by Peter Mericka B.A., LL.B Real Estate Lawyer and Qualified Practising Conveyancer Victoria Lawyers Real Estate
When is an auction not an auction? When it’s a real estate auction. This was demonstrated recently when the highest bidder for a $2.7 million property refused to buy it.
According to Melbourne’s Sunday Herald Sun newspaper:
“…the sale failed to go ahead, despite the winning bidder making several bids to buy the property in front of a crowd of about 45 people. …the Real Estate Institute of Victoria agreed there was little estate agents could do if a winning bidder did not sign a sale contract after an auction.”Estate agents have always known that real estate auctions are not true auctions. But they still choose to trick consumers, vendors and purchasers alike, into believing that properties are actually “sold under the hammer”.
We believe that estate agents should be required by law to disclose to all consumers the fact that a real estate auction does not result in a sale. Perhaps the term “auction” should be replaced with a more accurate descriptive term such as “purchaser selection process”.
At the very least, consumers should be informed that the process is not binding on either party, and that the vendor and purchaser are both free to walk away without signing a contract.
Can there be a true real estate auction, conducted ethically and legally? Of course; but estate agents will always prefer the commission-generating fake auction.
Let’s examine this a little further.