New auction rules

Gunning says the Office of Fair Trading is working on new rules for auctions in NSW and this has the backing of the NSW Minister for Innovation and Better Regulation, Victor Dominello.

Gunning says a taskforce which has the support of NSW Premier Mike Baird is working on resolving the grey areas surrounding auctions. The taskforce includes the Real Estate Institute, the Australian Livestock Property Agents Association and the Estate Agents Co-operative.

In Sydney’s sizzling market, auctions are naturally the most favoured option for sale. The market is moving so fast that properties are being listed and sold at auction within three weeks. 

Auctions are another subject of angst. The young woman in this case study has repeatedly found that she is simply there to make up the numbers.

It would seem some agents like to have a big crowd for the auctioneer. To achieve that objective, the value of the property is understated in listings as well as throughout the sales process.

The experience of our potential buyer is instructive. Over the past three months, at more than a dozen auctions, the sale price in the listing has been understated by at least $100,000.

Being part of the auction process can itself be frustrating. In this case study, the young woman found a particular group of real estate agents at a high-profile agency completely incompetent. They did not know which forms needed to be filled in beforehand. 

Gunning is brutally honest when he says the industry in NSW has its fair share of people who are “unconsciously incompetent”. He says the Property, Stock and Business Agents Act is complex, but agents should understand it.

Gunning blames the low training standards on the Office of Fair Trading. But he says there is change in the wings and qualification standards will be lifted.

Many of the problems in the Sydney property market are simply a function of the boom in prices. Prices have moved so fast that agents have lost touch with market values.

The financial institutions have also struggled. For example, our potential buyer was given a bank valuation for a property for an auction this month that was 12 months out of date. That is critical given that the loan is based on the bank valuation.

Tony Boyd

Twitter: @TonyBoydAFR

Tony.boyd@afr.com.au