REAL ESTATE PROPERTY AUCTIONS PROGRAM September - December 2016

PURPOSE OF PROGRAM Access (AC) is responsible for ensuring that Real Estate Agents comply with the Agents Act 2003, Agents Regulation 2003, the Civil Law (Sale of Residential Property) Act 2003, Civil Law (Sale of Residential Property) Regulations 2004 and the Australian Consumer Law (ACL).

Purchasing property is one of the largest investments Australians will make in their lives. The Real Estate Property Auctions Program sought to ensure agents were complying with relevant legislation and were not misleading prospective buyers about the likely price of a property for sale at auction.

As part of the program, Access Canberra (AC) Inspectors identified 25 properties that were to be auctioned on 24 September 2016. The program covered properties in , , , South Canberra/ and .

THE PROGRAM WAS SPLIT INTO THREE PHASES

Phase 1 - prior to auction of the properties, Phase 2 - overt inspection of the auction being held on AC inspectors covertly attended open house 24 September 2016; and inspections posing as interested buyers and Phase 3 - inspection at the agency’s requested the selling agent to provide an place of business where the auction estimation of the selling price of each targeted property file was inspected. The agency property prior to auction. Inspectors also agreement was examined, and the 25 sighted required documents in relation to a sale expected selling price or range and AGENCY of residential property and copy of proposed details of any reserve determined by the INSPECTIONS contract for the sale of the property; seller were noted.

 More information and resources relating to real estate agents can be found on the Access Canberra website www.accesscanberra.act.gov.au ISSUES FOUND / AREA OF FOCUS

PHASE 1: MARKET INTELLIGENCE

The general practice is that a contract is available Inspections performed Compliant at an open house inspection, as this is a place where an offer to buy the property might be 23 20 made to the seller through the agent. Contracts Non-compliant Compliance rate were available at all premises except for three properties open for display. 3 87%

PHASE 2: INSPECTION DURING AUCTION OF PROPERTIES

Of the 23 properties inspected in Phase One, AC inspectors attended a total of 18 auctions conducted on Saturday 24 September 2016. In this phase AC inspectors noted the standard conditions for the conducts of public auction of residential property were displayed, bidder’s records were established and that prior to conducting the auction the auctioneer:­ • announced standard conditions; • indicated whether the property was subject to a reserve; • announced the auctioneer could refuse any bid and determine the amount by which the bidding was to be advanced; • property may be withdrawn from sale at any time; and • where there was a dispute, noted that the auctioneer was the sole arbiter, the decision was final and the auctioneer had the right to place a vendors bid. Inspections performed Compliant Non-compliant Compliance rate 18 18 Nil 100%

PHASE 3: AGENCY INSPECTION

Inspectors visited the licensed agents who were in • the address of the property being auctioned; charge of the auction conducted as part of Phase • the name of the seller; Two and requested access to the auction file. • the name and licence number of the sellers agent; When viewing the file, particular note was made of • the name and licence number of the auctioneer conducting the the bidders register, any reserve prices established auction; by the seller, and inspection of the agency • the authorised bidder and represented party, details recorded in agreement to determine the estimated selling authorisation letter but not transcribed onto bidders register; price quoted in the agreement entered into by the • the recording of the successful bidder and the price paid again agent and the seller prior to the property being was not always entered on the bidders register; and offered for sale. • the failure (in one instance) to record the identification presented by a bidder when registering at the auction. The majority of non compliant issues identified relate to the bidders register, where agents failed Inspections Compliant Non- Compliance to record:­ performed compliant rate • the date and place of auction; 25 7 18 28%

PROGRAM OUTCOMES The main purpose of this program was to identify agents that may be underquoting the likely selling price of a property that was to be auctioned. From information obtained of the 25 properties that were auctioned, ten of the properties were underquoted and other non compliant issues relate to bidder records. Given that this program has identified issues of non compliance, it has been determined, the best course of action in this instance is to educate real estate agents.