25 Mar 2020

COVID-19: Private treaty sales set to soar as public auctions banned

Media Release

Private treaty sales will become the dominant method of selling in our cities as moves to ban public real estate auctions come into effect from midnight tonight amid Coronavirus fears, according to Australia’s leading body of professional buyer’s agents.

Last night Prime Minister Scott Morrison announced further strict social distancing measures which includes banning real estate auctions and open house inspections in a bid to slow the deadly disease.

Real Estate Buyers Agents Association (REBAA) president Cate Bakos said she believed selling agents would steer away from virtual auctions in favour of private treaty sales.

“While virtual auctions probably won’t be banned as they technically don’t infringe on the social distancing rules, agents will likely veer away from them as they can’t build the same number of buyers or read the competition like they ordinarily could via the private treaty process,” said Ms Bakos. 

“Buyers won’t want online auctions without visibility. There is no way to guarantee against false bidding and even if selling agents are honest, buyers will still hold the element of distrust.

“Buyers also need to be cognisant that a selling agent will be likely to FaceTime the most appealing aspects of a property in an online open home but they won’t necessarily be prepared to show the worst, or troublesome elements.

“Selling agents have a fiduciary commitment to the vendor, and as such they will show a home in its best light at every opportunity, regardless of its shortcomings.

“Buyers generally dislike auctions and are particularly suspicious of online auctions, which lack the usual transparency of a public auction.  Ultimately agents will adopt the method most likely to get the vendor the best result and results are only optimised by willing buyers.”

Ms Bakos said there were several alternatives to selling property than by public auction. These include by private treaty, ‘best and highest’ regimes and via expressions of interest (or tender).

She said engaging an independent buyer’s agent in these rapidly evolving times could provide some valuable security for buyers who were nervous about negotiating online or via private treaty.

“As buyer’s agents we understand the strict safety regimes at open for inspections and we can easily coordinate private inspections with agents based on qualified, finance-prepped buyers which limits social ‘over exposure’ for vendors,” said Ms Bakos.

“We can represent buyers who are in isolation using real-time technology apps such as Periscope which can showcase properties to buyers from inside their own homes.

“We can also facilitate faster transactions because our buyers are purchase-ready and we can prep accurate due diligence in a short time period. We can also facilitate online contract signing, offer submission and exchange; something that inexperienced buyers aren’t equipped to coordinate.”

REBAA is Australia’s largest professional body representing buyer’s agents. It’s members are experts in searching, evaluating and negotiating property and work on behalf of property buyers independent of commission. Visit www.rebaa.com.au for a full list of national members.

The other advantages for using a buyer’s agent during the Coronavirus pandemic are that they can:

  • Decipher agent speak;
  • Ask the right questions;
  • Obtain proof of competition when required (in ways that buyers are too timid to try);
  • Know which agents have form for being straight shooters;
  • Know the right prices to pay;
  • Know how to tackle “best and highest’ regimes;
  • Help buyers position their offer above others with terms, as opposed to price and;
  • Shortlist only the appropriate properties in appropriate price ranges for inspection. No unnecessary inspections.