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No more price guides on auctions

Auctioneers and Real Estate Agents Beware – No more price guides or disclosure of reserve or other prices (whether by Auction or otherwise)

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From 1 December 2014, the Property Occupations Act 2014 will apply.  This legislation brings with it a number of significant changes to the former Act that governs real estate agents and auctioneers.

We have touched previously on the practical changes that come into play around the formation of Contracts themselves, but the purpose of this article it to highlight the new sections that now prohibit the disclosure of reserve or other prices for properties sold at Auction.

Section 214 now provides the following (our emphasis added):

214 Auctioneer not to disclose reserve or other price

(1) This section applies if residential property is to be, may be or

is being, offered for sale by auction (offered property).

(2) 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.

Maximum penalty—540 penalty units.

(3) However, if during the auction, the reserve price is reached or

exceeded, the auctioneer does not contravene subsection (2)

only by disclosing, to persons present at the auction, that the

reserve price has been met.

Example of a disclosure that the reserve price has been met—

the auctioneer announcing during the auction that the property is on the

market

(4) Also, an auctioneer does not contravene subsection (2)(c) only

because a price or price range for the property is disclosed by

the auctioneer to an electronic listings provider to establish

search criteria for listing the property for sale on the

provider’s website or other electronic medium.

(5) However, subsection (4) applies only if the auctioneer is

satisfied on reasonable grounds that—

(a) the electronic listings provider will list the property for

sale on the website without disclosing the price or price

range; and

(b) the listing will include any statement prescribed under a

regulation.

(6) If an auctioneer gives a copy of a comparative analysis or a

written explanation (market information) to a seller under

section 213(4), the auctioneer must not give the market

information to a person without the seller’s written approval.

Maximum penalty—540 penalty units.

 

So, this means that Real Estate Agents and Auctioneers will need to review their advertising policies before 1 December 2014 to avoid being in breach of the Act and liable to financial penalties.  Care should be taken to ensure that any electronic listing providers do not disclosure the price guides despite that information being required in order for those providers to correctly categorise the property.

Similar restrictions now also apply to Real Estate Agents whether or not the property is to be sold at Auction. New section 216 provides (our emphasis added):-

216 Real estate agent not to disclose reserve or other price

(1) This section applies if residential property is to be, may be or

is being, offered for sale, whether or not by auction (offered

property).

(2) If the offered property is to be, may be or is being 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 real estate 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.

Maximum penalty—540 penalty units.

(3) If the property is not to be offered for sale by auction and the

seller has instructed the real estate agent not to disclose the

price at which the seller is willing to sell the offered property,

the real estate agent must not disclose to a person, other than a

person acting for the seller in relation to the sale—

(a) an amount the real estate agent considers is a price

likely to result in a successful or acceptable bid for the

offered property; or

(b) a price guide for the offered property.

Maximum penalty—540 penalty units.

(4) A real estate agent does not contravene subsection (2)(c) or

(3)(b) only because a price or price range for the property is

disclosed by the real estate agent to an electronic listings

provider to establish search criteria for listing the property for

sale on the provider’s website or other electronic medium.

(5) However, subsection (4) applies only if the real estate agent is

satisfied on reasonable grounds that—

(a) the electronic listings provider will list the property for

sale on the website without disclosing the price or price

range; and

(b) the listing will include any statement prescribed under a

regulation.

(6) If a real estate agent gives a copy of a comparative analysis or

a written explanation (market information) to a seller under

section 215(2), the real estate agent must not give the market

information to a person without the seller’s written approval.

Maximum penalty—540 penalty units.

 

It stands to reason that Agents will now have the interesting task of communicating responses to Buyer’s who request price guides or a fair indication of the price Seller’s want for properties if the actual asking price is not listed.

There are serious financial penalties for breaching these sections if complaints are enforced by the Office of Fair Trading so agents should take care to review their internal sales policies and procedures to comply with the new requirements.