Queensland is currently considering legislation that would ban price guides for properties listed for auction, and punish real estate agents or auctioneers who reveal those details to prospective buyers with significant fines.
The Property Occupations Bill and the Agents Financial Administration Bill 2013 (which would replace the Property Agents and Motor Dealers Act 2000 if passed), represents a strengthening of existing legislation which will make any kind of price guide for auction properties illegal - including searching by price online.
The proposed leglislation states:
The auctioneer must not disclose to a person other than a person acting for the seller in relation to the sale—
(a) the reserve price set for the offered property; or
(b) an amount the auctioneer considers is a price likely to result in a successful or acceptable bid for the offered property; or
(c) a price guide for the offered property.
If the offered property is to be offered for sale by auction, the real estate agent must not disclose to a person other than a person acting for the seller in relation to the sale—
(a) the reserve price set for the offered property; or
(b) an amount the property agent considers is a price likely to result in a successful or acceptable bid for the offered property; or
(c) a price guide for the offered property.
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The new Bill, proposed by the Real Estate Institute of Queensland, will also not require any commissions to be disclosed to the buyer and extends to websites (including realestate.com.au) that allow show price ranges wherever possible to help buyers find a property within their budget.
John McGrath, chief executive of McGrath Estate Agents, said he believes banning price guides risks seriously damaging Queensland's property market.
"The banning of price guides will be a barrier to business for this great state. We should be open for business. Making it easy for others to research our property and invest in Queensland," he said.
The law will prohibit buyers searching for auction properties by price on the internet, and there will be no price filter on Queensland auction searches. Data companies that offer pricing information and guidance to consumers (such as RP Data) will also be prevented from offering those details on Queensland properties.
The legislation does permit an auctioneer or agent to provide a comparative market analysis or a written explanation of the property’s estimated price to a 'serious buyer' after an explicit request is received. Buyers would need to make that request for every property they are interested in obtaining pricing for. The buyer will not able to obtain this information anywhere but via the agent or auctioneer.
Australian buyers say a lack of price or price guide is a top turn off when they're house hunting. Pricing details are used daily by Australian buyers to help them efficiently manage their budgets, shortlist properties, plan inspections and make offers.
There has been vocal criticism of the proposed law from a number of different groups. Buyers and sellers, along with members of the property industry, have mobilised to sign an online petition calling for the Government not to pass the legislation. Real Estate Institute of New South Wales president Malcolm Gunning joined John McGrath in calling the move a "step backwards".
REIQ CEO Anton Kardash said the absence of price guides in auctions had long been the status quo in Queensland and concerns from consumers and the industry were unfounded.
“Currently in Queensland, it is common practice for real estate agents to market an auction property with no price guide or likely sale price indication. In fact, the proposed new laws simply seek to clarify existing laws which many in the real estate industry consider to be consistent with the proposed provisions,” he said.
“Indeed, auctions are not unique to real estate. Art, horses and motor vehicles, to name but a few, are regularly auctioned without a fixed price or a price guide because that is the very nature of auctions. The market will decide on the day of auction what it is prepared to pay for that particular asset.”
The Bill goes to a vote this week and, if passed, could be law by June.
*John McGrath is an independent non-executive Director of REA Group.
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