Price guide ranges - not yet the new norm for NSW auctions

Some auction listings will now be marketed with price guide ranges under new auction marketing laws.

Banned are the open ended $500,000 plus/offers over $500,000 estimates that the state government deemed as potentially misleading.

Instead there's a permissible strict 10 percent band, such as $500,000 to $550,000 that can be put to potential buyers by estate agents. 

Our legislators concluded $500,000 plus guides were likely to mislead that the property could be bought for the minimum figure.

NSW Fair Trading was right that intentional understating causes interested buyers to waste time and money on inspecting properties, getting reports and attending auctions. But the government won't come at any trial of the vendor-provided pest and building inspection reports.

I actually didn't mind the $500,000 plus system, but I guess being well practiced I intuitatively added something like 10% anyway to estimate where the hammer was likely to fall.

Ofcourse super successful selling prices are more about emotional outcomes, rather than any 10% mathematical formula in my mind or government regulations. 

It is apparent many agents don't like the price range as it introduces a potential price ceiling which discourages buyers from going any further. 

A review of the auctions held on the last weekend in January suggests an understandable slow uptake of the new price band system with the vast majority of agents not giving any public price guidance in their marketing.

I calculated just 15 percent of the listings having a published range along with a half dozen where agents hadn't yet cottoned onto the over $500,000 ban. 

But no underquoting alarm bells so far with the price ranges that were on public offer.

At Erskineville there was a one bedroom apartment listed with the price guide of $650,000 to $700,000. It sold at $708,000, so hopefully no-one's running off to NSW Fair Trading claiming this was anything akin to under-quoting.

These rules went through parliament amid heightened claims of underquoting as prices escalated at a frenetic pace in the then crazy Sydney market, but I'd expect this year to actually see the opposite trap of overquoting emerge as inexperienced agents grapple with trickier market conditions.

There was one weekend offering passed in at well under the price range estimate at Elderslie. With a pre-auction guidance of $725,000 to $795,000, it was passed in at $650,000.

Getting agent estimates that are publicly consistent with their true belief is commendable. But if the state government really wanted transparency - and the buyers right to know - then the tighten laws ought have made the figure in the agency agreement, which the vendor signs on formal listing with the agent, the mandatory public price guide.

Instead we have a system that could leave the public less informed.

This article was first published in the Saturday Daily Telegraph.

{mijopolls 128}