Property Point

It’s interesting how Australian states have different rules and approaches in an attempt to achieve the best result for their citizens.

In Queensland we have the “adult crime, adult time” approach to youth offenders, an approach with which some will agree and others disagree.  

‍

Youth crime has become a significant issue throughout the country and certainly became a concern in places like Townsville and Cairns, which led to the change in how sentencing is assessed.

Victoria seems a bit different and it is true that that state has challenges that Queensland doesn’t face.

‍

We don’t seem to have a problem with youth gangs armed with machetes so we do not require the same measures as they do in Victoria.

In Victoria there are special boxes scattered around the place where people can hand in their machetes. Getting machetes off the streets is an important part of the fight against crime in that state. The different approaches also extend to real estate, particularly with the rules around auctions.

‍

In Queensland the seller of a property sets a reserve prior to auction but this price is only revealed to the auctioneer and the sales agent. Queensland law dictates that the reserve price cannot be revealed to any potential buyers.

The rules in NSW and Victoria are different, with Victoria’s law changing in the past week to make it compulsory that sellers make the reserve public seven days prior to the auction.

‍

In one state it is illegal to reveal the reserve and in another state it is compulsory.

Glenn Price, director of Price Buyers Agents, told real estate online publication REB that buyers wanted to know price expectations before spending time checking out a property.

‍

“The buyers I work with all say the same thing. They want to know what the vendor is expecting before they burn a Saturday standing in a backyard for an unrealistic number,” Price told REB.

“If buyers know the number a week out, low-ballers stay at home and people who turn up are serious bidders.”

‍

There were only 500 auctions in Melbourne following the introduction of the new law compared to 700 the week before. Price said that some sellers might now be avoiding auctions because the don’t want to show their hand.

He also pointed out that Queensland was now out of step with Victoria and NSW. Queensland’s auction clearance rate dropped to 17 per cent and Price said the fact that bidders don’t know the reserve could be an issue.

‍

“Based on the clearance numbers right now, Queensland’s market is a bit of trouble; that’s due to a host of other factors. Bidding blind on top of that doesn’t help,” he told REB.

It is worth noting that Price is a buyer’s agent and that role is different to that of a listing agent, who is predominantly focused on getting the best result for the seller.

‍

The argument in favour of leaving the reserve confidential is that the open market is left to determine the true value of a property. That could be higher or lower than the reserve.

It’s also worth remembering that while a seller  sets a reserve, where the property will be sold to the highest bidder above that price, the vendor still has the option of selling at a lower price.

‍

Gardian’s auctioneer, Gordon Macdonald, will have a conversation with a seller if bidding stalls and the reserve has not been reached, which enables the vendor to assess the state of play and perhaps lookat bids below that reserve price.

‍

Plenty of buyers would not turn up to an auction if the reserve was revealed and they felt it was too high … only to discover later that the property sold within the buyer’s budget at a price below the reserve.

Too much meddling from governments or not enough?

‍