Hey Geoff, Real Estate Deceptions Are Never Funny

OPINION
by Peter Mericka B.A., LL.B
Real Estate Consumer Advocate
Real Estate Lawyer
Qualified Practising Conveyancer Victoria
Director Lawyers Real Estate Pty Ltd

It would appear that the President of the REIV thinks it’s funny when consumers are tricked by the scam known as the real estate auction.

In a column titled “Confessions” appearing in the Domain section of The Age Newspaper (Saturday 18 February, 2006), REIV President Mr. Geoff Dobson tells of an auction conducted near Shepparton, in country Victoria.

Geoff tells us how auctioneer Des O’Shea started the auction in the presence of

“a few neighbours, two dogs and the only buyer, who had indicated what he’d pay before the auction.”

It seems that the auctioneer did not want to abort the non-auction, and chose to pretend that the auction had run its course. How did he do this? According to Geoff the auctioneer,

“…quiety asked the vendor whether they’d take the price the buyer mentioned before the auction. Then he goes to the buyer and says: ‘I’m going to put another vendor’s bid over the top and you’ve go to come back straightaway with the price. As soon as we’ve got that, we’ll knock it down. Have we go the story right?’ So Des went back, made a vendor’s bid, and the buyer came back. Sold.”

Geoff then has the audacity to add,

“In the country, you don’t try to fool people.”

We would like to raise a few questions about this “auction”: Why did Des “quietly” ask the vendor about taking the price the purchaser had had mentioned before the auction? And why did Des then approach the purchaser and apparently “set up” what was to follow? Why did Des ask, “Have we got the story right?” For whose consumption was “the story”?

The terms “contrived”, “trick”, “conspiracy” and “misled” appear to have been left out of this story.

A few pointers for Geoff and Des:

1. Abandon the auction concept. Auctions should only be used where the item on sale is of indeterminate value (e.g. items sold through Sotheby’s and Christies) or where the item is of little value and the vendors will take whatever they can get (clearance auctions). Real estate auctions enable the estate agent to get a property sold, regardless of value, and are inherently unfair.

2. When a purchaser makes an offer pre-auction, enter into negotiations.

3. Where no other party has shown interest in the property, ensure that the vendor is aware that the auction is likely to be aborted, and that it is advisable to negotiate with the known potential purchaser.

4. When the auction has clearly failed, do not pretend that it is actually functioning. There should be no quiet conversations with the vendor, no contrived “vendor bids”, and no pretence about a winning bid in response to the false “vendor bid”.

5. When publishing the result of the transaction, ensure that newspaper readers are not misled by anything that suggests that the property was sold at auction, or that the auction was in any way “successful”.

6. Do not patronise country people by suggesting that they have not been fooled by a contrived “auction” when the opposite is true.

Perhaps the funniest thing about this story is that the President of the REIV doesn’t recognise a deception when he sees one – maybe the story is better described as a tragedy.

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