Victorian Justice Department recommendations regarding new auction rules in Victoria are flawed, according to veteran real estate agent and auctioneer David O’Callaghan.
O’Callaghan says stakeholders to new laws affecting auctions to be introduced on February 1, next year have just released an impact statement that will create problems for the auction system, rather than helping it.
The stakeholders are Consumer Affairs, the Real Estate Institute of Victoria, the Estate Agents Council and the Law Institute of Victoria.
O’Callaghan says throughout all the discussions, reports, rhetoric etc, the stakeholders all appear to have forgotten the primary consumer in this whole debacle – the vendor!
Firstly, the statement recommends that the REIV’s auction rule “the person to whom the property is sold to shall immediately sign the contract” be abolished.
If the statement’s recommendations are approved, how will a vendor compel the highest bidder to sign the contract?
Admittedly, at the “knock-down” there is only a moral obligation to sign the contract, but without the pre-existing rule the incentive for a “renegade” bidder to “walk” will be colossal.
It might become a new Saturday afternoon sport!
Secondly, the statement recommends discarding a fundamental REIV auction rule that a bid once made cannot be retracted.
Two of the main stakeholder protagonists, the LIV and the EAC, have opposed this requirement and sought for it to be abolished.
If approved, how could such a ludicrous notion provide credibility to the auction system. if a bidder can retract a bid, what rights does the next bidder have against the person who retracts the bid?
The statement places much emphasis on the auctioneer to decide if bidders are genuine, but surely this casts greater dispersions on a bidder’s bona-fide.
Is it Consumer Affairs, the LIV and EAC’s intention that we will now conduct “reverse auctions”?
Another example of how ignorant the stakeholders seem to be appears on page 17 of the statement: “Because all vendor bids must be declared, there is no possibility of potential buyers being deceived as to whether a real bid exists.”
O’Callaghan says it is naive to suggest that just because the auctioneer is compelled to declare all vendor bids that all vendors will as well.
As a leading commercial auctioneer with 11 years experience, a past chairman of the REIV’s auction committee and auction trainer, he has grave concerns with parts of this statement. Throughout the statement, he says, there are persistent references made of the inadequacies of the REIV’s current auction rules.
That’s despite the REIV being complicit to the other stakeholders demands throughout the entire consultative period, and mindful of the fact that the REIV represents over 75% of Victoria’s estate agents and auctioneers.
He says the REIV’s auction rules were developed for the whole industry (vendors and buyers) and have been constantly revised over the past 15 years. O’Callaghan says proposed changes to the auction system are welcomed, but need to strike a balance between each of the two distinct consumer groups – vendors and bidders.
He says stakeholders appear to have taken the opportunity of advancing their own causes rather than legitimately attempting to provide a workable platform which is fair to everybody.
“The Bracks’ Government has been ill-advised, or led, by all the stakeholders and the government must now request an urgent review of this ill-conceived policy statement before a working auction environment is destroyed for good,” O’Callaghan concludes.
(Editors note: The statement can be viewed at www.consumer.vic.gov.au Click on “Proposed Sale of Land Regulations 2003”).
