FOR IMMEDIATE RELEASE
A survey just released finds that the changes made to Victoria’s auction laws in 2016 are not working: estate agents still significantly underestimate the likely prices at which houses will sell at auction.
In fact, over 2 separate periods totalling 12 weeks in mid and late 2019, agent estimates were wrong 82% of the time !
And each of those wrong estimates was an underestimate, by an average of almost 12% !
The survey was conducted by Ben Piper, an independent commentator on auctions and auction law. Mr Piper is the author of the e-book “How to buy a house at auction in Victoria”. He also manages the “howtobuyahouseatauction.com.au” website, which provides independent advice on house auctions.
According to Mr Piper:
“My survey provides the first hard evidence that Victoria’s auction laws, which were revised in 2016 to try to make sure that house buyers and sellers could rely on estate agent estimates of how much a house was worth, are not working.”
“The survey finding that 4 out of 5 estate agent estimates are wrong, and that they are wrong by an average of almost 12%, suggests that the situation is almost as bad as it was 20 years ago, when there were no laws governing agent estimates.”
“Laws on under-quoting first started in Victoria in 2004 because deliberate underquoting by estate agents was causing potential house buyers to waste a lot of expense and effort trying to buy houses that they didn’t have a realistic chance of getting at auction. It seems we are back to those good old days.”
“Having had a bird’s eye view of the making of 2004 laws, and how they were enforced, in my opinion the problem does not lie with the laws – instead, the problem is with how the laws are enforced. The laws cannot enforce themselves. They need someone to do that for them. That takes considerable resources. It appears either that those resources have not been provided, or that they are not being used effectively.”
Until 2004, real estate agents in Victoria were free to make whatever price estimates they wanted in relation to houses about to be auctioned. Traditionally they quoted a price to prospective house sellers that was more than the price they thought the house would get (to try to get the seller’s business), and they quoted to prospective buyers a price lower than the price they thought the house would get (to try to get them to attend the auction).
This underquoting to prospective buyers caused much anguish and wasted time and effort.
The Victorian Government first attempted to do something about this in laws that took effect in 2004. By 2015 it was clear that these laws were not working. Therefore the Victorian Government had another go in laws that took effect in 2016.
More about the survey
The survey was conducted using price estimates and auction results published in readily available media. The 1st period surveyed was from 22 June 2019 to 3 August 2019, and the 2nd period was from 26 October 2019 to 23 November 2019.
The survey looked at all properties that had a price estimate published in the Domain magazine, and that then had their auction results published on the Domain website. Unfortunately owing to the relatively small number of properties for which auction results were reported, the total number of results is quite small compared with the number of auctions held in the relevant period.
For more information, see: https://www.howtobuyahouseatauction.com.au/post/how-accurate-are-agents-estimated-prices
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Ben Piper is a retired ex-public service lawyer who has had a long-term interest in auctions and auction law. In June 2019 he published the e-books: “How to buy a house at auction in Victoria” and “How to buy a house at auction in N.S.W.” and the website: https://www.howtobuyahouseatauction.com.au/
Mobile: 0412 469 824
Email: [email protected]
Sole trader interested in auctions and auction law.
M: 0412 469 824