Property auction reforms to overhaul public selling system
Proposed legislation to overhaul the nation's residential property auction system will address rising concerns over property prices misleading prospective buyers.
The would-be legislation put forward by consumers minister John Rau, would see more transparency in the auction market, with vendors restricted to setting a reserve price at no more than 10 per cent higher than the property listing cost.
Under the planned changes, those in the market for buying a property through an auction will have a clear indication of the minimum price the vendor will sell for.
"The government is planning to introduce new laws to prevent misleading and unrealistic auction places," acting consumers minister Patrick Conlon explained.
"This will ensure that the prospective purchaser will have a reasonable indication of the reserve price before the auction."
Under current legislation, reserve prices aren't regulated, meaning vendors have complete flexibility with fixing a base cost and marketing value.
Some experts believe however, the drafted legislation will destroy the auction system, with the purpose of a public sale to gauge public opinion on the worth of a property.
"If the reserve price is basically disclosed three weeks beforehand, when the property is listed - when no one really knows how much interest there will be in the property and prior to public feedback - it could lower expectations, which will penalise the vendor," Mr Brock explained, News Limited reported.