Industry Authority issues warning over 'Quick flick' auctions

REAA.png

It all started earlier this year as the active Auckland property market came alive and auctions became the guaranteed process to sell every property or so it seemed. At the same time as buyers became more desperate agents decided to shorten marketing period from the usual 3 to 4 weeks to a matter of 2 to 3 weeks.

Then of course we had that much publicised  'Quick flick' auction with a marketing campaign of 33 hours roundly defended by the real estate industry.

Whilst the industry locked arms and stated that they were merely responding to the demands of the market and serving the needs of their clients - the sellers of properties, the Real Estate Agents Authority (REAA) in their role as overseers and licensors of the industry reflected on this behaviour and when questioned in the NZ Herald article stated:

That the situation raised "significant concerns".

"The practice is not one that the authority encourages and one that we would strongly urge any vendor or purchaser to take legal advice about prior to entering into," she said.

"From a vendor's perspective, an issue is raised as to whether (they) could receive the best possible result from such a limited marketing campaign.

"For any short marketing or sales programme, the vendor should have been given adequate time to ensure they are well informed about the decisions that are being made and the potential consequence of those."

Over the past month the REAA has reflected further and just this week they have sent out  guidance to all licensees on this issue. In an email sent to the industry last week they stated:

There has been some media attention recently about property’s having very short advertising periods and being sold within days of being listed. While this may be a sign of the times in some markets around the country it does raise some concerns for us. We are concerned that the marketing period may not be long enough to achieve the best results for the vendor and that prospective buyers may not have enough time to do their due diligence and get legal and technical advice. As licensees you must point out these risks to both the seller and the potential buyers, and of course you must continue to meet all of your obligations under the Act and the Code of Conduct.
— Real Estate Agents Authority - Sep 2013 Update

I am pleased to see this communicate from the governing body of the industry. They have not made changes the code of conduct but I see this as a valuable communication especially as they make the point that licensees must consider the needs of buyers to ensure they have the appropriate time to undertake due diligence. Too often we only hear the needs of sellers being expressed by agents.