By now you will have heard of the Victorian underquoting case of Hocking Stuart Richmond regarding the anticipated price of eleven houses for sale being dramatically understated.  No doubt the headline fine of $330,000 is well known but what about the rest of it?  The agency must also:

- Pay legal costs of upwards of $100,000;

- Publish a notice in the paper advising the community of the finding;

- Display a notice of the finding in their office for six months; and

- Employ a compliance officer to oversee necessary training.

Reputation is everything in real estate.  Imagine if your office had to commit to the above? Sure, many can pay the fine and all the rest of it but at what cost to your reputation?

When I see extraordinary prices made above the 'price representations' during marketing, I often wonder whether the agent simply didn't know the market place or had misrepresented the price being sought by the vendor. I know agents aren't valuers but let's face it, the first call a valuer makes is to agents to find out what is going on in the market place (so let's not hide behind the adage that agents aren't valuers to protect themselves from bad price marketing).

Sure, exceptional prices above the marketed price do happen because after all, who can predict when two different parties negotiate with their heart instead of their head for a property and want it that desperately. I think we can all agree that the two-party-plus battle is an exception rather than the rule.

As for the 'market place is increasing' argument as to bad price marketing - well, then cater for that in the marketing of the price.

Over the years, I have had many discussions (and even arguments) as to the best KPI for an agent. Is it the agent that sells the most or the quickest? Is it the agent that has the greatest market share in an area that makes him or her the best? I don't think it is any one of these. I believe it's the agent that 'walks the talk'. 

What's the best measure to determine if an agent 'walks the talk'? I believe it's a measure that deals with underquoting to sell as well as overquoting to get the listing in the first place. It's as simple as this:

Agent's Appraisal Price divided by the Final Selling Price.

If there's a better measure, let me know.  The closer the measure is - say over the five most recent sales - to the number '1' then the better for a knowledgeable agent. Even if you can't manage an unrealistic vendor price (and hence limited to what you can market a property for being that higher price), then this measure still only takes into account the appraisal price. To me, this is the first and only question any vendor needs to ask of an agent - what were your last five appraisals compared to the sale prices? 

This measure will become a key facet in REISA's Awards for Excellence program in 2017.  And with the individual agent's permission, REISA will enable the publishing of the 'walk the talk' measure on the website.