National reform into auction laws should be top priority, MD says
The Victorian government’s move to fix underquoting is misguided. Instead, a national reform into auction laws should take centre stage to fix problems plaguing the industry, according to a managing director and auctioneer.
Earlier this month, the Victorian government confirmed it would invest $3.8 million towards a dedicated taskforce to squash underquoting in the state’s property market.
The move was subsequently criticised by the REIV, which argued it was “overkill”, “not justified” and carried out without proper consultation.
John Keating, managing director and auctioneer at Keatings Real Estate, has offered a different take.
Speaking to REB off the back of the announcement, Mr Keating said while the Victorian government’s intent behind the taskforce is “honourable”, current rules are “fundamentally flawed” so long as vendors are able to change reserve prices before contracts are signed.
“Underquoting in real estate auction sales will never be stamped out until auction rules are reformed by the introduction of a simple new rule to require estate agents to publish their vendor’s reserve prices in all auction advertising,” Mr Keating said.
“The reform should also be Australia-wide. It is ridiculous that every state has different and confusing auction rules for homebuyers for what is one of the most emotional and biggest financial decisions most people make.”
Mr Keating believes a published reserve price auction model would bring “maximum transparency” and integrity to auction sales.
“It would also be widely welcomed by all stakeholders from first homebuyers to the reserve bank — except perhaps by rogue estate agents and some vendors who work in cahoots with their agent to artificially manipulate quotes to engage in unbridled greed,” he added.
Further, Mr Keating said such changes would go a long way in enhancing the reputation of real estate agents and the profession more broadly.
“If auction reserve prices were required to be published, the auction selling system would also thrive, many more properties would be sold by auction, and we would have a much more trusted and respected estate agency profession,” he said.
“Publishing reserve prices would be self-regulating as vendors would not want to waste expensive advertising costs if their reserves were set too high.
“Policing quotes would also be simple and at negligible cost, and the problem of thousands of prospective purchases being duped every weekend would be fixed instantly.
“Publishing reserve prices is how auctions should be done. Done right.”
