Call for auction reserves to be made public a week before auction day

This real estate industry insider says he has the solution to end auction frustration and bring transparency to the Sydney property market.

Sydney properties are reaching well above their reserves. Auctioneer James Keenan takes b

Across Sydney’s buzzing auction trail frustrated buyers are being knocked out of the race with properties selling for hundreds of thousands of dollars above reserve.

The overwhelming demand, which is currently far outweighing property supply, means Sydney’s skyrocketing auction prices seem set to continue, but one Sydney buyer’s agent said he has a solution to add some clarity to the situation.

Patrick Bright, buyer’s agent and author, said he knows Sydneysiders are fed up with spending between $500 to $1000 on building, pest or strata reports for each potential purchase, only to miss out on their dream home come auction day.

At the fall of the hammer, he said even the savviest buyers are being smashed by competitive bidders when prices go well beyond “price guides”.

Vendor Maurice Broome has benefited from the surge of properties selling well above reserve. His family home of 90 years in Kensington sold for $2.575 million — more than $1.2 million over expectations.

Founder of EPS Property Search, Mr Bright, is challenging the NSW Government to “take the lead” and make it mandatory to advertise reserve prices on auction properties in a bid to stamp out underquoting and dummy bidding.

The author of The Insider’s Guide to Saving Thousands at Auction has launched his own online petition calling on the NSW Minister for Fair Trading, Stuart Ayres MP, to amend the current legislation and make it compulsory to publish reserve prices a week before a property goes under the hammer.

Richard Lutterbeck with real estate agent Isabella Catto. Mr Lutterbeck’s Surry Hills terrace sold last week for $215,000 over the set reserve for $1.265 million.

Mr Bright said as auctions are fast becoming the more popular sales method in Sydney it is time the NSW Government “got serious”.

“Under this scenario, buyers will have the choice to go ahead and pay the lead up costs with confidence knowing that they are actually in the running to purchase the property,” Mr Bright said.

Although deliberate underquoting is an illegal practice, Mr Bright said the real estate auction process is “rife” with the dodgy practice.

“It’s time for buyers to take a stand and say no to this unfair, misleading and deceptive practice,” he said.

In response to Mr Bright’s call out to the Minister, a spokesman from the Department told The Daily Telegraph:

“NSW Fair Trading is preparing a discussion paper on real estate industry reforms. The issue of underquoting is one of several raised in the paper,” the spokesman said.

“Among other things the paper will seek public comment on whether the practice of underquoting is endemic in the industry in NSW and, if so, what could be done to address it.”

The Fair Trading spokesman said the Department currently conducts both “covert” and “overt” operations targeting on site auctions to ensure the sale is conducted in accordance with law.

Mr Bright said unsuspecting buyers naturally accepted an agent’s price guide on “face value” but are often disappointed when properties sell “significantly” above the price guide.

But not all industry insiders are in agreement with the proposal.

CEO of the REINSW, Tim McKibbin said he did not agree that forcing sellers to publish their reserve prices was fair, or even helpful.

“I think purchasers come to a sale with a confidential strategy as to what they’re prepared to pay — and the vendor has the same entitlements,” he said.

Mr McKibbin said he also did not believe recent reports that vendors were getting greedy in the current hot market.

“The agent will have a view about what a property will go for, and the vendor has an opinion about what they will sell it for. But at the end of the day, those figures are roughly irrelevant because the purchasers will decide what the price of that property is,” he said.

“I just don’t think that it’s appropriate that there’s one side of the transaction making a disclosure when the other party doesn’t have to.”

To sign Patrick Bright’s petition click here

This unrenovated home at 6 Eric St, Wahroonga sold for $168,000 above reserve at $1.468 million.