Real Estate Institutes go head-to-head over Queensland auction price guide debate
New Queensland legislation has caused a rift between the Real Estate Institute of New South Wales and the Real Estate Institute of Queensland to appear as they argue through the potential banning of auction price guides.
Much discussed in the media over the past few weeks, the banning of price guides under the new legislation has seen John McGrath referring to it as “dark days”, taking out full page advertisements in Queensland newspapers to argue against the change.
The changes, which are said to stop price guides from being provided or discussed with potential buyers, to stop buyers from being able to search auctioned properties online by price and for property reporters not to be able to mention price guides or estimations in their editorial, were slammed by McGrath. It has even had some news outlets calling it a breach of freedom of speech.
The legislation for the Property Occupations Bill and the Agents Financial Administration Bill 2013 is currently before Parliament.
On Friday, the Real Estate Institute of New South Wales (REINSW) released a statement calling for Queenslanders and those looking to invest in the state to immediately voice their concerns over the proposed legislation.
REINSW president Malcolm Gunning said that this potential ban on auction price guides would cause havoc.
“It is a step backward for consumers. Now more than ever buyers are demanding transparency in regard to property. To take away price guidelines will turn back the clock on Queensland real estate,” Gunning said.
They also included comments from McGrath Estate Agents chief executive John McGrath, who is an REINSW member, as he called the potential changes “insanity”.
“There is no logical reason why this should happen. The new legislation would effectively act to ban the agent, buyer and seller from holding a conversation in regard to price,” McGrath said.
“It will not solve the issue of underquoting and will prevent buyers from other states and internationally from looking at the Queensland market.”
He said that web searches would become useless, with thousands of auction listings appearing in “random order”.
They called for consumers to write to Attorney-General of Queensland, Jarrod Bleijie.
Despite the REINSW’ view, the Real Estate Institute of Queensland (REIQ) were providing a quite opposite message.
Discussing ‘factually incorrect statements recently made in the media’ about the proposed changes, they agreed that under the new bill the use of price guides and disclosure of reserve prices in Queensland auctions would be prohibited.
However, CEO of REIQ, Anton Kardash, said that the absence of these price guides is standard in Queensland, despite the uproar.
“Currently in Queensland, it is common practice for real estate agents to market an auction property with no price guide or likely sale price indication. In fact, the proposed new laws simply seek to clarify existing laws which many in the real estate industry consider to be consistent with the proposed provisions,” said Kardash.
“Indeed, auctions are not unique to real estate. Art, horses and motor vehicles, to name but a few, are regularly auctioned without a fixed price or a price guide because that is the very nature of auctions. The market will decide on the day of auction what it is prepared to pay for that particular asset.”
He also hit back against comments that new laws would stop allowing an agent representing a property to make a comment on the price. He said that under the proposed laws, they would be permitted to provide a comparative market analysis or a written explanation of the property’s estimated price.
However, this must have been prepared by the agent or auctioneer, given to the seller, consented to by the seller, and then passed on to the public.
He also said that if sellers want to market their property with a price or price guide, then they should use a private treaty method instead.
“It should also be highlighted that if a seller wishes to market a property with a price or using a price guide, they may do so by instructing their agent to sell via the much more popular private treaty method,” he said.
He also noted that auctions are a small segment of the Queensland sales market, and that where auction price guides are permitted, such as in New South Wales, there are said to be problems with underquoting or price baiting.
“We all know that by advertising a price guide or giving an indication of the reserve price, an expectation may be set at a level that is too high or too low and this may impact on the outcome of the auction,” he said.
“It is with great pride that Queensland can say that it has largely avoided claims of misleading and deceptive conduct in relation to property price guides. Unlike in some other states where such complaints are rife, Queensland has not been subject to constant complaints of such a nature and will continue to prevent any future issues with the passing of this legislation.”
The Real Estate Buyers Agents Association of Australia (REBAA) has recently spoken out against the proposed ban on price guides, saying it will expose buyers to the risk of overpaying.
Queensland spokersperson for REBAA, Scott McGeever, said that buyers would be forced to spend a considerable sum to undertake due diligence on every property they had some interest in.
“A ban on giving a price range for properties going to auction will seriously disadvantage buyers,” said McGeever.
“More than ever before, buyers will need to do their research thoroughly and ensure they get their building and pest inspections done, engage solicitors to look over contracts and get bank valuations,” he said.
He pointed to an alternative being to get agents to provide recent sales, but said it is “fraught with danger” due to sales not always being directly comparable and their ability to be manipulated.
“In what is the biggest transaction most people ever make, the buyer is totally unrepresented and will now be relying totally on the selling agent to make their offer price,” he said.
“To remove the only guides available to them seems nonsensical.”
A recent poll of Property Observer readers (results below) saw the vast majority, 84.5%, looking to have reserve prices published across the country.
It is Property Observer's view that the more information provided to those looking to buy and sell in the real estate industry the better.
There is currently an online petition to amend the proposed legislation that has reached 1,000 signatures, with signatories claiming it will cause a further loss of transparency and that it is an illogical move.