| michael@zeroagents.com.au 2006-08-21, 9:25 am |
| Amendments to the PAMD Act 2000 are effective today (21st August 2006).
Fair Trading Minister Margaret Keech claims that the amendments will
make property buyers and sellers more confident of getting value for
money and improved consumer protection.
We are not so sure these amendments will work in achieving those aims.
The basic changes to the PAMD Act 2000 are effectively;
A) Bidders at Auctions will have to register prior to Auction,
including providing suitable identification and receiving a marker to
identify when they make a bid.
B) Any Market Opinions an agent provides to a property seller will need
to be substantiated by a comparative market analysis (CMA).
Now call me a cynic about the behaviour of real estate agents, but
these are really not going to achieve the goals of cleaning up the
behaviour of dishonest real estate agents.
These legislated changes really only make the honest hard working
agents, and yes they do exists, more honest. The dishonest agents will
get around this in no time, whilst buyers and sellers believe the
system will protect them.
Consider these approaches to both of the above changes.
A) The dishonest agent can still get a friend or an associate to
register at an auction. That person can be informed of how high to bid
- so that they bid just below the reserve, to try and get the
potential real buyer to increase their bids. Even if no-one bids after
the friend or associate bids - they are still below the reserve
price, so it just looks to all and sundry like there were some serious
buyers interested in that property. Additionally did you know that the
Auctioneer can bid on behalf of the Vendor. This is called a vendor
bid, and the way an auctioneer does those bids can still influence a
potential buyer into believing they are bidding against a genuine
bidder.
B) A market opinion is not a property valuation. It's the opinion of
the real estate agent on what the likely sale price of a property will
be. They now must substantiate his opinion by comparing similar type
properties that sold within 5km of the property in question. Now I
reckon 5km covers quite a lot of ground, in-fact it could cover suburbs
that have a significantly lower average price. Additionally what about
the time frame - is last 6 months a good indication. Last 12months.
The market opinion is simply not a valuation done by a professional
independent valuer. The agent has an agenda, they will substantiate to
their hearts content and legitimately under the PAMD Act, to get the
result they are after.
Sorry Mrs Keech we don't believe either of these changes do anything
to address the dishonest agents, and the process they employ.
If a property seller wants to feel truly comfortable they should seek
an independent valuation. Then they can decide whether they need to use
an agent or not.
As for auctions, considering current auction clearance rates in
Queensland, forget the dummy bidder, you'd be a dummy seller.
Michael Eroz
Property Analyst
Zeroagents.com.au
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