Property Auctions May Be Good Places To Stay Away From
Property Auctions May Be Good Places To Stay Away From
Whether we have been advising and representing property sellers or buyers, Mitchells have long warned our clients to be wary of auction sales. Sellers beware! A crusty old real estate agent once remarked that an auction was little more than a device for persuading sellers to drop your reserve price. And buyers beware…particularly of vendor or auctioneer bids!
Some time ago our Tim O’Dwyer, wearing his Real Estate Watchdog’s hat, gave this on-line warning to Aussie auction buyers and sellers alike after a significant New Zealand court decision arising out of a dubiously-conducted auction:
Many of us have long warned that real estate auctions across Australia are little more than devices for deception. What about in New Zealand? Might Aussies learn anything from the Kiwis about how to make auctions more honest?
While limited reforms are being introduced into real estate auction laws in some parts of Australia, consider this tale from across the Tasman.
A property, with a reserve of $235,000.00, was set for auction with other properties at the selling agent’s premises. Before any properties were put up, the auctioneer read out the sale conditions. These included a vendor’s right to bid personally (or by an agent or by the auctioneer) and that, subject to the reserve being reached, the highest bidder would be the purchaser. This particular property came up at its advertised time, but the auction conditions were not re-read.
The auctioneer made the only bids. These started at $110,000.00 and moved quickly by $10,000.00 rises to $180,000.00. Then came a bid of $185,000.00 before the property was passed in on a final bid of $190,000.00. The property was sold some time after the auction for $210,000.00.
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