Don't like the auction price guidance ban? You can only blame yourself
For as long as auctions have existed in Australia, agents have been rorting the system.
For the past 15 years, state and territory governments have been passing laws to curtail auction excesses like dummy bidding and underquoting on price guides. But agencies keep sidestepping the rules and so governments keep passing new laws that cause agents to scream from the rooftops.
We’re seeing that playing out now with Queensland plans to ban price guides on auction properties. Agents and their representative bodies are squealing loudly and urging consumers to lobby politicians to stop it. The level of angst from real estate “professionals” is amazing to observe.
I have several messages for those protesting the changes.
One, you have only yourselves to blame. If you were competent and honest in their dealings around auctions, law changes would not be needed.
Two, you’re distorting reality when you claim your protest is motivated by concern for consumers. The motivation is self-interest, pure and simple. Nobody does self-interest like a real estate agent.
Three, real estate consumers are unlikely to protest about a ban on price guides because there’s no downside for buyers and sellers. The average buyer in particular will benefit from the ban.
The bottom line is that price guides are worthless. Agents commonly under-quote in their price guides to try to attract interest in the sale property. This means potential buyers waste their time and money on pursuing properties that were never in their price range.
It’s hugely frustrating for people who think they have a chance on a home, but discover on auction day that the reserve price was always higher than the top of the price range advertised. Buyers would be better off doing their own research than relying on the rubbery figures in price guides.
Whenever media or consumer affairs personnel have surveyed price guides and eventual sale prices, they have found that most price guides are fictitious. It’s a form of advertising fraud and governments are right to take action on it.
Strangely, the loudest noise is coming from interstate agents. The Real Estate Institute of New South Wales, for example, claims the ban will harm consumers. It says the move will reduce “transparency” at auctions. John McGrath, a Sydney-based agent, has claimed that “Queensland is facing a dire situation” and that the move is “insanity”.
Transparency at auctions? The typical auction is the antithesis of transparency.
A dire situation? Because agents will be prevented from misleading consumers with their “price guides”? Someone needs to take a cold shower and some valium and have a wee lie down.
In one of his many media statements on this issue, McGrath says: “Every buyer I have ever met in 32 years wants price guides.”
No, they don’t. They want accurate and honest price guides. Given that the industry seems incapable of providing them, the best course is to ban them altogether.
Terry Ryder is the founder of hotspotting.com.au.
You can contact Terry via email or on Twitter.
