New laws which will reveal reserve prices to bidders in South Australia have passed parliament this week.
Deputy premier and minister for business services and consumers John Rau, said the laws will mean fairer auctions for South Australian homebuyers.
“These laws are another important step in protecting the rights of South Australian consumers,” Mr Rau said. “The changes mean that if a price for property to be auctioned is advertised, the buyer will know what the vendor is willing to accept.
“Importantly, this eliminates the shoddy practice of under quoting, which is used by some rogue agents.”
In November last year, Mr Rau vowed to stamp out the practice of bait pricing, however president of the Real Estate Institute of South Australia (REISA) Greg Troughton said this was not the way to do it.
"When you know the reserve, that has an impact on the auction and will have a dousing effect on the bidding," he said in November.
Mr Rau claims the new laws also remove a significant amount of red tape for real estate agents and reform the sales agency agreements to allow them to be extended and more flexible, while still protecting individuals from being exploited.
New laws also require the price placed in a sales agency agreement by an agent to be a single figure, rather than a range, compelling agents to be more accurate and realistic in their sales agency agreements.
However, Mark Forde, principal and auctioneer at Harcourts South Coast in South Australia, believes the laws go too far.
“I don’t think it’s good in my opinion. I don’t have a problem with having a price guide with an acceptable selling price within 10 per cent of that, but the beauty of the auction process is letting market forces take over,” he told Real Estate Business.
“People might find a house they want and may be prepared to bid a bit more to get it, and if two or more bidders are in that situation then the property can sell well above any expectations.
“I don’t condone under quoting in any form at all … but the reserve price is something that should remain between the vendor and their agent.”
But George Psarros from Ray White North East believes the new laws won’t affect him too much.
“These laws only affect agents who put out a price guide to begin with. Ray White has a policy of never using a price guide, so we can’t be accused of under quoting," he said.
“If we supply a price guide on an auction, we get a grilling from head office, so it doesn’t affect us too much.”