The ban on auction price guides is ridiculous | John McGrath

In John McGrath’s latest Switzer column he discusses the upcoming changes  to auctions in the Queensland property market.

John Mcgrath

He says:

From December 1, 2014 agents in Queensland will no longer be able to advertise a price guide on properties listed for sale by auction.

They also won’t be able to even discuss price with buyers – leaving them to play a guessing game on what the seller’s expectations are.

The only time agents can give any price indication is when listing on property websites such as realestate.com.au or domain.com.au; where a price guide has to be entered in the back end of the system so the property will appear in relevant buyers’ searches.

This is one of the most ludicrous, retrograde steps in real estate I have seen in my 30 years of being in the industry.

I’m still unsure as to whom the Real Estate Institute of Queensland (REIQ) and the State Government believe it is benefiting.

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It appears to me to be detrimental for buyers, sellers and agents all in one.

And nobody from the REIQ or Government has been able to give me a credible answer as to why they have brought this in.

Ask yourself, as a buyer of real estate, if you think it will assist you to purchase property by not allowing agents to discuss a property’s price with you?
In an age of transparency and information, Queensland will become the only jurisdiction on planet earth that bans agents and buyers from having conversations about the price of a property.
Is the rest of the world wrong and the Queensland State Government right?

It is quite likely that a number of sellers will choose alternative methods of sale due to the new legislation, which is highly likely to cost them money because auction is by far the best way to achieve the highest possible price – and it’s also the most transparent way to buy.

Buying a new home or investment can be an incredibly exciting enterprise, but any buyer who has been out there every Saturday for months on end will tell you that the process can be tiring.Inspector
What they need most is to be able to quickly and efficiently understand the likely selling range of a prospective home so they can determine whether to pursue it or not.

This decision is often made when putting together a list of homes to inspect on Saturday, so properties listed for auction with no price indication are highly likely to be ignored.

They’ll go into the “too hard basket”.

Who does that hurt?

Pretty much everyone – sellers will have fewer people inspecting their homes and buyers could potentially miss out on their ideal property.

People don’t have the time or desire to waste energy pursuing a property if they can’t get access to a price range.

Sure, if buyers are purchasing in the same suburb they already live in, they might know enough to make an educated guess on likely selling prices. But these days, few people buy in the same suburb.

Young families drift further from the CBD looking for bigger homes on bigger blocks.

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Downsizers come closer to the CBD for entertainment and lower maintenance homes.

Investors look for opportunities outside their own backyard to diversify.

This crazy price ban is going to make it so much harder for buyers coming from outside Queensland.

I have fought hard against this price ban but for some unfathomable reason the Government feels it is important to keep buyers in the dark.

There’s going to be fall-out over this and I think it could impact Queensland consumers and consequently the property market.



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'The ban on auction price guides is ridiculous | John McGrath' have 2 comments

  1. November 28, 2014 @ 9:06 pm Lee

    How about the real estate agents quote a real range in the first place? Why even quote a price range that starts well below (or even below at all) the reserve price?
    Ie a 400-440k range when the reserve is set at 450k!
    That’s the misleading and annoying part for buyers…
    A ban is unnecessary but there should be real, enforceable penalties for REA’s who mislead buyers in such a way, thus wasting their time using the previous method of quoting anyway

    Reply

  2. November 28, 2014 @ 10:32 pm Paul

    “… which is highly likely to cost them money because auction is by far the best way to achieve the highest possible price – and it’s also the most transparent way to buy.”

    Certainly it’s the most transparent purchase method, but claiming that Auction is by far the best way to achieve the highest possible price for Vendors? To make such a sweeping generalisation is misleading. It’s horses for courses – sometimes Auction is the best approach for achieving the highest price, sometimes it’s not.

    Auction’s can be really great for buyers though! I purchased my PPOR for $25,000.00 less than the maximum I was willing to go on the day – hardly the best way to achieve the highest possible price for the vendor. If I was negotiating privately I would have offered much more.

    Reply


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