Million Dollar Agent
Million Dollar Agent
Underquoting, Overpricing & Vendor Conditioning
Underquoting is under increasing scrutiny in Australia, with regulators cracking down on misleading pricing tactics. In this episode, Tom Panos, John McGrath, and Troy Malcolm dive into what underquoting really is, why it happens, and how ethical agents can avoid it.
They explore three common pricing pitfalls: lack of product knowledge, deliberate deception, and good agents being pressured by dodgy competitors. More importantly, they offer real-world strategies—like early buyer feedback, honest price conversations, and aligning vendor expectations transparently across a campaign.
Troy discusses how buyers now use AI to do their own market research, making deception harder than ever. John McGrath reinforces the need for radical transparency, stating, "We don’t condition, we don’t make up buyers, we don’t make up comments."
With Tom reporting a strong market and a recent 100% clearance rate, this timely episode provides essential insights for agents who want to stay ethical—and competitive.
Tom Panos, john McGrath, troy, malcolm, million Dollar Agent the podcast. By the way, gentlemen, I've got to tell you I was listening to some other podcasts the other day and I went on there and had a look at a number of episodes, the podcast and then I just thought let's just go binge on these different podcasts, see how many they are. I actually we've done listen, we've done pretty good to be going for Troy. It is over a decade, isn't it? Yeah, 2013,. We kicked off. If you actually have a look at it, there is like there's, I've got to say, podcasting has exploded to the point that even people that aren't in education I mean everyone's got a podcast, that even people that aren't in education, I mean everyone's got a podcast. We've gone the distance. But I think, troy, we're the only ones that aren't making money out of podcasting. That's true.
John McGrath:Troy. I've seen a clipping to Tom. The other day, while he was overseas, there was an article about an Australian podcast that just sold for $8.5 million. I said to Tom what are we doing wrong? No, we're not doing anything wrong. Actually, We've got a loyal band of followers who are listening right now and we appreciate you all and we love doing it and we enjoy In fact, today is going to be a great one, because this is an important topic right around Australia but we enjoy what we do, so, even though we do it for love, not money, that's okay too.
Troy Malcolm:I was going to say we've got the first part right, john, we started a podcast, we just haven't monetized it. What do they say If you?
John McGrath:follow your passion, the money will follow.
John McGrath:Well, let's see about that 10 years later, tom, today, I know you want to talk about, and so do I. Let's call it underquoting. It's a scourge of the industry. Certainly, the various NCATs and VCATs and so forth, and OFTs the regulatory bodies are right now, as they should be, putting it under the microscope. What are we referring to? We're referring to agents who systematically not occasionally, but systematically push a property out into the market at an artificial price that it can't be bought at, to attract more interest. And there are going to be a lot of dire consequences, because all the consumer bodies around the country are getting complaints on a regular basis and they're sick and tired of the real estate industry going out there with outdated practices that lack transparency, that waste people's time and money and so am I, by the way.
John McGrath:I've been banging on this all three of us have for the best part of that decade, I think.
John McGrath:I'm sure, if you look at the first few episodes, we probably spoke about the bad practices of the industry. So I think today, tommy, we're going to talk about what the hell is underquoting. Why does it happen? Why does it not only happen occasionally? Why does it seem to be a constant thorn in the agents? Because if you don't get this right, if you don't deal with this, there are licenses and businesses that will go to the wall, because I think enough's enough and I think the governing bodies are sort of coming to that same conclusion. So we don't want anyone that's listening here to suffer from that negative consequence, or anyone in the industry, even if they're not listening. I mean, I love the industry and pretty much all the real estate agents that I know I really love, and even the people I like and respect. Tom, some of them have got this bad practice because they're just not sure how to change the habit or how to do it properly, how to deal with it. What do you think?
Tom Panos:So there's three, john and Troy, three things in real estate. This is my 39th year, three years in real estate that have bugged me Overpricing, where they deceive an owner on what price they're going to get this. Conditioning, where they go in manipulation, no market buyer intel, no intelligence, and they use a sledgehammer to crunch an owner. And then the third one is the underquoting. So if those three things weren't happening, I would say we work in the perfect industry. We meet amazing people, we add value, we change lives and we can end up building an effortless, lucrative, fun life.
Tom Panos:But the under quoting out of the three seems to be the big spotlight, and we are talking, of course, specifically about markets that are auction focused marketplaces. That's where it's relevant. So let's kick it off, troy, john, firstly, I think it's important to define, because there are times where people walk away feeling like that agent has underquoted, but they haven't underquoted what it was was. It was a result that went beyond that was expecting. So I think what we should look at is what is underquoting and what is not underquoting in a result. So let's touch on that.
John McGrath:So, tommy, I think look, as I said up front, this is what we're talking about is the systematic, premeditated approach to agents saying you know, I'm going to tell them it's worth 1.2. But then, when the buyers arrive, I'm going to tell them they might buy it for a million, and that someone you know thinks that's a good idea, and someone that does this well, actually, if you do it once it's bad. But this is as opposed to someone. Why do I think? Troy, underquoting and wherever underquoting is happening, there's probably overquoting. The same agents are telling the vendors, often an inflated price, yes, and then they're going to the market at a lesser price, and often not just a lesser price than the inflated one, a lesser price than the real market value. That's why you end up with this. You know, 20% gap. I think there's three Troy, there's three avenues.
John McGrath:Some agents, their product knowledge is not as good as it needs to be, should be, and they get it wrong. Well, you might say. Well, you can't really come down too hard and someone gets it wrong. Well, yes, I can, because if a brain surgeon screwed up because they hadn't read the manual or the books or been to the course that they needed to get to. That's pretty serious. Real estate agents have an obligation and a responsibility to be up to speed. You know as much as practicable on their product knowledge. But that is I think that's the first case is sometimes people get it wrong, and I guess if occasionally you get it wrong, not the end of the world. The next one I think that we're really going to look at is what I mentioned before a systematic, premeditated underquoting.
Tom Panos:The intent was there, wasn't it? John A hundred percent.
John McGrath:And these are the people that know what it's worth tell the vendor more, tell the buyers less, highly illegal process in pretty much every well, in every part of Australia, as it should be, and New Zealand and you know. Certainly I'm not sure elsewhere in the world, but I know a lot of Kiwis watch this. So I think that's just people that have been taught to do it the wrong way, that haven't figured out this is a bad practice, or people that think it's a good practice to win business and then you know sort of create a competitive auction. And I think the third one is probably good agents, good people, but they know that their major competitors are going in high and they kind of haven't figured out how do you have the conversation without losing a listing. So they're not malicious intending, but they just haven't honed their skills. So I think the first one you can dispense with is just get really good on product knowledge. You've got to know what's sold, what's for sale, what offers are coming in on properties, what's sold off market. That's just really critical, troy.
John McGrath:Here's where I think the interesting part happens is what do you do when you know that competitors in your marketplace are going to? And let's just for today, let's call a property market comparables around a million and we know competitors are saying one one and we know that a lot of those same agents, if they list the property, they're quoting 900 plus this kind of craziness. And, as you know, tommy, some of them are even coming up with look, I'm going to put this on the agreement because I have to by law and I can't quite All that sort of rubbish. My God, just learn to tell the truth. So I think, troy, there's some dialogue here and I know you and I and Tom teach this a lot. I think it's important A is to be able to curate the right recent comparables and I recommend three to five. Any more than five becomes confusing and suggests that I mean CoreLogic could give me 30.
John McGrath:I actually want an expert that can refine down a list of recent sales that look a bit like mine, that can actually match and give me comparative reason as to why it might be seen by the buyers. So I take the pressure off, as you know, up front, troy. I say Troy, you know, here's the good news we don't need to finalise price today. In fact, I'll go a step further, troy. I don't think we should be looking to finalise price today, because there's one thing neither you nor I know as we sit here today is what's it really worth. What we can look at is what other similar properties that are on similar locations and have similar improvements and similar land size, what these sort of properties have been fetching in the market to date, and also what other properties similar to yours perhaps might be being offered for. So I find, up front, if you take the pressure off this decision to have to determine and finalise a price today, it actually helps your process, troy.
Troy Malcolm:Yeah, I agree, john, and most of the time when it comes to agents winning listings on price, you can guarantee their strategy and proven track record probably doesn't equal the skill they have. It's actually interesting, tom and John. I have a couple of friends that are trying to buy a property at the moment and the agent that they're trying to purchase it from has been fantastic throughout the whole campaign and has been really clear with the transparency around what other properties that are similar to theirs that they're going to purchase has sold for. Here's the interesting thing the buyers right now are so savvy. Here's the interesting thing the buyers right now are so savvy. They've taken that information from the agent and they've put it into AI and to see what else is selling in the area.
Troy Malcolm:So, john, you know how you mentioned RP Data and CoreLogic and Cotality can produce all those recent sales for you. The buyers are savvy enough to take that information, put it into AI and then generate what they deem is the appropriate price, and I just think we're heading down this pathway For the agents that keep getting this wrong. You're going to get found out. Technology is enabling so much more information and really being transparent around that information and giving the clients the really valuable information. If you're even 10% out, you're going to come undone, so I think transparency wins here every time, even speaking, troy.
Tom Panos:that's brilliant, and I don't know how my brain hadn't come up to correlate using AI there, because every day we're finding a different way to use AI to make our lives better. And there's just another one. But I can also see the AI being able to do the same thing and showing the vendor or saying hey, I need you to know that this is what we're doing. They're putting your address in there and they're saying give me the most relevant sales. Relevant sales, yeah.
Troy Malcolm:So Tom, I did this. I did this on the weekend because I kind of thought, oh, that's interesting. When they said it to me I hadn't kind of clicked on, but I did it and I had a look on the weekend and it was the results that were happening on the weekend. So it actually grabbed realestatecom and Domain's results from the weekend and actually spat out results back to make the sales like to the minute, not just within the last three months, it was like from the weekend, which I thought was amazing.
Tom Panos:Jordan, john Troy I want to continue on this conversation that John started about, like you know, the three groups. Let's talk. So let's try and come up and help our listeners, because every one of our listeners is probably our listeners. We make the assumption of people that want to do the right thing, they've got the right intent, they've got the right transparency.
Tom Panos:But I, troy and John, I have good real estate agents that say, tom, but you need to understand every vendor that goes onto the market is always being optimistic, regardless. Number one, they're going to try and go for that 2% to 5% premium anyway, right? Everyone thinks their house is worth more. Everyone thinks their kid's better looking than what it is. We accept all of that.
Tom Panos:But in addition to that, unfortunately in our industry, every area does seem to have at least one Larry the liar, and that is one that goes in there and says, oh look, I'll get you the 1.2.
Tom Panos:So when you've got the double effect of an owner being optimistic and then also a Larry the liar, then you've got good quality people that need a way to be able to sort of give that vendor the opportunity to go for their aim price but at the same time have the conversation in a transparent way to say if this happens, we're going to do this, if this happens, we're going to do this.
Tom Panos:And on your point, john, where you talk about having the pressure off, because a really good real estate agent will take into account the buyer intel, the feedback and all the stuff that happens after the home goes on the market. And, as you said, john, sometimes you're adjusting down but sometimes you're adjusting up, because if you have a campaign where you end up getting 70 groups come through in week one and 15 people ask for a contract and you know you went out there thinking, hey, it was 1 to 1.1, you might need to re-look at it and say, hey, listen, we've got so much interest, we better accept that we might actually have to start educating these buyers and re-look at the sales again, because that happens a lot of the times as well.
John McGrath:Yeah, totally, which is where I mean agents as wordsmiths. So number one is you've got to have an incredibly solid foundation of product knowledge so you know the facts. Two is you have to be smart enough to realise there are always exceptions. So we've all seen, and hopefully experienced for ourselves, where we've done such a damn good job. We've got eight buyers at an auction and it's gone for 20% above reserve. So we know that. And, by the way, you should be adjusting that going forward if you're aware of the price escalation. So I think that's cool.
John McGrath:So on that example, I was talking about Troy. So you know it's probably comparable to saying a million, a lot of dirty agents are going to be saying Troy. So you know it's probably comparable to saying a million, a lot of dirty agents are going to be saying, oh, we're going to quote 900, and yet they've told the vendor 1-1. And the vendor probably would like to hear 1-1. In fact, they might pop a bit on top and say, well, you know, I'm a seller at 1,150,000. So how do you deal with that? You say you know, troy, $1,150,000 would be an extraordinary result. In fact it probably would break records and I would love to break records if they're achievable. I have at the moment a lot of buyers I'm working with. In fact, I did some research before I came here and, knowing what you'd told me beforehand that you would like to get in the early millions I've got eight or nine buyers right now that have got a budget of $1,1 to $ 1.2. And if you put me to work today, the first people I'm going to call are those people with the budget at the price range that you're trying to achieve. I'm going to get them through in the short period of time.
John McGrath:Initially, and one of two things is going to happen, troy, we're going to achieve that sort of result that would break that record and we're going to get feedback, which is great. Or we that sort of result that would break that record and we're going to get feedback, which is great. Or we're going to get feedback to suggest that we're not fishing where the fish are and we need to actually adjust our sites to actually create interest and create competitive tension. So you just have an honest conversation.
John McGrath:But again, you know some people talk about you don't want to, you know, steal their dreams or take away their hope, and I get that but you also don't want them going into a campaign expecting that oh, oh yeah, 115, I reckon that's a goer, we'll achieve that and then you wait till the first open home and then you either quote what they want and you're burning the market, or you then quote something way lower and you're committing an illegal act in many jurisdictions. So I think you've just got to learn to have those honest conversations and have product knowledge that gives you a good footing and have a buyer database across a whole range of buyers so you can start bringing people through at the top end of their goal and their dream price and then get some feedback. Troy.
Tom Panos:That's beautifully said, John. Can you extend on that?
Troy Malcolm:Yeah, I was just going to say John and Tom. You know, john, you just mentioned that they're having that pool of buyers, those hot buyers that you've been working really closely with, to get them through very early on in the campaign, like within the first couple of days of listing it. They will be really transparent, especially if you have an existing relationship with them. I think if you go out there and just try to pitch a price and wait for the first open for inspection, you're kind of already behind the eight ball. You've really got to be in front of it and make sure that you're getting really valuable feedback, that's transparent, from those buyers and then take it straight to the owners and say, hey, listen, the great news is we got really valuable feedback. The great news also is that we may need to adjust our price up or down, and that's even before the first open for inspection or before the first set of appointments.
Troy Malcolm:So I think, john, you nailed it in regards to having that pool of buyers. Now what's the right number, depending on your area? 20, 30. I think, john, some of our best agents have a pool of 50 buyers that they work with at any one time, based on the volume of the market that they push through. But 20 to 30 of those hot buyers is always the goal. So you know exactly the price point, the type of property, the configuration, but also the lifestyle attributes as well that they're looking for.
Tom Panos:John just jump in. It's interesting, troy, because I ask a lot of agents, when they're making that adjustment on the guide, because they don't have the buyer intel, do they wait till the end of week one or do they actually do it by having a preview inspection with buyers that they've already got before they actually start marketing? And I get I get a mixed message. I get some say we like to actually try and address price before we actually launch on week one, after we've had our buyer intel. I have other agents that say, tom, we need to sometimes go through week one and week two because many of our vendors are going to say that we haven't had the first week of the campaign. And I get all of that. I've said it to you off camera before. John.
Tom Panos:I've got to give credit to Tarun, one of your agents, who's done exactly that. We had a situation it's a listing that's a friend of mine. He was managing it for him At the last week of the campaign. They've got no buyers. The feedback they were giving the vendor didn't want to adjust. The vendor rings me up Tom, should I just cancel my auction, right? Tarun is saying that maybe if we adjust the price and we add another two weeks because it does take time, sometimes for a price, to filter on to an inspection. More buyers get excited by the time they get their lawyers involved. They extended the campaign by two weeks and in the end the owner ended up getting more than what he was originally hoping to get Right. It created competitive tension and it went off.
John McGrath:Yeah, I think there's. And Tarun, he's a freak of an agent. I think we saw a stat the other day I'll send it to you Tommy 16 of the top 20 sales in Strathfield he's done which is phenomenal 80% of the top sales. He's incredible. But there's a couple of things that come to mind just want to make sure our audience captures this. Number one is you need to have the buyers, as Troy said, across several price ranges to be able to early on. Now I'm not talking and it did sound like some of that feedback that the vendor took was at the tail end of his campaign. But in an ideal world you actually want if there's feedback to the contrary that suggests that you're fishing where the fish aren't and you're going in too high, in an ideal world you actually want that up front. So if you can get off market first week before you actually have any opens, even before it hits the website, potentially get some of your most qualified buyers at the upper end through. And if the feedback is you guys are kidding, you're going too high, it's not worth that and it's qualified commentary from people that are in the market that really they know what's going on. I think that's really critical. So urgency off market early on, I think, is really critical. And the second thing is, you know, at the listing, presentation or soon after you've got to say Tom, I just want to talk to you about how I think this kind of process generally works best.
John McGrath:I'm sort of a bit of an unfiltered frequent communication guy and I'm happy to do it via text if that works better. You're a busy guy, but what I find is, every time I have a quality conversation with someone who's in the market, who knows what they're talking about, that's either inquired or come through your property. I like to share as much of that with you because this is a real partnership and if I hold back on information it's probably not in your best interest. So if you're good with it, I'll just sort of keep you updated on the commentary. And I've never in 40 years of real estate had someone say no, don't tell me.
John McGrath:No, actually once I have. I sold a property in Bellevue Hill in Kambala Road, many, many, many moons ago and this guy said to me and it was true he said send me a text once a week and I'll see you at the auction. And we sold it, fortunately, but that was all he wanted. I tried to contact him and he said didn't you hear what I said? I don't want to talk to you. Send me a text once a week and I'll see you at the auction. And fortunately we got away.
Tom Panos:Sounds like it. Ryan Serhant said I don't know what it is with billionaires. All they want to do is send you a text message. They don't want to talk anything. They feel like if I get talking it's not going to be in my best interest.
John McGrath:Well, it's close to the mark because this guy was extremely wealthy and very successful and he's just one of those guys he knew. He said I don't want to be bothered, just don't email me, don't call me, send me a text. So anyway, they're the exception. But everyone else says, yeah, yeah, keep me posted, it's important. So I think that's really a couple of critical pieces that you get permission upfront to let them know the commentary along the way, you get buyers through early that have the capacity to pay the top end of the market, and you get feedback early. So preferably you can get it sold by the auction date. But Tarun did the right thing, as he always does. If he feels that the weight of evidence is starting to suggest, the closer we get to the auction, that we're a little bit high, let's adjust it. Let's just take our medicine, adjust it, push the auction back a week or two and I know, troy, you've had a number of your top agents who have adopted the same. It's not a strategy but it's a flexibility within a sales campaign to do it. And of course, Troy, you've got the other opportunity and I know a lot of your agency, your auction for it, mcgrath as well bring auctions forward. Sometimes you get a whoosh of enthusiasm in the first week of the campaign. You've got seven contracts out, everyone wants to make an offer, vendor is keen to sell, and you say, well, we're going to bring this damn auction forward two weeks and we'll do it next Saturday. So I think you've got to be flexible as an agent.
John McGrath:But what you never do is tell an untruth. Don't tell someone something that's not real. Yes, agree to them, it'll be a great outcome. Yes, tell them, you'll try and get it. Tell them you've got buyers at that level You'll be getting through as long as it's true. But there's no need. You know, you just don't want to be going and telling. And imagine if it was a member of your family, tom. You know, like someone you cared for your parents or your best friend or whatever one of your kids. You know, I know you're so close with your kids, tommy. Imagine they went to buy their first home and you know an agent's quoting 600 goes for 800 and they're devastated. And they come home and they're emotional. I mean, it's just, it's a bad vibe, man, you just don't do that, tony.
Tom Panos:Listen, I have got a family case study on a real estate issue about a year ago and he's also been negligent. The vendor, my friend. He had his property valued. The agent was adamant, I'm going to get you this price. He went off and bought another property. Right, he's bought this other property thinking to himself. There ends up being a $400,000 differential between the hope price and the sell price. And listen, you know a lot of people $400,000 is game changing in their life. It changes the direction of their life significantly.
Tom Panos:But, john and Troy, I just want to finish off and just share with our listeners the perfect piece of dialogue I heard a real estate agent do at a listing presentation in a marketplace where an owner wanted more than it was worth because there was another agent that had gone in there and over-promised it. And I just want to show you what beautiful dialogue he used to get the listing. He shared it with me. He said to the owner look, I've shown you comparable sales and those comparable sales are 1.8% to $2 million. I've shown you those. You've indicated to me that you're hoping to get at least $2.2 million and you've indicated to me that you've had another agent that has said that they've got a buyer that will buy this property at $2.3 million. I want to let you know that $2.2 million and $2.3 million is not out of the question, but I need you to be aware that if we got that price, that would be an extraordinary number and I would be singing it from the top of the mountain how proud I would be.
Tom Panos:And I need you to know that for now, my comparables are going away. I need to focus on finding a buyer that has the same opinion on value as you, and I want to let you know the best chance of that happening is in the first week, because there's a hard buyer out there that might be waiting. But I need you to know that if we're not getting engagement in that week or so, we are going to need to realign based on the feedback. That realignment might be higher, but most likely be lower, based on what you've showed me, on what you want and my comparables. So what I'd love to do is to set a date a week from now, after we've had a number of inspections, where I can speak to you with confidence on what we've got.
Tom Panos:How does that sound? And I just thought to myself. I said to him I gave him the benefit of the doubt to try and see if it was out there, but at the same time I also told him that we would have to relook at at things if it wasn't achieved right. And I think the big difference is having the transparency to actually give the benefit of the doubt. We're going for more but at the same time help an owner understand there is a strong possibility we might have to realign your price yeah, yeah, and I word alignment, tom, because a lot of the old agent jargon is conditioning.
John McGrath:Conditioning is a terrible, it's a disgusting word, john. Yeah, a terrible word, and the connotations are I'll tell them a high figure and then I'll tell them lots of other stuff to bring them back to earth. You know vendor alignment is. You know where's the market at. If you're going to sell, if you've got shares on the share market and they're trading this afternoon on the ASX at $21, there's no point putting one up there for $28 and thinking you're going to get a bid. You've got to be in the money, as they say, and it's the same in real estate. If you want to get competitive tension, you've got to be in the money where people see value, and that gives you the opportunity to create competitive tension.
John McGrath:But we don't condition, we don't make up buyers, we don't make up comments. You know we act with integrity and that's where I think the future is. That's where you know radical transparency is all about. So look, I know we're preaching somewhat to the converted, but I know even the good agents and even members of your great gym, tom, you, they'll say to me yeah, but John, I get it, but I just find it hard because I want to get the listing and I know two other agents have told them a price that's really inflated. So I get all that.
John McGrath:But just work hard on your craft to get your words right, get your energy right and you can overcome it. And I'm delighted to say all the top agents certainly, that I'm working closely with, they have a total commitment to integrity and they don't have the desire to run a business that's based on lies. They don't have the time to waste with it and they've built the credibility that their owners are listening to them. So, anyway, hopefully there's some good dialogue in there. I loved your dialogue, tom, from your man there and let's just-.
Tom Panos:John, between realestatecom domain RP data, the first category where you said, where they just don't know values. I mean, I totally get it. If you're selling that $160 million house in Vaucluse, that gets this. I understand that there's no recommended retail price for that, but I think there's only a small number of real estate agents that can genuinely say, in the 2025 year, with all the resources, including what AI is doing and the beautiful input that Troy had, there is very few people that can honestly say, oh, I don't know what it's worth, I didn't have the right information. Every agent should have great product knowledge to at least to be able they should be able to get a rough idea. But John Troy, an absolute pleasure.
Tom Panos:I actually think, on the marketplace I auctioned on Saturday, I hadn't auctioned for a while. 12 sold out of 12. To me it seems that there's a lot of. To me I can sense buyers are thinking we're on a rate going down and I actually think that this market is a good marketplace for agents to be operating. It's a great market. I spoke to Ethan this morning and Jason and they said to me they wish the Melbourne market stayed exactly the way it is. They said stocks coming in and stocks being sold. There are no complaints.
John McGrath:But, tommy, 12 out of 12, it doesn't get any better than that. Well done to you and all your agents that you work with in the inner west. Great result, but that speaks volumes. And again, you know I've had conversations in the last few days, generally not with our guys but with just people in the industry, and they're telling me how tough it is, you know. So every time someone tells you how tough it is, just realise there's someone around the corner in a postcode nearby doing 12 out of 12. All right, guys, have a good one, have a great week. See you later. Thanks John, thanks Tim. See you, tommy.