Auctions: To price or not to price?

This week, the REIQ and the REINSW both came out with very fixed views on whether or not price guides should be made available for Auctions.

The Real Estate Institute of Queensland (REIQ) addressed what it considered to be factually incorrect statements made in the media about proposed changes to our State auction legalisation in a press release this week, and stated, Under the Property Occupations Bill, introduced to parliament in November last year, the use of price guides and the disclosure of reserve prices in Queensland property auctions will be prohibited.

REIQ CEO Anton Kardash said contrary to some media statements, the absence of price guides in auctions had long been the status quo in Queensland.

Currently in Queensland, it is common practice for real estate agents to market an auction property with no price guide or likely sale price indication. In fact, the proposed new laws simply seek to clarify existing laws which many in the real estate industry consider to be consistent with the proposed provisions,” he said.

“Indeed, auctions are not unique to real estate. Art, horses and motor vehicles, to name but a few, are regularly auctioned without a fixed price or a price guide because that is the very nature of auctions. The market will decide on the day of auction what it is prepared to pay for that particular asset.”
Mr Kardash said further misinformation about the new laws included that an agent representing the property will be unable to make any comment on price whatsoever. Again, this is incorrect.

“Under the proposed laws, agents and auctioneers will be permitted to provide a prospective buyer with price guide information in the form of either a comparative market analysis or a written explanation of the property’s estimated price,” he said.

“The document must have been prepared by the agent or auctioneer and given to the seller and the seller must consent to this information being passed on to the public.

“It should also be highlighted that if a seller wishes to market a property with a price or using a price guide, they may do so by instructing their agent to sell via the much more popular private treaty method.“

With this in mind, Mr Kardash said, it should be noted that auctions remain a relatively small segment of the Queensland property sales market. In Brisbane, the most recent preliminary statistics show that about 157 auctions were held last week. In Sydney and Melbourne, there were nearly 2,500 over the same period.

“Auction price guides are permitted in New South Wales, which also reportedly has problems with the practice of under-quoting or price baiting to attract bidders to an auction,” he said.

“We all know that by advertising a price guide or giving an indication of the reserve price, an expectation may be set at a level that is too high or too low and this may impact on the outcome of the auction.

“It is with great pride that Queensland can say that it has largely avoided claims of misleading and deceptive conduct in relation to property price guides. Unlike in some other states where such complaints are rife, Queensland has not been subject to constant complaints of such a nature and will continue to prevent any future issues with the passing of this legislation.”

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