Will this result in a rash of complaints ? I don’t think so, as the agent can always point to the CV & say this is what the Official valuers priced the property at in xxxx.
As a buyer, it is down to you to get your own valuation if you consider the price point indicated (CV) is around what you are prepared to pay.

Thanks for this question. I am not an agent and therefore I will defer to other commentators (specifically licensed real estate professionals) to this blog to provide some comments and observations. My only comment is that given the significant nature of a property transaction it is always wise to seek legal council to provide clarity on any matter you have concerns regarding.

The whole real estate auction world is a pretty easy target and rightfully so if properties are under quoted just to gather interest.

Recently I had a property going to auction and it happened to have a low-ish CV of $890,000. Several customers asked me if the owner would accept CV. I said the only way to find out was to put it in writing. When I asked the same customers if they would pay $1mil they said no.

So if I said to future customers that my only interest had been expressed at CV, but also provided accurate sales stats (that happened to be well above CV), I reckon that would be totally transparent and not in breach of the Act.

What anyone who is wary of the auction process should realise is that customers will twist such scenarios due to self interest and (sometimes) misplaced distrust of the process. I believe most customers dislike auctions because they fear being forced (by another buyer) to pay more for a property they love. In the above example, the word on the street will often be that I low-balled this auction and told people it would sell for $890,000. Nothing could be further from the truth. But that is the mis-truth many will hear.

As I said in an above post i believe licensee’s who run auctions should not disclose client expectations because in the end they might turn out to be high, low or spot on. They must tell the truth about recent sales which could either support ot discredit genuine levels of interest. If they do this their auctions will work well and the public will trust them.

To avoid getting into any strife with customers, clients and the REAA the best policy is for auction licensees to avoid “quoting” prices/price guides for auctions. Give the stats and encourage offers.

I agree that auction in it’s purest form is a great method but (and this is more likely now under the new Act) the salesperson must not quote any price whatsoever.

If you quote a home at $700,000 and the owner sets his reserve at $800,000 and it is obvious from the auctioneers “it’s on the market call” or he has to stop the auction to get the owner to lower the reserve to $800,0000 then you could be in strife if you have at any point indicated low to mid $700’s and it sells for $835,000.

I suspect that the REAA has instigated the appraisal rules in part to clean up “dodgy” auction practices.

9.6 and 9.7 are only breached if you quote a figure that is well below the vendor’s expectations. Maybe an interim reserve figure should have been made a requirement of the new code of conduct with regard to auctions.

A client is provided with a written appraisal of $700,000 to $800,000. The client is not too fussed about the price (a rare animal) but accepts the appraisal, signs the authority with an appraised price of $800,000 and acknowledges the commission payable on a $800,000 sale.

The licensee gets to work selling by auction program. Many people ask what the client expects. The licensee says that like most clients they expect a good result. Instead of blurting the client’s expectations (which weren’t discussed in depth at the time of listing anyway) they provide all customers with sales stats that show similar prices achieved for comparable homes.

Throughout the program the licensee never discloses the client’s expectations (irrelevant anyway in my opinion). An interest rate announcement mid program spurs the market a bit and the property sells for $823,500. An amazing result that nobody could have predicted. The right customers who were willing to compete to own the “rare as hen’s teeth” home made a mockery of the appraisal process. Appraisals are required yes. But they rely on old information.

The licensee did everything by the book. I don’t think the REAA would be disciplining this licensee. On the contrary, they might give him a medal for upholding the highest of professional standards and improving the public’s perception of the industry as a whole.