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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