speaker 1 (21:44):
So it's they talk about in the article.
Sorry, can I tell you why?
Because they all go to the sametraining.
We're not going to name thattraining, but they all go.
Let's not forget for ourlisteners, consumers out there.
This is the industry thatrushed to the Gold Coast five
(22:05):
years ago to pay $1,500 a ticketto listen to the Wolf of Wall
Street, jordan Belford.
Yeah, yeah, and who was there?
It was sub-35-year-olds withshort pants and no socks, if you
get the idea.
Yeah yeah, sitting in the frontrow taking notes from the Wolf
of Wall Street.
(22:25):
Yeah, that is the real estateindustry.
Speaker 3 (22:29):
Yeah, it's.
Uh, I think it's.
Yeah, it's unfortunate.
The sales in general right,that's.
That's now kind of portrayed asthe way to succeed.
Is that slightly manipulativeslick.
You know maximize opportunitykind of process as opposed to
matching people with solutions,you know.
Yeah, anyway, look again.
(22:50):
Super interesting topic, peter.
We say this every time.
I really hope there is somemajor, major change that comes
out of this.
I I remember, you know, all mytime working with you in real
estate.
I always had that kind oflingering feeling in the back of
my head that I was unanimouslyhated by everyone who knew me
(23:10):
just by virtue of the industrythat I'm in, and I always felt
that was unfair because I'm anhonest, kind of honourable guy
and we are surrounded here.
I told you to stop wearingpaisley ties, Well you know
you've got to put on what youknow make sure look young and
fresh, peter, but I you knowthere was always that niggling
thing right that it really is,you know, consistently rated as
one of the least trustworthyindustries and you know this
(23:31):
data supports that that'sprobably with good reason.
Uh, I really do hope that thereis some massive punitive damage
here and people realize thatyou can't.
You just can't do this.
Speaker 1 (23:41):
So in closing, kieran , in the podcast that we were
listening to between JohnMcGrath, tim McKibben and Tom
Panos, they were interviewingJohn and Tom were interviewing
Tim McKibben and they said theywere asking him questions.
And Tim said let me ask you aquestion, does underquoting get
(24:03):
higher prices?
And they said they're askinghim questions and Tim said let
me ask you a question Doesunderquoting get higher prices?
No, not a bad question.
Yeah, yeah, and John and Tomboth gave their answers, which
were versions of no, but that'sthe wrong question.
The question is why do realestate agents underquote?
Speaker 3 (24:25):
Well, I think, because it gets more people
there to push the price, becauseit works.
Speaker 1 (24:29):
Yeah, yeah.
How do you have an auction withone buyer?
You can't underquote.
How do you have an auction nowthat dummy bidding has been
stamped out and no one wants totake the?
Speaker 2 (24:40):
risk to do that you underquote.
Speaker 1 (24:41):
How do you create a frenzy?
Well, occasionally, as youwould know from your time in
real estate sales, the oddlisting and in the odd market
environment naturally createsfrenzies.
But by and large, it's aboutbringing a buyer and a seller
together.
Yeah, yeah.
So how do you create frenziesweek in, week out?
Well, you make it seem too goodto be true, you underquote,
(25:01):
yeah.
Frenzies week in, week out?
Well, you make it seem too goodto be true, you underquote,
yeah, yeah.
So that's when the consumerunderstands that.
Why do real estate agentsunderquote?
Because the tactic works.
It might be non-compliant, itmight be a dirty, low-rank sales
tactics, but the reality is isthat's why they're doing it.
The consumer becomes a littlebit wiser about how to play the
situation.
Speaker 3 (25:24):
Yeah, a little bit wiser about how to play the
situation.
Yeah, yeah, as a final pointbefore we move on to our final
piece today, peter, I still loveand I must remind our listeners
the digital footprint you talkabout.
If you have ever followed aproperty on domain, you still
get those price updates.
Whether the agent changes themor not, whether they follow
compliant procedure or whatever,there is a digital footprint.
I have some on my phone stillgoing back five, six years,
(25:46):
where every price change isthere and if it wasn't changed
and then sold for a ridiculouslike under quote to over over
achievement price, it's allthere for them to find.
So I suspect this is going touh, you know, this might be the
first 18 months of data, butthere is a lot more to collect.
Speaker 1 (26:00):
Yeah, Now to keep the consumer balanced on this issue
.
If you engage in a property andyou are outbid above the
reserve, you haven't beenunderquoted.
You've been outbid by a buyerwho wants it more or can pay
more yeah.
But if you are the auctionbunny, where you, in good faith,
(26:22):
have followed the agent's priceguide, the agent's clearly got
sufficient interest in theproperty to have a strong sale,
or they're underquoted and youfollow the agent's price guide
right through to the auction andturn up to the auction and you
bid your best price and expireabove the agent's price guide
(26:42):
but below the vendor's reserveprice, you are a victim of
underquoting.
You are an auction bunny.
Speaker 3 (26:48):
Yeah.
Speaker 1 (26:49):
And the journalist from the New Zealand Herald said
how do we stop this?
And I said well, there's acouple of things.
Vendors who are complicit inunderquoting need to be on the
hook.
That's how you stop dummybidding is.
It wasn't just the real estateagent that got a fine if a dummy
bidder turned up to an auction.
The vendor got one too.
So the vendor said I'm notdoing that.
(27:10):
And then suddenly the practiceceased.
So the vendor has to be on thehook in instances where they've
been complicit in underquoting.
The other thing is that where aproperty passes in for 10% more
than the agent's advertisedguide, it should be investigated
.
I'm not saying a penalty shouldbe issued in every instance,
(27:30):
but it should be investigated.
In instances where a propertyis not on the market and it's
obvious that it's not on themarket and you can always ask
for the reserve letter theregulator can ask for the
reserve letter to be sent tothem.
Instances where the it's not onthe market and you can always
ask for the reserve letter theregulator can ask for the
reserve letter to be sent tothem.
Instances where the property isnot on the market inside 10% of
(27:50):
the agent's advertised guideshould also be investigated.
And again, I'm not saying inevery instance there should be a
penalty to the agent or theconsumer, but someone should be
taking a look at it.
Speaker 3 (28:01):
Yeah, oh look, I slightly disagree with you on
the last point.
I think if there is an obviousdiscrepancy between the guide
and the reserve letter uh,outside the range then they,
they should inherently bepunished.
Speaker 1 (28:11):
But vendors, vendors blindside real estate agents all
the time.
I hear you, I hear you, I needto sell it, I want to sell it,
make sure you've got it sold,and then they're overly
aggressive as a protectivemeasure on auction day and and
and blindside them.
So there will be isolations.
The reason I love policing thisissue through the mass data
that they're now doing is you.
(28:33):
You can always have a reason foran isolated incident which is
plausible and truth yeah butwhen you have 80% of your
listing, sell for 20% more thanyou've quoted the buyers for
three years in a row.
Speaker 3 (28:47):
They're not outliers anymore.
Speaker 1 (28:49):
They're not outliers yeah exactly, yeah, great topic.
Speaker 3 (28:54):
As I said, we've got a lot more to uncover in this
space and we'll certainly talkabout this again, I have no
doubts.
As we wrap up today's episode,then, peter, as is customary,
I'd love you to take ourlisteners through the auction
clearance data for the week fromSQM Research and how you felt
this data reflects what you'veseen through the week on the
ground.
Speaker 1 (29:12):
Thanks, kieran.
Look, 52.6% clearance rate forthe week.
Out of 775 auctions, 225 weresold under the hammer.
183 of the successes were soldprior, 35 were sold after, 205
were re-advertised for privatetreaty.
(29:33):
Look, it's on trend for what'sbeen happening.
Big difference between theSaturday clearance rate and the
midweek clearance rate.
I don't know if that meansanything or not, but the
Saturday clearance rate was55.1% where the midweek
clearance rate was 45%.
More properties clearly go toauction on a Saturday than
midweek, so that's why you got afinal reading at 52.6%.
(29:56):
Look very similar to what we'veseen for the last month.
Seems like the higher the priceof the property, the easier it
is to sell.
Agents are probably stillputting too much of the wrong
stock to the auction market.
Generic apartments, strataissues Very hard to sell under
the auction conditions at themoment because the depth of
(30:18):
bidders is not there.
The demand is there for housing, but when you're talking about
apartments with strata issues orgeneric apartments, there's not
the depth of bidding to justifythe auction process in any way,
shape or form yeah, certainly I, I think pretty much line ball
figures really from the weekbefore.
Speaker 3 (30:36):
You know, even the, the number of scheduled is about
the same, clearance rate aboutthe same.
So holding, holding, as youexpected.
And you know we're movingtoward the end of winter so we
expect those numbers will, atleast the volumes will rise.
But interesting to see if theclearance rate holds as the
stock comes to market.
Oh, that's right.
Speaker 1 (30:51):
You've got two interesting dynamics for the
market now, so a very vanillatrend that has been continuing
for the last four to five weeks.
But from this point on you'vegot lower mortgage rates or you
know coming yeah coming bankswill move reasonably quickly.
So you've got lower mortgagerates, um, and you've got high
stock levels, yeah, so, um.
(31:12):
Buyers that are saying I'mwaiting to spring for the stock,
we're saying, yep, you can dothat.
Keep in mind that mortgagerates will be lower by then, so
that'll play out the way itplays out.
And vendors who are sayingthey're cutting interest rates,
so property prices will go up,we're saying, yes, they have cut
interest rates now, but stocklevels are going up and we don't
pretend to know how it alltruly plays out.
(31:32):
That's why we track the marketwrap each week, kieran, because
when there's a clear trend line,as they've been, there's not
much to discuss.
But what happens from thispoint, with two big factors
higher stock and lower mortgagerates, it will be interesting.
Speaker 3 (31:47):
Yeah, it certainly will Well look.
Really great chat today, Peter,especially the topic around
underquoting.
I think we are going to bespending quite a bit of time on
over the next 12 months.
As always, I really appreciateyou coming in and sharing your
knowledge with our listeners.
Thanks, Kieran, All the best,All the best and thanks to
everyone for listening toCurrent Market Insights.
We look forward to speakingwith you next time.
Speaker 2 (32:11):
Thanks for joining us on the Current Market Insights
podcast brought to you by HarrisPartners Real Estate, the
podcast providing real estateinsights you won't find anywhere
else.
All down, all silent, going, going, going, gone.
So congratulations.
Speaker 2 (00:07):
Welcome to the Current Market Insights podcast
brought to you by HarrisPartners Real Estate.
Each episode we chat with realestate author and industry
leader, peter O'Malley, todiscuss the current property
market conditions and provideinsights to assist you on your
property journey.
Speaker 3 (00:30):
Hello and welcome to another edition of Current
Market Insights.
I'm your host, kieran O'Brien,and with me, as always, is Mr
Peter O'Malley.
Peter, hello.
Speaker 1 (00:36):
Kieran, great to see you.
Speaker 3 (00:38):
Great to see you for another week, my friend.
We've got a big episode today,so let's just get straight into
it.
Since we spoke last week, theRBA met yesterday, as we're
recording this, and the boardand the governor made their
statement and made a decision onthe interest rates, which I'm
sure most people have heard bynow.
But, as you always do with thestatements, take our listeners
(00:58):
through what was said and whatyou think the messaging kind of
indicates from here for the nextcycle, when the RBA do meet in
six weeks.
Speaker 1 (01:06):
Yeah, thanks, kieran.
So we got a 0.25% interest ratecut of course no larger, which
some people would have liked tohave seen, and some will argue
that could have been justified,yep, but we did say last week
whatever the RBA did at thismeeting, they had data to back
up their decision and they didfinish their statement, which
(01:28):
we'll pick apart quickly beforemoving on.
But they did finish theirstatement by saying that today's
policy decision was unanimous.
That's interesting, becauselast month, when they were on
hold, it was 6-3 to hold versuscut, but it was unanimous today.
Speaker 3 (01:45):
I wonder just very quickly whether they were
unanimous to cut or whetherthere was unanimity around the
extent of the cut.
You know, was it unanimous?
Yes, we all agree we should cut, but did they actually agree on
the numbers?
Speaker 1 (01:55):
Oh, it says today's policy decision was unanimous.
So I think there was only one.
There was only two options onthe table hold or 0.25.
Yeah, so even though wespeculated, would they go higher
?
Would you know, with a high, alarger cut, not higher.
But would they go with a largercut?
Last week was never consideredlooking at this and there wasn't
anything in their statement tosuggest yeah they were looking
(02:18):
at anything other than a hold ora 0.25 cut.
Yeah, the statement um issometimes very insightful,
kieran, which is why we pull itapart, and then sometimes it's
very bland, and I saw a lot ofmedia commentary on this
statement before I read thestatement and when I look at the
statement and read it, theydidn't say too much other than
(02:38):
we're cutting interest rates by0.25% and reiterated some of the
key data points and thethinking and the key points in
the statement that they came outis that interest rates,
inflation rates, are moderating.
We're happy with that.
We're on a sustainable path.
Inflation has fallensubstantially since the peak in
(03:00):
2022, as higher interest rateshave been working to bring
aggregate demand and potentialsupply closer towards balance.
So that's all prettystraightforward stuff.
One of the journalists did pickthis up and he was right to do
so In every statement.
It feels like maybe not, but itfeels like every statement for
(03:21):
the last six meetings hashighlighted the risks in the
global economy, in financialmarkets, and the RBA's
preparedness to stand behind andsupport the Australian economy
and Australian jobs if they needto.
Speaker 3 (03:38):
Yeah.
Speaker 1 (03:38):
And it's in this one again.
Speaker 3 (03:39):
Yeah.
Speaker 1 (03:40):
And it was David Taylor, the fellow from the ABC,
who wrote along the lines onex-Twitter that it's pretty
obvious.
The RBA look like they arepreparing for a global market
event.
Speaker 3 (03:56):
Yeah, look, I think that's probably a very astute
insider assumption.
I can't help but think thatthey all of the statements you
know have been quite bland.
I feel like they're justkeeping their cards close to
their chest and they're givingthemselves room to make rash
decisions in whatever directionthey need to, in the event
something happens.
I mean they, you know they'vebeen proselytising that the
(04:19):
global economy is in strife fora long time, you know, with all
the things that have beenhappening wars and government
changes and all those kinds ofthings.
But I do wonder whether they'rejust hedging their bets to try
and avoid the level of scrutinyor disdain that can come with
making an unpopular decision.
Speaker 1 (04:37):
I think they're capable of unpopular decisions.
Their statements are normallybland, but you can sort of read
between the lines to juice it upa bit.
But this one, as I say, wasparticularly bland.
They went on to say withunderlying inflation continuing
to decline back towards themidpoint of the 2% to 3% range
and labour market conditionseasing slightly, as expected,
(04:58):
the board judged that a furthereasing of monetary policy was
appropriate.
This takes the decline in thecash rate since the beginning of
the year in 2025 to 75 basispoints.
The board nevertheless remainscautious about the outlook,
particularly given theheightened level of uncertainty
about both aggregate demand andpotential supply.
(05:18):
It noted that monetary policyis well placed to respond
decisively to internationaldevelopments if they were to
have material implications foractivity and inflation in
Australia.
So it's saying it'll actfurther if it has to, but it's
by no means promising more ratecuts in that statement.
What does that mean for theproperty market?
As we touched on last week,vendors think it means higher
(05:42):
prices, wrongly or rightly, andthey very much welcomed the news
.
Buyers are not so impacted byinterest rate cuts, although
there will be an element ofbuyer who says rate cuts will be
good for the property market,so I'd rather buy sooner rather
than later.
What buyers are really lookingfor is a broader base of supply,
(06:02):
because stock levels are verytight still.
Speaker 3 (06:05):
Yeah, yeah, look, I think that's a pretty reasonable
assumption.
The only other comment I'd makethe way they frame that ability
to react gives me theimpression they feel like
they're kind of in the midpointof where they should be.
You know they could go a littlebit lower, they could go a
little bit higher, but they feellike they're, you know, in the
middle of the seesaw and if theyneed to switch one way or the
other they can, which you know,if I'm reading between the lines
(06:28):
tells me that we've kind of wemight be at a point an interest
rate setting or a cash ratesetting where, uh, they feel
it's there's a bit of long-termstability.
Potentially they could, theycould adjust either way, but you
know we're not going to expecta two percent cut from here.
We're kind of at a nice levelfield where things are coming
down the right direction.
Speaker 1 (06:45):
But we could adjust either way if we need to yeah, I
think it was anz are predictingthree more rate cuts yep down
to a low of 2.85 by february,march next year.
Um remains to be seen if, ifthat's the way it unfolds, the
rba would be very, veryconscious not to front run their
thinking and have expectationsof further rate cuts in the
(07:08):
system Because, as we've seen,at the beginning of 2023 or was
there was this sense that theRBA were going to start cutting
rates imminently the marketbehaved and the economy behaved
as though those rate cuts were alock.
Everyone got excited, pushedproperty prices up 5%, 10% and
then the rate cut didn't come in2023, and there was a deflation
(07:30):
there.
So carefully managed messaging.
There's no doubt.
Speaker 3 (07:33):
Certainly Look.
Moving on then, I know wenormally spend more time on the
interest rates and the RBAstatement, but pretty juicy
topic I want to talk about today, peter, the overarching topic
under quoting.
We have spoken about adinfinitum and we will continue
to talk about it forever whileit's in the industry and we have
a podcast.
(07:54):
It is a topic that ourlisteners are no doubt aware of
if they've listened to us before.
But in the last few weeks tomonth we have spoken in detail
about some stories coming outabout a particular agent, josh
Teschelen in Western Sydney andsome of the investigations from
journalists and fair trading andother you know complaints from
(08:16):
consumers around some of hisactivities and we have said
throughout all of those episodesthat he is most certainly not
alone in his conduct, in the waythat he conducts business.
Just this week there's been apretty major investigation come
to light in the.
Speaker 2 (08:32):
Herald.
Speaker 3 (08:33):
Now, I know you are intimately across this piece,
but also you know obviouslyyou're a subject matter expert
on.
You know the dealing itself.
So I'd love for you to talk toour listeners about, firstly,
what the the follow-on is fromthe teslan story in particular,
but then what is the the kind ofbroader conversation that's
come out with this large-scaleinvestigation.
Speaker 1 (08:54):
Yeah, thanks, kieran.
So look, uh, we all woke onsaturday morning to uh, under
quoting and the agent inquestion on the front page of
the herald.
The other thing that we havesaid over the last few weeks is
Joss Teslin did not deserve, nordoes anybody deserve, to be
trialled by media.
Yeah, which is what washappening.
Yeah, of course, andintelligently or not?
(09:17):
Joss Teslin's only response toall of this is I've been under
investigation for three years.
If I've done a crime, tell mewhat it is and I can defend
myself.
But, at the moment, it's allthis smoke around me.
My word's not his, the smokearound him.
But there's all this innuendo,but there's no charge put to me.
(09:37):
So how can I respond to that?
So on Saturday morning, well,we must go back.
It would seem that him whetherit be my mutual decision or one
party cut the cord, but Teslonand the Ray White Network went
separate ways over this issueand the coverage.
Read into that what you will.
And then, shortly thereafter,teslon rebadged his business and
(10:06):
then, within a week of there-badged business commencing
operations, he was hit with afour-month suspension of his
license, with furtherinvestigations to take place.
Underquoting was not the onlycharge put to him.
Dummy bidding, underquoting,high, high-pressure sales
tactics and this one, if foundguilty of, I think, will have
(10:29):
major ramifications andproducing false documents to
fair trading are among theallegations being levelled
against one of Australia'shighest earning real estate
agents.
Yeah, so anyway, he's now gotcharges to defend um and if he's
innocent, that'll come throughum.
(10:49):
But yeah, this is he's.
Speaker 3 (10:53):
Unfortunately for him , wrongly or rightly, he's
become the poster, the posterboy for all that is wrong with
sydney property, when it is anindustry-wide problem under
quoting yeah, yeah, look we uh,as you say I I should have said
uh, alleged, because again, youknow he does now have a case to
answer for with fair trading, uh, and I think I have to agree
(11:13):
with you that if there is uh,you know, wrongdoing is one
thing, uh, but then you knowperjury perjury not that it's
perjury in this case,necessarily, but uh, you know,
delivering false documents,lying to a court, lying to an
investigation, whatever thosethings do bode very poorly and
certainly don't give as areporter, don't give any
confidence to anyone readingthat that in fact he has done
(11:34):
the right thing and maybe he'sjust a victim here, but maybe
the first cap to fall in whatcould be a much larger issue.
We know it's like a system-wideissue, but the Herald goes on
to talk about a much largerproblem.
Speaker 1 (11:50):
So if you can talk us through what the article kind
of goes into, what theinvestigation itself kind of
comprises of or what it didcomprise of, and what really
this does mean, yeah, so,whether it be the Herald or the
Department of Fair Trading orboth, but it's very, very
obvious, based on the content inthis article, that agents
(12:14):
probably unknowingly for many ofthem have been getting
monitored for the last few years.
Yep, instead of the regulatorzeroing in on isolated
incidences where the agent saysyou know, I support your
attempts to clean up theindustry with underquoting, but
the market just took hold onthis one and it beat all
(12:36):
expectations and my file's inorder.
Have a look at it here.
What they're doing is they'retracking franchises, individual
agents, individual firms andgetting data sets on the price
performance of those respectiveagents, firms and franchises
over a greater period of time tosee who the systemic
(12:59):
underquoters are.
And they've mentioned firms inhere and I don't want to start a
war with the real estateindustry or individuals.
It's all there in the articleonline for anyone who wants to
read it.
But there are agents who havesystematically underquoted the
likely selling price of theirlistings and they systematically
(13:20):
sell for 20% to 25% more thanwhat they've quoted the consumer
.
Now, if it's a one-off, I'vehad that happen in isolated
instances and that's great forus and it's great for the vendor
and we've got to say to theunderbidders we never saw that
coming.
So I'm not saying we've neverhad that happen, but what the
what the herald article did withall of the data is?
(13:42):
You can only blame the marketonce or twice before it becomes
a tactic.
And agents are now even in ourmarketplace in the inner west
are suddenly really responsiveand really compliant suddenly
with the way they're managingprice during their campaign.
But if you look, if you readbetween the lines in this
article in the Herald, it's toolate.
Speaker 3 (14:05):
It makes me wonder we spoke about to be honest, I
can't exactly remember when theepisode was, but we talked about
some of the changes and howfair trading was starting to
issue what I said on the podcastat the time ridiculously low
and pointless fines to agenciesfor what appeared to be cases of
underquoting.
I now wonder, and I'd love toget your insight on this do you
(14:25):
think that that was a verydeliberate kind of drip feed of
notice to agencies to in someways draw them off the fact that
they were heavily, heavilyinvestigating with a much more
punitive action in mind?
And you did say at the time, tobe fair, that this will likely
result in something more extreme, but I wonder whether that was
(14:46):
a bit of a red herring oh look,you know we might come and check
on your documentation to makesure you're compliant when in
fact, they were building anenormous case which, if this
data is correct, is exactlywhat's happened.
They have built a massive dataset that shows some pretty
consistent, broad, likemisleading conduct, which is,
(15:06):
you know, unfortunately confirmsa lot of what consumers have
said to us over the years, thathow do you trust any of these
agents?
The pricing's terrible, itdoesn't make sense.
You know it's the wholeindustry is cooked.
Speaker 1 (15:17):
Well, it is, and we've spoken on other podcasts
where if you're an honest realestate agent with a $2 million
listing and two of yourcompetitors down the road have
got a competing $2 millionlisting but they're quoting 1.6,
you can quote an honest priceof $2 million, but the reality
is all the buyers who might beinterested in your listing are
(15:37):
down the road in the open housesat 1.6.
Yeah, of course, and that is howit's a rush to the bottom with
underquoting.
Where the agent that goes thelowest, he's setting the tone
for all of their competitorswithin that respective
marketplace.
So there's many agents, kieran,who will find themselves doing
(15:58):
a compliant version or anon-compliant version of
underquoting or pricing belowexpectations, because when they
quoted market price, no oneturned up to the inspection of
underquoting or pricing belowexpectations.
Because they have to, becausewhen they quoted market price,
no one turned up to theinspection.
Speaker 3 (16:12):
Yeah, look, I agree with you entirely.
But I also hate that viewpointright that they have to do it to
be competitive, because I justthink again, that's a systemic
issue.
But if the regulator didn'tpolice the issue.
Speaker 1 (16:24):
This is what the agents had to do to survive and
this is what the vendors wereprepared to do to sell.
Yeah, so it's.
It's actually the side effectof no regulation or no over
proper oversight.
Speaker 3 (16:38):
This data match that we're talking about here is
going to clean that up very,very quickly so from a before we
actually get into a bit more ofthe nitty-gritty around the
data itself, because I'd love tojust get some rough figures.
But in reality, let's say thisinvestigation is reported by the
Herald but is going on very,very thoroughly through Fair
(17:00):
Trading and they decide to comeout with a bunch of punitive
actions here.
What do you think the actualeffect is?
So let's say, agency X that'slisted and has 45% or 50% of
their properties going 30% aboveguide very clear cases of
underquoting.
Do you think it's a scenariowhere Fair Trading will use
financial?
Speaker 1 (17:17):
I'll just answer the question because two people
within the industry that havemore insight well, three people
actually, who have got much moreinsight than me have all said
the same thing over differentperiods of time.
So there is a real estate agentin surrey hills who, um, whose
target market or his specialtyis real estate agents right, and
(17:39):
he has said publicly at aseminar two years ago the
department of fair tradesinvestigation into real estate
agents on underquoting is realand agents are going to lose
their licences.
If you're doing it, stop, andif you're not doing it, don't do
it.
Speaker 3 (17:54):
Yeah.
Speaker 1 (17:55):
This week on a podcast, John McGrath and Tim
McKibben of the New South Wales.
President of the REI both saidreal estate agents are going to
lose their licenses over thisissue and on the front page of
the Saturday Herald star, agentTeflon Josh has license
suspended pending furtherinvestigations so that is where
(18:16):
it's going.
Speaker 3 (18:17):
Do you think that will be the end of the line and
obviously you don't know theanswer to this but obviously
license cancellations,suspensions, whatever that is
the punitive action for theagent or agencies involved.
But do you think there'll beany financial implications here
other than loss of business as aresult of losing your licence?
Speaker 1 (18:34):
I think they've been handing out warnings and
administrative fines.
Speaker 3 (18:42):
They're the ones we've talked about before.
Speaker 1 (18:44):
Yeah, which for a long time.
But the blatant cases, thefirms we're talking about that
have miraculously and I say thatsarcastically miraculously been
achieving 20%, 22.5% above thelisted guide for all of their
listings, or essentially all oftheir listings, for the last
three years.
They've got major problems andthe thing is they don't have
(19:06):
problems that go away by doingthe right thing next Saturday.
Speaker 3 (19:10):
Yeah.
Speaker 1 (19:11):
The digital footprint is recorded and there for all
time it's.
You know, the long hand of thelaw moves slowly, justice moves
slowly, but it's coming for allthose home buyers that were
blatantly misled into bidding atauction and you know, we've
spoken about it before.
You were one of those, yeah,yeah.
Speaker 3 (19:30):
Through Ray White, happy to name drop.
They were dreadful and refusedto take accountability and, you
know, tried to put the blame onus for being unrealistic in the.
You know all of the tacticsthat get used, right.
Speaker 1 (19:40):
Yeah.
Speaker 3 (19:40):
Which is anyway.
It's a sore point for me.
Speaker 1 (19:43):
Yeah, well, I didn't want to bring that up for that
reason, but a journalist fromNew Zealand Herald rang me today
and saying hey, we've got thisgoing on in New Zealand.
Could you share some of yourexperiences with me?
And we got onto talking aboutthe auction bunny.
It's like what's the auctionbunny?
And the auction bunny is thebidders that have maxed out in
price before the properties evenhit the vendor's reserve.
(20:07):
Yeah, and the reason they'vemaxed out on price and they're
at the auction and they thinkthey're a chance is because
they've listened to the agent onthe agent's price guide.
Speaker 3 (20:15):
Yeah.
Speaker 1 (20:16):
So to bring specificity to that, you've got
an auction guide of $2.2 million.
You say, hey, we could pay$2.45 for this, count us in.
But everybody in every realestate agent in the suburb knows
the listing's worth 2.8.
And you're bidding in goodfaith to 2.45 million, thinking
you're a chance, and it's noteven on the market and then it
(20:37):
eventually sells for around 2.8.
And it's that stage that youwork out.
You're a stooge, you've beenplayed and you are the auction
bunny for the day.
Speaker 3 (20:45):
Yeah, and to anyone who hasn't listened to our
episode where we actually talkabout my case, it wasn't on the
market until I think from memoryit was 48% above the guide, the
guide given on the morning ofthe auction.
48% above.
That is when it finally went onthe market and it sold for over
60% above the guide, which youknow.
(21:06):
Obviously that's an extremecase but it certainly happens.
I guess, looking a little bitcloser at the data itself, in
terms of where the data suggeststhis is happening, I guess two
questions.
Is it happening at a particularrange in the market, you know,
is it the lower end, the higherend, the middle?
Speaker 1 (21:26):
That's the first question.
It's right across the industry,it's right across the city,
it's right across every pricepoint.
Speaker 3 (21:33):
Okay, that was my follow-up question.
Is there any particular regionsyou know?
Is this an isolated issue toQuakers Hill and the Ray White
kind of agencies out there?
Speaker 1 (21:40):
or are we seeing this all across?
Speaker 3 (21:42):
Sydney, absolutely not Okay.
Speaker 1 (21:44):
So it's they talk about in the article.
Sorry, can I tell you why?
Because they all go to the sametraining.
We're not going to name thattraining, but they all go.
Let's not forget for ourlisteners, consumers out there.
This is the industry thatrushed to the Gold Coast five
(22:05):
years ago to pay $1,500 a ticketto listen to the Wolf of Wall
Street, jordan Belford.
Yeah, yeah, and who was there?
It was sub-35-year-olds withshort pants and no socks, if you
get the idea.
Yeah yeah, sitting in the frontrow taking notes from the Wolf
of Wall Street.
(22:25):
Yeah, that is the real estateindustry.
Speaker 3 (22:29):
Yeah, it's.
Uh, I think it's.
Yeah, it's unfortunate.
The sales in general right,that's.
That's now kind of portrayed asthe way to succeed.
Is that slightly manipulativeslick.
You know maximize opportunitykind of process as opposed to
matching people with solutions,you know.
Yeah, anyway, look again.
(22:50):
Super interesting topic, peter.
We say this every time.
I really hope there is somemajor, major change that comes
out of this.
I I remember, you know, all mytime working with you in real
estate.
I always had that kind oflingering feeling in the back of
my head that I was unanimouslyhated by everyone who knew me
(23:10):
just by virtue of the industrythat I'm in, and I always felt
that was unfair because I'm anhonest, kind of honourable guy
and we are surrounded here.
I told you to stop wearingpaisley ties, Well you know
you've got to put on what youknow make sure look young and
fresh, peter, but I you knowthere was always that niggling
thing right that it really is,you know, consistently rated as
one of the least trustworthyindustries and you know this
(23:31):
data supports that that'sprobably with good reason.
Uh, I really do hope that thereis some massive punitive damage
here and people realize thatyou can't.
You just can't do this.
Speaker 1 (23:41):
So in closing, kieran , in the podcast that we were
listening to between JohnMcGrath, tim McKibben and Tom
Panos, they were interviewingJohn and Tom were interviewing
Tim McKibben and they said theywere asking him questions.
And Tim said let me ask you aquestion, does underquoting get
(24:03):
higher prices?
And they said they're askinghim questions and Tim said let
me ask you a question Doesunderquoting get higher prices?
No, not a bad question.
Yeah, yeah, and John and Tomboth gave their answers, which
were versions of no, but that'sthe wrong question.
The question is why do realestate agents underquote?
Speaker 3 (24:25):
Well, I think, because it gets more people
there to push the price, becauseit works.
Speaker 1 (24:29):
Yeah, yeah.
How do you have an auction withone buyer?
You can't underquote.
How do you have an auction nowthat dummy bidding has been
stamped out and no one wants totake the?
Speaker 2 (24:40):
risk to do that you underquote.
Speaker 1 (24:41):
How do you create a frenzy?
Well, occasionally, as youwould know from your time in
real estate sales, the oddlisting and in the odd market
environment naturally createsfrenzies.
But by and large, it's aboutbringing a buyer and a seller
together.
Yeah, yeah.
So how do you create frenziesweek in, week out?
Well, you make it seem too goodto be true, you underquote,
(25:01):
yeah.
Frenzies week in, week out?
Well, you make it seem too goodto be true, you underquote,
yeah, yeah.
So that's when the consumerunderstands that.
Why do real estate agentsunderquote?
Because the tactic works.
It might be non-compliant, itmight be a dirty, low-rank sales
tactics, but the reality is isthat's why they're doing it.
The consumer becomes a littlebit wiser about how to play the
situation.
Speaker 3 (25:24):
Yeah, a little bit wiser about how to play the
situation.
Yeah, yeah, as a final pointbefore we move on to our final
piece today, peter, I still loveand I must remind our listeners
the digital footprint you talkabout.
If you have ever followed aproperty on domain, you still
get those price updates.
Whether the agent changes themor not, whether they follow
compliant procedure or whatever,there is a digital footprint.
I have some on my phone stillgoing back five, six years,
(25:46):
where every price change isthere and if it wasn't changed
and then sold for a ridiculouslike under quote to over over
achievement price, it's allthere for them to find.
So I suspect this is going touh, you know, this might be the
first 18 months of data, butthere is a lot more to collect.
Speaker 1 (26:00):
Yeah, Now to keep the consumer balanced on this issue
.
If you engage in a property andyou are outbid above the
reserve, you haven't beenunderquoted.
You've been outbid by a buyerwho wants it more or can pay
more yeah.
But if you are the auctionbunny, where you, in good faith,
(26:22):
have followed the agent's priceguide, the agent's clearly got
sufficient interest in theproperty to have a strong sale,
or they're underquoted and youfollow the agent's price guide
right through to the auction andturn up to the auction and you
bid your best price and expireabove the agent's price guide
(26:42):
but below the vendor's reserveprice, you are a victim of
underquoting.
You are an auction bunny.
Speaker 3 (26:48):
Yeah.
Speaker 1 (26:49):
And the journalist from the New Zealand Herald said
how do we stop this?
And I said well, there's acouple of things.
Vendors who are complicit inunderquoting need to be on the
hook.
That's how you stop dummybidding is.
It wasn't just the real estateagent that got a fine if a dummy
bidder turned up to an auction.
The vendor got one too.
So the vendor said I'm notdoing that.
(27:10):
And then suddenly the practiceceased.
So the vendor has to be on thehook in instances where they've
been complicit in underquoting.
The other thing is that where aproperty passes in for 10% more
than the agent's advertisedguide, it should be investigated
.
I'm not saying a penalty shouldbe issued in every instance,
(27:30):
but it should be investigated.
In instances where a propertyis not on the market and it's
obvious that it's not on themarket and you can always ask
for the reserve letter theregulator can ask for the
reserve letter to be sent tothem.
Instances where the it's not onthe market and you can always
ask for the reserve letter theregulator can ask for the
reserve letter to be sent tothem.
Instances where the property isnot on the market inside 10% of
(27:50):
the agent's advertised guideshould also be investigated.
And again, I'm not saying inevery instance there should be a
penalty to the agent or theconsumer, but someone should be
taking a look at it.
Speaker 3 (28:01):
Yeah, oh look, I slightly disagree with you on
the last point.
I think if there is an obviousdiscrepancy between the guide
and the reserve letter uh,outside the range then they,
they should inherently bepunished.
Speaker 1 (28:11):
But vendors, vendors blindside real estate agents all
the time.
I hear you, I hear you, I needto sell it, I want to sell it,
make sure you've got it sold,and then they're overly
aggressive as a protectivemeasure on auction day and and
and blindside them.
So there will be isolations.
The reason I love policing thisissue through the mass data
that they're now doing is you.
(28:33):
You can always have a reason foran isolated incident which is
plausible and truth yeah butwhen you have 80% of your
listing, sell for 20% more thanyou've quoted the buyers for
three years in a row.
Speaker 3 (28:47):
They're not outliers anymore.
Speaker 1 (28:49):
They're not outliers yeah exactly, yeah, great topic.
Speaker 3 (28:54):
As I said, we've got a lot more to uncover in this
space and we'll certainly talkabout this again, I have no
doubts.
As we wrap up today's episode,then, peter, as is customary,
I'd love you to take ourlisteners through the auction
clearance data for the week fromSQM Research and how you felt
this data reflects what you'veseen through the week on the
ground.
Speaker 1 (29:12):
Thanks, kieran.
Look, 52.6% clearance rate forthe week.
Out of 775 auctions, 225 weresold under the hammer.
183 of the successes were soldprior, 35 were sold after, 205
were re-advertised for privatetreaty.
(29:33):
Look, it's on trend for what'sbeen happening.
Big difference between theSaturday clearance rate and the
midweek clearance rate.
I don't know if that meansanything or not, but the
Saturday clearance rate was55.1% where the midweek
clearance rate was 45%.
More properties clearly go toauction on a Saturday than
midweek, so that's why you got afinal reading at 52.6%.
(29:56):
Look very similar to what we'veseen for the last month.
Seems like the higher the priceof the property, the easier it
is to sell.
Agents are probably stillputting too much of the wrong
stock to the auction market.
Generic apartments, strataissues Very hard to sell under
the auction conditions at themoment because the depth of
(30:18):
bidders is not there.
The demand is there for housing, but when you're talking about
apartments with strata issues orgeneric apartments, there's not
the depth of bidding to justifythe auction process in any way,
shape or form yeah, certainly I, I think pretty much line ball
figures really from the weekbefore.
Speaker 3 (30:36):
You know, even the, the number of scheduled is about
the same, clearance rate aboutthe same.
So holding, holding, as youexpected.
And you know we're movingtoward the end of winter so we
expect those numbers will, atleast the volumes will rise.
But interesting to see if theclearance rate holds as the
stock comes to market.
Oh, that's right.
Speaker 1 (30:51):
You've got two interesting dynamics for the
market now, so a very vanillatrend that has been continuing
for the last four to five weeks.
But from this point on you'vegot lower mortgage rates or you
know coming yeah coming bankswill move reasonably quickly.
So you've got lower mortgagerates, um, and you've got high
stock levels, yeah, so, um.
(31:12):
Buyers that are saying I'mwaiting to spring for the stock,
we're saying, yep, you can dothat.
Keep in mind that mortgagerates will be lower by then, so
that'll play out the way itplays out.
And vendors who are sayingthey're cutting interest rates,
so property prices will go up,we're saying, yes, they have cut
interest rates now, but stocklevels are going up and we don't
pretend to know how it alltruly plays out.
(31:32):
That's why we track the marketwrap each week, kieran, because
when there's a clear trend line,as they've been, there's not
much to discuss.
But what happens from thispoint, with two big factors
higher stock and lower mortgagerates, it will be interesting.
Speaker 3 (31:47):
Yeah, it certainly will Well look.
Really great chat today, Peter,especially the topic around
underquoting.
I think we are going to bespending quite a bit of time on
over the next 12 months.
As always, I really appreciateyou coming in and sharing your
knowledge with our listeners.
Thanks, Kieran, All the best,All the best and thanks to
everyone for listening toCurrent Market Insights.
We look forward to speakingwith you next time.
Speaker 2 (32:11):
Thanks for joining us on the Current Market Insights
podcast brought to you by HarrisPartners Real Estate, the
podcast providing real estateinsights you won't find anywhere
else.
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