Lies and real estate auction campaigns: Edwin Almeida

If the topic of underquoting and misleading advertising wasn’t so serious, the Valentines Day $1 auction campaign would make a great comedy screenplay.

At a moment of reflection, I ponder which actors would suit the roles of the Premier calling for industry reform, or the CEO of the REINSW as well as the agents facing allegations of underquoting.

It’s time I believe we unravel the possible motives behind the Valentines Day $1 auction. Was it worth the trouble and who paid the ultimate price?

As I discuss the outcome of the auction with industry groups, we feel that there are now more questions than answers. These are questions that are now being asked of the real estate industry (REI) as a whole now that the dust has finally settled.

The facts as we see it

• First marketing campaign: Sale by private treaty

Source: CoreLogic RP Data

On or about November-December 2014, the home was advertised as "private treaty sale” for offers over $560,000, to offers over $570,000.

The records procured from CoreLogic are significant. At the very least, these records, I feel, evidence the real price sought by the vendor and the agent. It may also assist, to help clarify their true intentions. Other sites tell the same story.

Information provided above, also obtained from another free to access website. A site property buyers should frequent: onthehouse.com.au. The graph shows the advertising pattern of the property's marketing campaign.

• New campaign: Sale by auction $1 reserve

A new campaign, and a newly devised strategy, is concocted to create interest among the general public and the media. On this note, I take my hat off to the parties; a strategy that didn’t even "personally offend" the CEO of the REINSW.

However, a strategy that only served one purpose, to lure a crowd of potential bidders that were never going to get a bargain. Buyers that invested time and money and made an emotional investment, under the belief that they would get a bargain.

• The outcome: Sold at auction $565,000

The property sells for $565,000. Bring out the marching band, drums and all. The vendor and the agent can now get some sleep and stop biting their nails.

Meanwhile, on the other side of the fence, innocent buyers walk away with greater cynicism about the REI. This is on top of walking away with a financial hole in their wallets, one to match their unchanged perceptions of the REI.

"Hey! You weren’t going to buy it for '$2 bucks mate', stop your whinging," is the taunt from the industry, while the agents and auctioneers beat their chests after so-called achievements of 20%-30% prices above reserves throughout Sydney.

On the contrary , I personally encourage you to keep complaining about what just happened. You got ripped off, conned and all recorded on National TV, to remind you in future. There should be an entrenched pathway already, leading to the Premier's office, to voice your complaints.

You took the time and organised; pest and building inspections, sought legal advice and invested time and emotion. All this on the belief a bargain was to be had.

After all, you’re a reasonable person and all you expected was a reasonable chance, a fair crack of the whip. Like the magic cures and elixir sales of yesteryears, all you got was conned.

Who will repay you for time lost and money spent? Well, you did perhaps get to see your face on national TV. Perhaps, both the agent and vendor think this is good enough?

• Cost to the industry:

I don’t believe there will be a substantive cost to the REI at all. Here's why:

First reason: No auction campaign that stoops into under-quoting has been prosecuted in the last 10 years. It's become a free for all. The agents get paid their commission regardless, the vendors get to see a crowd being spurred on by emotion. Happy days for the REI.

Second reason:

• Will you personally sell your own home now, and not use an agent?
• Will you now terminate the agency agreements with the current agents that are selling your home?
• Will you stop attending auctions?
• Most of all, will you stop looking to buy?

I can say with all confidence, no you won't. Therefore, there is no cost that will hurt the REI as much as it will hurt you.

• Cost to the Real Estate Agent:

Apart from further sleepless nights now that Fair Trading NSW is on the war path, the thought of being investigated and the thought of not keeping the commission may be all that is lost for now.

Perhaps more sleepless nights will become pertinent, should Mr Baird step in and make his words felt and act on the deception and misrepresentation. Direct action that should stem from industry conduct that cost the public dearly. Shameful conduct, to warrant clawing back the commission earned at the expense of many innocent buyers that attended the $1 auction.

• Cost to the vendor:

A bit of time, a little more vendor paid advertising perhaps? Unfortunately time wasted may be all the vendor loses at this point.

Hopefully, the vendor too is losing sleep after misleading the public with this fiasco of a campaign. Or will he?

Well, maybe and one can only hope as it may be a fitful ending to the comedy screenplay, should the agent end his dialog with: “the vendor made me do it”, as the agent faces the Tribunal.

A further token reward, would be for the vendor to face the Tribunal and be fined. We can only once again corss our fingers and see.

Should we hold our breath? Will the law be enforced?

• What can we learn from this?

Many agents and the general public are not aware that just about everything in relation to property is stored. From advertising to sales figures and even as far as mortgage holder's records. It is collected, collated and stored for various reasons.

Property valuers use the stored information to set their estimates. Banking institutions and government bodies use this information for research and other purposes to suit their needs. Yes, we the REI use these figures to compare prices and check sales history and put together market appraisals.

With some websites, we incur charges to obtain more information than what the general public sees. Others sites like, onthehouse.com.au also have good insights, and for free, but this information may take time to source. However, the paid for sites will deliver information at a glance.

Unfortunately, the governing and licencing bodies, such as Fair Trading NSW, are just understaffed and overworked already and lack the resources to research all the sales as we do. Our estimate is that there are 23,000 registered selling REAs in NSW. To police most of the transactions will be a monumental task.

If the Premier wants to get serious about his promises in this area, he needs to look closely at the root issue of Fair Trading NSW being understaffed.

Now there are lies and there are real estate auction campaigns. Some would say both are the same, just packaged in different wrapping.

I can only sit back and wait for some of my peers to try and convince me otherwise.

EDWIN ALMEIDA is licensee in charge of Just Think Real Estate.

He is also the creator of Oz Real Estate.TV and a presenter for propertyinvestingvault.com.