There was a 60% clearance rate this weekend from 619 auctions. There were also over 450 private sales. Of the three properties we purchased last week all were either gazetted auctions or deadline sales. All were purchased prior to the gazetted date. Agents are definitely becoming more open to offers prior to auction when the offer is at a level that makes sense. This only occurs when the agent and vendor are “on the same page”
On Sunday, Chris Vedelago, writer for The Sunday Age’s Domain, wrote about the “loophole” allowing large discrepancies between quoted ranges and reserve prices. He has spoken about reserves not having any correlation to quoted prices and this is correct. They do not. However, agents do have to quote a property at what they have appraised it at, or no lower than any offer that has been declined by the vendor: even if the vendor has not quoted a reserve.
There is no loophole. The law is very specific. A vendor does not have to sell his property for what it is worth. They have the right to sell it for what it is worth, or for a lot more or for a lot less. A quote to “market Wrap” asked whether the real estate industry will be properly “called out” about this inappropriate and time wasting conduct”: The only way to force a vendor to advertise his price is to legislate that if a vendor wishes to sell anything, they must set a price and when offered they must accept and sell.
This would be incredibly difficult. It would mean that once a number is reached the vendor must sell, he cannot “wait” for a higher offer. Therefore we would need to go to the “Dutch” style of auction. Unlike popular believe, this is not a “boardroom” auction but one where the auctioneer starts off at a high price and slowly goes down in numbers. The first person to raise his hand wins the auction.
There would also be other issues, such as the allowance of a vendor to withdraw from market. What happens if there is unforeseen competition for the property? Is the vendor allowed to increase the quote price? I know this sounds silly, but as soon as you set a “price the property must sell” then all these issues come into play. A house is not a refrigerator or a car that you can buy the exact same thing off multiple people. Houses are unique and the vendor only has that single unique item to sell.
These are the issues that would make it difficult for the vendor, but we are missing the major issue. For some unknown reason most members of the public and the media think that counsel for the vendor is there to assist the purchaser. The vendor is paying tens of thousands of dollars to the agent to get the best possible deal for the vendor. NOT THE PURCHASER.
Have you ever been to a courtroom were the defendant gets a little lost so he leans over to the plaintiff’s solicitor to ask for advice! This is not as funny as it sounds. Anytime a prospective buyer asks for the wording of a special condition or how long does an “average” finance clause need to be, they are doing exactly that. Asking the outer sides counsel for advice.
All of the above issues could be eradicated, all of the low quoting or even the illegal underquoting could be stamped out very quickly simply by purchasers using a Buyer’s Agent / Buyers Advocate. The purchaser would immediately know what the property is genuinely worth. The buyer would have counsel as to how to handle early offers, when to get pest and building inspections and have the confidence to sign offers, knowing they have a professional Real Estate Agent to fill up the contract on their behalf.
I have absolutely no idea why our Government is not advertising this option to inexperienced purchasers. There is no court in our country that does not warn any party to a legal case that is not represented, that they should seek counsel and gives them time to do so. But for some reason our Government, and the media, believes we should try to hamstring paid counsel for one side to act in a manner that does not unduly disadvantage the other side. I THOUGHT THAT’S WHY YOU PAY FOR COUNSEL!!! BUYING YOUR HOME IS USUALLY THE BIGGEST FINANCIAL DECISION YOU WILL MAKE IN YOUR LIFE.
If you are purchasing a property you need to seek competent counsel. The fees are minimal compared to what you could lose. Auction bidding and offer facilitation can start from as little as $500. For a first home buyer, for a first time bidder, for the person who has purchased many properties, how could you not ask for help.
If you are considering purchasing property please call our office to organise a no obligation meeting
Ian James
Director
JPP Buyer Advocates