Auction price guidance essential for Queensland property market's visability and viability
Queensland's proposed banning of price guides for auction home listings is of great concern to leading estate agent John McGrath.
The legislation - sought by the Attorney-General Jarrod Bleijie and supported by the Real Estate Institute of Queensland - proposes that an estate agent can only provide recent comparative sales, but not any guidance in print, on the web or in conversation with a person, for the actual auction property.
"Every buyer I have ever met in 32 years wants price guides," a passionate John McGrath recently told the Queensland parliamentary committee reviewing the extraordinary regressive proposal.
"I am very passionate. I am very frustrated. I am very concerned that this could take us back 50 years, and for what purpose? It benefits no-one. In fact, it is detrimental to all parties involved, in my opinion," John McGrath told the committee.
And he is spot on, as quite simply, by banning price guides on auction listings, not only are the buyers disadvantaged because they do not have the information they need to make an informed choice, but the legislation will also disadvantage sellers because they are potentially losing buyers.
McGrath says 73% of his east coast agency listings — and they sold about 8,000 last year — come with price guides.
"This legislation would remove the opportunity for us to do that," he noted.
"The obvious question of, ‘What do you think it will go for?’ is asked around the world, day in, day out, by millions of people.
"They want to say, ‘Is it $650,000 to $700,000? Why do you think it’s that? What else has sold? I’ve got $650,000 as a budget so should I come along or is this out of my price range?’"
"You would now be told in Queensland, ‘I can’t discuss price but if you’d like to give me your email address I can email you a comparative market analysis that you can have a look at.'"
But McGrath rightly says the consumer expects more. I'd suggest that certainly all those southerners who make the move to Queensland after selling their auction properties in Victoria and NSW do. Often, their only prior knowledge of Queensland property was the coverage of the notorious king of con, two-tier marketing rackets that did untold damage to the reputation of Queensland as a place to buy private treat with confidence.
Of course, as the main auction states, Victoria and NSW residents know every weekend the price guide is not the reserve or the selling price; rather it is an moving indication based on the best evidence available to the vendor and their agent as to the price it is likely to fetch.
There is not one Brisbane house going to auction this weekend with price guidance. I had a look in the Brisbane Courier Mail's weekend realestate section last Saturday and found just the one auction price estimate amid the ads and editorials within the 80 pages. That was for a McGrath listing at Coorparoo which was given as over $990,000, and a quick phone call ascertained it's been sold before auction at $980,000 given the agent Gemma Kunst gleaned sufficient buyer feedback arising from concerns over the adjoining block of flats.
Readers in Sydney are spoilt! I recall introducing strict price publication requirements for editorials within the Fairfax SMH print publication many years ago. There had to be price guidance and then this was stepped up to include the last sale price too, a worthy practice still evident in the now slimmed down supplements.
John McGrath - who has been at the forefront of property websites since the mid-1990s - points to a recent internet usage survey that indicated 66% of buyers looking on realestate.com.au passed by properties with no price guides. And I am aware of reseach that puts it as high as 90%.
"So they are marching with their eyeballs and they are moving beyond," McGrath noted.
I'd suggest home buyers might make bigger efforts to try to glean the lay of the land, but investors will more quickly look for listings with guidance, or screwdly seek to take advantage of the paucity of guidance.
Under the legislation, property websites such as realestate.com.au and domain.com.au will need to remove all Queensland auction properties from price search functions.
Buyers want three things:
Firstly, fresh reliable information.
Secondly, they want transparency.
And the third thing is that buyers and sellers want integrity.
"By removing the ability to put price guides, you are removing information which is what they want, and you are removing the transparency, because when I put a price guide in the paper a buyer knows that I have had a discussion with the seller which is the same discussion I am having with them," McGrath said.
"For too many years, this industry has had smoke and mirrors and all sorts of activities which we know have created a bad name for the industry, and we are slowly creeping away from that and I think that is through transparency and integrity.
"I am not having a discussion with a seller saying, ‘We think you might get $600,000,’ and then telling the buyer, ‘I think you might pick this up for $500,000,’ which unfortunately has been a practice in this real estate industry for far too long."
McGrath told the parliamentary committee that the legislation he would suggest ought make price guides mandatory for auctions.
He noted the legislation was being pushed by the Real Estate Institute of Queensland as they believe putting a price guide has the ability to put a ceiling on price and therefore retard its true value.
"I sold 8,000 properties last year and I can tell you that is not the case. It actually has the opposite effect because it encourages more qualified buyers to pursue the property rather than miss it."
There are also fears that allowing agents to put a price guide leads to bait advertising and potentially misleading quotes.
"Let’s not confuse misguided price estimates and price guides," says McGrath.
McGrath's view is that agents who promote properties at prices that are not true in an attempt to bait people to come should lose their licence.
The history of the McGrath agency four years ago coming to Broadbeach is interesting because they were told it was illegal in Queensland to give prices guides.
"This is why a lot of agents do not use them, because that was the perception.
"So we said, ‘This cannot be true. Queensland is such a sophisticated state; they cannot be banning price guides.’
"So we went to the higher powers that be, the institute and the government, and then we were told, ‘Well, it is actually not illegal, but we prefer you do not use it.’
"We said, ‘We like to use it and we think the buyers want it, so we are going to use it if that is okay.’
"And that, I think, has stirred the pot," he proferred as the reason behind the pending legislative vote.
The legislation is part of a package of property reforms billed as bringing property laws into the 21st century to help revitalise the market, the attorney general has suggested.
But the News Corp Australia national real estate editor, Kylie Davis, has described the Property Occupations Bill and the Agents Financial Administration Bill 2013 legislation as a breach of freedom of speech for web and print publishers.
“Under this legislation, any agent who even speaks to a journalist about what an auction property might go for is in breach of the law,” Ms Davis said.
“It claims to be protecting the rights of buyers, but the legislation keeps them in the dark.”
The legislation does allow agents to provide a written opinion of what a property is worth, but only to a “serious buyer” if the request has been made in writing by the buyer - and only then if the response is approved in writing by the vendor.
Brad McLeod, real estate state sales manager at Fairfax Media Queensland, has described the changes as counterproductive to consumer trends around visibility. “It’s reverting back to pre-online times when agents held all the information about a property,” he told the newspaperworks website.
“We’re a time poor society,” he added. “Consumers are going to turn up to properties for inspection that are out of their price range. It is not effectively utilising the time of either buyers or agents.”