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Tuesday, January 14, 2003
Property auctions

Since Australia is such a desirable place to live, I have been looking into how houses are bought and sold. This has led to my finding out a few more things about the property market here. I note that the majority of sales are achieved through auction. This, in turn, has led to a television programme following selected auctions. It’s a bit like a combination of Hot Property and Location; Location; Location, both of which have their equivalent here, too. (Oh yes, and there’s an Aussie ‘Ground Force’, sans Alan Titchmarsh. Shame, really.)

That so many properties are sold through auction does not have universal approval. Indeed, there is one estate agent who thinks it about time the sector cleaned up its act. Could this be true? An ethical estate agent? Whatever next?

Well, this agent has written and published a book about industry malpractice. Curiously enough, I have just received a circular on the same subject, trying to exert some influence over Victorian state legislation governing auctions. It appears that current proposals do too much to benefit the industry and not enough to protect the consumer. These are some of the naughty things, together with the remedies suggested:
Dummy bidding. These are often slipped into auctions - I’ve seen it on the ‘Hot auction’ programme here. The suggestion is that bidding should start at the reserve price.

Harassment. Sellers’ agents allegedly harass, intimidate and bully both sellers and buyers at auctions. The bill should (but does not) make it illegal for agents to approach either buyers or sellers.

Cooling off period. Currently, cooling off periods only apply to private sales below $250,000. This period should apply to all sales under all selling methods.

Kickbacks. The bill makes it illegal not to disclose kickbacks (‘rebates’ & ‘volume discounts’). The bill should outlaw such practices.

Selling agency agreements. In other states (not Victoria), there is a cooling off period on agency agreements and a maximum valid time limit. Sixty days is suggested as the optimum, consumer-friendly period.

False quotes. Agents often give false high quotes to potential sellers about the likely selling price and false low quotes to buyers. It is suggested that commission be denied agents in the first instance and that buyers should be compensated for wasted expenses in the second.

Insider trading. There is no bar on buying for relatives. It is suggested that agents or their relatives should never be allowed to buy real estate through their own real estate offices.
With agents like this rooting for appropriate legislation, one might feel that consumerism was getting an entirely appropriate crack of the whip. There is more information here.

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