Property Occupations Act's impacts on Queensland agents: Michael Davoren

The forthcoming Property Occupations Act 2013 changes to the Property Agents and Motor Dealers Act 2000 (PAMD) have had readers discussing with some fervour lately.

The first area getting a lot of traction in discussion is the deregulation of commissions, requiring no cap to be made on the amount an agent can make. Property Observer recently wrote about the fact that commissions will no longer require disclosure to buyers.

Another change that had the Real Estate Institute of Queensland asking for was the abolishment of the PAMD 30c warning statement.

While yet another piece of wide discussion was that the legislation could leave buyers without price guides.

Michael Davoren, managing director of RE/MAX Australia, noted the following about two different areas:

Deregulation of commissions

Queensland law currently caps the amount of commission an agent can charge for residential or rural property transactions. That will alter when the State Government deregulates real estate commissions  as one of the changes included in the Property Occupations Bill 2013, which spits the Property Agents and Motor Dealers Act 2000 (PAMDA) into industry specific Acts.

The deregulation process in 2014 will bring Queensland into line with other states and territories. In effect, Queensland is moving to be in step with the rest of Australia.

While many have expressed concern perceiving that deregulation may lead to increases in commissions, the experience in other Australian markets shows that this is not the large scale case.

A percentage of agents will move their commissions downward.

Under a deregulated system, agents will be better placed to negotiate with sellers on the amount of commission to be paid.

The amount charged will only come into question when the customer can’t see the point of difference, when an agent cannot differentiate themselves through the value of their service.

Deregulating commissions can be expected to lead to increased competition in the industry, which should benefit consumers and agents.

Agents have to learn how to address the customer’s questions on the commission fee charged.

Agents have to learn how to truly add value…for example, by sharing their listings with other agents in the market. Agents must be prepared to negotiate the commission charges around such arrangements as exclusives and conjunctions, and consider options such as charging a listing fee.

Many of these things will be alien to practicing Queensland agents so RE/MAX Australia will offer dedicated training in the first half of 2014 to put its people at the front of the game.

Auctions and price disclosure

The Property Occupations Bill 2013 currently before the Queensland Government contains guidelines around price disclosure of properties to be auctioned.

The decision to clarify what the agent can and cannot give a potential buyer by way of price guide is a good one.

The Act proposes that an agent or auctioneer can provide a comparative market analysis in writing with the written consent of the seller and at the direct request of the buyer.

The auction method is the purest form of sale and the proposed Act firms up its transparency.

The auction sale outcome is not influenced by the real estate agents opinions of price and value but can be based around actual substantiated comparative facts presented in writing, which includes via fax or email.

These conditions in the proposed Act also remove any temptation by real estate agents to attract buyers as well as auction listings by quoting price ranges that cannot be backed up in writing.

What are your thoughts? jduke@propertyobserver.com.au