A vendor instructs their agent to set a reserve price of $1.2 million but wants the property advertised as 'Auction - Price Guide $950,000+'. The agent has recent comparable sales between $1.15-1.25 million. What should the agent do?
Correct Answer
C) Explain that this is underquoting and adjust the guide to reflect the evidence.
The agent has a legal and professional obligation to refuse to engage in underquoting practices. They must educate the vendor about the legal requirements and adjust the advertising to reflect realistic price expectations based on the reserve and comparable sales.
Why This Is the Correct Answer
A $950,000+ guide against a $1.2 million reserve and comparables of $1.15 to $1.25 million is underquoting. The agent must explain this to the vendor and advertise a guide that reflects the evidence and the vendor's expectations.
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A vendor's reserve is $800,000 and the agent's advertised guide is '$800,000 - $850,000'. Three weeks in, the agent has received several genuine written offers between $880,000 and $900,000. What should the agent do?
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In Victoria, a vendor plans to pass the property in at auction if the reserve is not met and then negotiate straight away with the bidders. What is the key legal consequence for a buyer who signs a contract that afternoon?