Auction Property Price Guide Indication Ranges
You may have noticed in recent times that agents have been putting price range indications on Auction properties when marketing. This is used to give buyers a somewhat guide of where the property may sell for at Auction. This price range band is only an indication of where the property should sit in the market on comparison.
As we have seen with auctioned properties, and “The Block” as an example, showing that emotions can take hold and some property prices can go further than were first thought and expected .
Some agents have complained to the Office of Fair Trading relating to this issue on giving price ranges or price band marketing indications as seen below from the REIQ and OFT
It had also come to our attention that real estate agents had made complaints to the Office of Fair Trading (OFT) regarding other agents advertising price guides in connection with auction properties. The OFT investigated these complaints.
As the industry peak body, the REIQ was concerned by the level of uncertainty surrounding this important aspect of the legislation and the conflict it was causing amongst real estate businesses. We sought urgent clarity from the OFT on this issue. read more hear…
The OFT has responded to the REIQ in writing as follows:
Price representations and reserve price indications in relation to residential auction properties
Sections 574B and 574D of the Property Agents and Motor Dealers Act 2000 (PAMDA) detail the obligations of auctioneers and real estate agents. The sections provide that if a property is to be offered for sale by auction, the auctioneer/real estate agent must not disclose to the potential buyer:
a) whether the seller has set a reserve price for the offered property;
b) the reserve price set for the offered property; or
c) an amount the auctioneer/real estate agent considers is a price likely to result in a successful or acceptable bid for the offered property.
To advertise a price band prior to auction appears to conflict with subsection (c). Sections 574B and 574D apply only when the potential buyer asks an auctioneer/real estate agent for information about the price at which the property is likely to be sold. This requirement appears to limit the sections to circumstances where a potential buyer asks the agent for this information.
However, the explanatory notes accompanying the Property Agents and Motor Dealers and Other Acts Amendment Act 2006 reveal that these sections were intended to prohibit the disclosure of the reserve price, or price at which the seller is willing to sell the property to a potential buyer by auction or otherwise. It seems clear from those notes that this section was intended to prevent disclosure of information regarding the reserve price in all circumstances.
To prevent the need for OFT to consider whether enforcement action is warranted, auctioneers and real estate agents are encouraged to consider using price band representations to protect themselves from complaints only where the vendor has provided written authority and approved the proposed advertising.
If an agent has written authority from a vendor approving such advertising, OFT is unlikely to take any enforcement action. source
If your agent does not have your written permission for all things relating to marketing, pricing then they may be working outside the law. Everything in writing and written consent is the only way to be sure all the rules are kept.
If my vendors, have written into our signed agency agreement that they want me to dress up like a chicken, dance on the footpath with a big FOR SALE sign around my neck pointing people to their house – I will do it!…. How much is it to hire a chicken suit?
Living In The Lock-Up in Surry Hills