Auctions and why the agent can’t answer your price question
We know this frustrates many, many home buyers. A place is up for auction and you want a price guide from the agent. They respond awkwardly, they dodge and sidestep and they answer your question with a question. The best you can hope for is a printed list of recent local sales. Not a hard question is it? How much does the owner want? So why can’t the agent tell you?
It’s the law.
The Act that governs real estate agents says if a property is being auctioned we can’t tell you what it’s likely to sell for. We can’t tell you how much the owner is likely to set as an auction reserve (or, ridiculously, whether or not they will even set a reserve) and we cannot give you our opinion on its value.
As a buyer you simply want to know if you should spend time checking the place out. You don’t want to become enamoured of a home that might be out of your reach. And you definitely don’t want to spend money and time on building inspections and bank meetings if it’s going to sell too high.
Now don’t scream out loud at us… but for all its shortcomings, we’d argue this current law might not be a bad thing.
The alternative is to allow price guides and leave it up to buyers to “interpret” the ads and agent estimates. Does “Bidding from $400,000” mean they will accept $400,000 or are they really expecting $600,000? Agents have a legal duty to not misrepresent, so publishing a guide it can be tricky. We’ve all seen homes sell for a premium, and similarly seen others sell for below initial expectations.
In other states there’s an unwritten rule that you add 10% to the agents’ price guides. Some agents (let’s call them “the more creative agents” when we all know what we’d like to call them) might trim 15-20% off so they get inundated with enquiry. And not surprisingly they get pre-auction offers that show their seller clients “what the market is really saying”. In the 1990’s, when guides were allowed in Queensland, I used to work with a salesperson trained by one of Australia’s largest real estate franchises, who used to halve his market appraisal. A $400,000 home had a bidding guide of $200,000. Had some busy open home he did. And a lot of very disappointed seller clients.
So the reason we prefer this current system, for the many faults, is that it prevents agents misleading, (unintentionally or otherwise). That’s a source of real annoyance to its victims and we don’t want it in our industry. Under the current law we can give you a list of comparable and recent sales. We can give you information about the market. But it must be factual and not opinion.
We’d really like to hear your comments. Have you bought at auction recently? Do you have a better solution? The state government is calling for submissions on the new act, the Property Occupations Bill so tell them directly if you have a strong view.