BUYER v VENDOR
Transparency and privacy are the twin pillars of any auction. People have long been screaming about shoddy practices, including dummy bidding and under-quoting. You could argue things have improved greatly since dummy bidding has been banned. But there are still frequent complaints about opaque selling methods and lax disclosure.
The main concerns are inevitably about the auction system. Low quoting comes in for particular attention, as does passing-in properties even though the top bid is within the price range quoted by estate agents. Some critics even go so far as to propose that to fix these problems the real estate industry should be treated like the stock market, with its legislated transparency and continuous disclosure processes. But is it feasible or even desirable for these rules to be applied to property?
There is a critical difference between a typical financial asset - say an ASX-listed stock - and residential property. A stock holding is a share of a publicly listed company. You only own it for the purposes of investment. In contrast, a residential property may well be an investment, and is something that is traded, but it is also - here is the key issue - a private asset. And while one share in a company is identical to another, every residential property is unique.
Understandably then, property owners are often fiercely self-protective. In fact, they have an almost primeval expectation of privacy and a distinct aversion to attempts by others to impinge on what they can and can't do, including how, when and whether to sell.
So any initiatives to improve transparency must strike a balance between improving governance and not crossing a line where home-owners and investors will rebel due to breaches of privacy. The inherent tension between these competing demands can never be completely resolved to everyone's satisfaction. But we can go some way towards striking a better balance and further enhancing transparency.
