Statement of Information – what is it, and how reliable is it?

When you’re scrolling the pages of realestate.com.au or domain.com.au you might be forgiven for missing the small button which says ‘view agent price guide’ or ‘view statement of information’.

 

What’s contained within these buttons is a document that came into effect in May 2017 to try and combat the rampant underquoting which was happening in Melbourne.

 

What you will find on the Statement of Information (SOI):

  • The property address

  • The indicative price - this can be a single price or a price range of not more than 10%

  • Median house price for the suburb that the house is for sale

  • 3 comparable properties that have been sold within 2 kilometres and within six months. If there are no comparable properties you will see the letter B in the fields where you would normally see the comparable properties.

The indicative price or selling range on these documents is a very contentious topic and can sometimes be a double-edged sword.

 


Some limitations of Statement of Information (SOI)

Whilst it should reflect sold prices of comparable properties in the area, more often than not properties cannot be compared apples for apples, particularly for unique properties there simply may not be a comparable property that has sold within the last 6 months which can make it hard to value.

 

The reality is that ‘conservative’ quote ranges attract more buyers, a lot of agents still subscribe to the old adage ‘Quote it low, watch it GO’ which in turn attracts more competition and usually equates to a higher sale price. In this regard, the sales agent who is employed by the vendor to achieve the best price possible, has in fact done their job. In Melbourne people automatically add 10-20% on the top end of the quote. Sometimes if the property is quoted in line with the actual value of the property, it often seems overpriced… fewer buyers come through the campaign which equates to less competition on the day and often a mediocre result! Go figure.

 

From a buyers’ perspective, it can be very frustrating. When the area expert aka the selling agent who knows property values in the area like the back of their hand says $900k-$990k, you expect they know what they are talking about. But buyers need to do their own due diligence. If it looks too good to be true, it usually is. Buyers need to look at the comparable sales the agent has provided and see if they are in fact true comparable sales. If one of the comparable sales is on a main road and has sold for the same price, clearly the one on the quiet residential street will sell for more. 



So has it done what it was meant to do to stop underquoting?

Well, firstly underquoting is where the agent quotes the property well below what the owner wants, or what the agent has told the owner the home is worth.

Obviously underquoting still occurs.

In 2020, we saw a house sell in Coburg quoted in the high $600ks when there hasn’t been a house sell in Coburg in the $600ks for over 2 years. It ultimately sold for $840k which was always what it was worth. But is that underquoting or was it that the agent was unsure of market response during such a tumultuous year?

This narrative can be carried across into 2021. Are agents underquoting or just unsure of the market?

 

Agents can still definitely get around having a ‘conservative’ quote by:

1.     Telling a vendor not to provide a firm ‘reserve price’ before auction

2.     Refusing to consider any offers prior to auction

 

The second scenario goes like this…

Property is quoted $800-$880k, but is clearly worth $950k+.

Buyer: ‘will you take offers before auction?’

Agent: potentially

Buyer: gives them an offer in writing at $950k

Agent: actually the vendor wants to continue through to auction, sorry!

Buyer: well, then don’t you have to adjust your quote?

Agent: no we don’t, because the vendors aren’t rejecting your offer on price, they just won’t look at offers before auction now.

 

So then other buyers turn up to the auction thinking they might secure it for under $900k, whilst the vendor and agent now know there is a buyer at the auction that will pay a minimum of $950k.

 

So buyers, the key takeaway: Don’t take the agent price guide as gospel. Some quotes are actually very realistic and you can secure the property in the range. Others are frustratingly low and beware…this attracts a lot of emotionally fuelled buyers thinking they are going to get a bargain. Do your research. Make sure you know property values in the suburbs you are looking in.

  

As always, we’re here to help.

So if you don’t want to do it yourself. Call in the experts. Yes – Us!

 

Regards,


Tabitha

 
 
Tabitha Robbbuying, property market, selling