Video Recording of Real Estate Auctions

Published 16 February 09 07:13 AM | Peter Mericka 

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

 

It's time for consumers to get serious about the tricks and criminal conduct associated with real estate auctions. As most of the criminal conduct associated with auctions takes place when the auction is in progress, the logical solution is to make a record of the proceedings. The video recording of every real estate auction would greatly assist in keeping real estate agents within the law, and consumers safe from criminal conduct.

As a former member of the Victoria Police Force, I can recall the time when the audio taping and video taping of police interviews was introduced. Some thought it would stifle police interrogations, that police would be reluctant question suspects thoroughly, or that suspects would be reluctant to participate. But the benefits were soon realised. I would often tell a suspect, "See that tape recorder, just imagine that it's a judge and jury and they're listening to everything we talk about this morning." A suspect who was initially full of bad language and bad attitude would suddenly realise that everything he said or did would be viewed by those whose role it was to assess his credibility, and he would see the advantages of being honest and courteous.

Auctions have always attracted crime

Serious criminal offences are regularly committed under the veil of the real estate auction - the most common being the criminal office of "Obtaining Financial Advantage By Deception". This crime was ignored for years, and justified by real estate agents as an essential part of the auction process. Eventually, the state government realised that the offence under the Crimes Act (see Section 82 of the Crimes Act 1958) was simply being ignored by the REIV, real estate agents and the regulating authorities. In order to look as though positive action was being taken to stamp out this crime, the government introduced a lesser version of the offence, called it "Dummy Bidding", and added it to the Sale of Land Act (see Section 39 of the Sale of Land Act 1962).

There were reports that dummy bidding slowed for a while, but anecdotal evidence (there are very few prosecutions) suggests that it is as prevalent as ever. Similarly, underquoting, dodgy price ranges and the refusal of estate agents to allow genuine negotiations on auction day put vendors and purchasers alike at a disadvantage. It seems that the one rule that all estate agents observe at auction is that a sale must take place, by fair means or foul.

Even "softer" forms of deception generally escape detection. For example, in a comment to a recent blog posting about dodgy auction result figures from the REIV, I was able to give a first-hand account of having seen former REIV President Richard Carter of Carter Real Estate Ringwood falsely report my neighbour's house as having sold at auction, when in fact the property had been passed in.

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Filed under: Deception, Auction, Auctioneer, dummy bidding, recording, video

Comments

# Austin said on February 16, 2009 9:32 AM:

Hi Peter,

Does standing out the front or under the carport of a house constitute 'a public place'? or is it considered private property?

# Peter Mericka said on February 16, 2009 9:53 AM:

Private property can become a "public place" if the public are invited in.

Really, it's all a matter of being cheeky enough to do it.  Whether you are the vendor, a friend of the vendor, a potential purchaser, or a friend of a friend, etc. etc., it's just a matter of having the confidence to man the video camera.

It's really no different from the tourist who wanders through a market with a video camera, recording stall-holders smiling and waving etc.

But, as I have mentioned in the posting, it's best to avoid confrontation with anyone who is brazen enough to ask you to stop recording, by agreeing to stop, but recording their request, the reason for the request, and the status of the person making the request.

Any estate agent who seeks to have a video camera turned off would be leaving himself or herself open to questions as to why. And if lies are told in order to have the camera turned off, the estate agent's credibility is on the line.

# Cecil B. DeMille said on February 16, 2009 10:04 AM:

best news ever and i am dusting off my video camera and i am going to video the auction at my sisters house next saturday and hey i might win funniest home videos on tv

# Sassoon said on February 16, 2009 10:43 AM:

Your not first one to videotape aucti8ns because I have already done it two times.  The first time the realestate didn't care but thjere were no bids anyway and everyone laughed but on the next one the realestate said you can not do that because of privacy.  Is it right you can not video if they say because of privacy?

# Peter Mericka said on February 16, 2009 10:48 AM:

Hi Cecil,

That's a great idea.  One of the property shows on TV has footage of real estate auctions, sometimes with auctioneers and estate agents looking very embarassed, but I'm sure they edit out the really juicy bits (otherwise estate agents would never agree to go on TV).

Even if you don't win the "Funny Videos" show prize (which I understand is over $10,000 - almost equal to an average real estate agent's commission) you could start off a new genre on YouTube!

# Peter Mericka said on February 16, 2009 10:52 AM:

Hi Sassoon,

Real estate agents regularly use the "Privacy Act" or "privacy reasons" or privacy laws" to sound convincing when they tell lies.

I have had clients complain that when they ask the real estate agent if there have been other offers on a property, or how much the competing offer is, the estate agent falsely tells them it's a breach of confidence and a breach of "privacy laws" to disclose.  Usually, it's because the supposed other offer is false, or a dummy bid.

Similarly, when an estate agent tells you that you can't record an auction it's not because of privacy rules, it's because the estate agent is camera shy - that's all.

# Austin said on February 16, 2009 11:02 AM:

Peter, you should host some of these videos on your site, when they start coming in. It's easy to embed youtube videos on your site.

# Peter Mericka said on February 16, 2009 11:30 AM:

I would be only too pleased to include an "Auction Videos" section on my website.  Perhaps we could even have a competition of our own.

I would love to see videos where dummy bids are observed, and the auctioneer is asked on camera to identify the bidder!  Or just seeing estate agents giving consumers false legal advice or telling porkies generally would be both interesting and entertaining.

# Austin said on February 16, 2009 11:56 AM:

I've always wondered - does the auctioneer / vendor reserve the right to remove people from auction?

I've been to thousands of auctions and they always state that 'disruptive' people can be fined, I can't remember whether they say they can remove people though.

I am betting that if too many people rocked up with cameras, they would be removed / threatened with fines under the 'disruptive' umbrella - especially if they openly questioned bids publicly.

# Peter Mericka said on February 16, 2009 1:51 PM:

Hi Austin,

This is another example of a consumer protection measure being falsely used against consumers.  First, I have NEVER heard of anyone having been charged with disrupting an auction, and certainly no vendor or purchaser has been charged with this offence.

The offence was created to control, you guessed it, real estate agents.  It was found that some real estate agents were disrupting auctions staged by other real estate agents.  Usually, it was real estate agents acting as "buyer agents".

It became common for a "buyer agent" to walk among other bidders at an auction and tell them something similar to, "Listen, I am going to buy this property one way or another, and if you bid you'll simply make it more expensive for me, but I will still out-bid you.  I will pay you $2,000 cash right here and now if you don't bid."

Another ruse was to simply spoil the auction by asking patently unnecessary or distracting questions, or to abuse the auctioneer.  Remember, these were real estate agents spoiling auctions for other real estate agents.  Anyway, some auctions became violent as a result, and it was decided that an offence of "disrupting an auction" was needed.

The real estate agents love this new law, because now they use it keep bidders from asking questions, from offering less than the bids nominated by the auctioneer etc. etc.

The use of a video camera will NOT disrupt an auction.  If the auction is disrupted because of the presence of a video camera it will be because the real estate agent has decided to disrupt the auction, and to blame his or her behaviour on the presence of a device, the purpose of which is to ensure that the auctioneer and other estate agents attending are accountable.

It would be extremely silly for an estate agent to take exception to the presence of a video camera, or to tell the vendor that the presence of a video camera is a problem.  Most people don’t look twice at someone with a video camera these days.  But imagine how you would feel as a bidder if the real estate agent became bothered by the presence of a camera, and told the person to stop recording, or if the vendor attempted to order the camera person off the property.  Why distract everyone in this way;  why not just ignore the camera like everyone else?  Drawing attention to the camera also draws attention to the need for one.

As I mentioned in the article, it is important to avoid confrontation.  If an estate agent or anyone else asks you to stop recording, just ask them who they are, by what right they make their request, and the reason for the request - then turn off the camera.

Similarly, if a vendor were to ask you to leave the property (assuming that the auction is taking place on the front lawn of the property itself, and not in the street), just leave – but is the vendor really going to order a potential purchaser away just because the real estate agent is camera-shy?

As for physically removing someone from an auction, the legislation gives no real estate agent the right to physically eject anyone, and any real estate agent who took it upon himself to get physical with a member of public for recording an auction could end up facing an assault charge, or even being sued for false arrest or false imprisonment.

Once again, the video recording of the auction would expose false "legal advice" put out by the auctioneer about the law regarding the disrupting of auctions, the right to eject, the right of bidders to question, the right of bidders to demand answers, and the right of consumers to hold real estate agents accountable.

# Korff said on February 16, 2009 2:22 PM:

Oh man just recording the agents putting their hand over camera and swearing or shouting turn it off and stuff would be awesome.  Can't wait!!!!!!!!!!!!!!!

# Peter Mericka said on February 16, 2009 2:29 PM:

Hi Korff,

I don't thing for one moment that any real estate agent would be silly enough to do that, but if they did I would certainly like to put such a video on public display.

# RhondaC said on February 17, 2009 9:14 AM:

Hello.  I am a licensed real estate agent and I agree with a lot of what you have said.

You are probably right about some real estate agents not wanting video recording but I am one of a lot or maybe the majority who would welcome any way of returning return credibility to the auction.

I can think of a lot of situations when I wish I had a video recording but I can not think of any auction I have ever conducted where I would not want a recording.

If anyone wants to video any of my auctions I will welcome them.

# kat said on February 25, 2009 2:32 PM:

I am a licensed real estate agent and I do agree with what you have said, however, you commented our commission is approx $10,000?  Before you start, half goes to the office, then tax, petrol, phone etc.  Maybe $3000 left?  How much do you earn?  My guess it's a lot more than us...

# Peter Mericka said on February 25, 2009 3:15 PM:

Hi Kat,

Court lawyers are always taught never to ask a question they don't already know the answer to - you have fallen into that trap.

I sell real estate for my clients without involving a real estate agent at all, I include all marketing, sale negotiation, legal advice and conveyancing.  I get better prices that real estate agents get, and I take full responsibility for everything associated with the sale.  To take a real estate sale from start to finish, and often beyond, I charge a total fixed fee of $4,400.  Part of that goes to marketing costs, part to office overheads, and the remainder is profit for the firm.

Visit our website at http://www.lawyersrealestate.com.au/ kat, and tell me how overworked and underpaid real estate agents are!

# Daniel Cameron said on March 6, 2009 11:13 AM:

Is it legal for a person attending the auction to just pull there personal camera out and film the entire event?

As an Investor I would like to film a few Auctions just as an educational thing to learn about the process and watch again later on. Plus i do video on this site for Property Investors. http://forpropertyinvestors.com

It's emerging as the leading site for video content for Property Investors. There is over 400 videos right now. It's the only site of it's kind in Australia right now.

I find that people will come to forums and anywhere else and talk till there black and blue about how honest they are and how they do this and that. But what happens in real life is a very different matter indeed (in most cases). But i guarantee you with my balls that not one of the dodgy ones will be posting in a forum telling people about how they screw people around. Even the dodgy ones that might post in here will try come across as little goody goodies.

I've traveled Australia and dealt with hundreds of Agents. If agents are underpaid would you mind actually putting a figure out on the table so that we can actually make a decision about how fair or not your wage amount is.

I'm sure you have an accountant that knows right?

Daniel

# Peter Mericka said on March 6, 2009 11:24 AM:

Hi Daniel,

If you follow the guidelines I have set out above you will have no problem if you video any auction.

# Qmann said on March 11, 2009 6:02 PM:

I have all of my auctions video recorded, even if they don't sell, although in 09 my office has a clearance rate of 90%

Why dont you upload some examples of dummy bidding for everyone to see

# Peter Mericka said on March 11, 2009 7:44 PM:

Hi Qmann,

I would just love to get my hands on some videos of dummy bidding, but I haven't had anyone send me any as yet.  I you have access to any I'd appreciate seeing them.

Also, Qmann, can you send me the video of the auction where the property sold for $910,000 when the estate agents (and I assume that this includes you) nominated an asking price of $800,000.

# Qmann said on March 12, 2009 6:21 PM:

The price was set $780-$820,000 after 3 agents gave appraisals around this range and the due the owners getting divorced they also had a sworn valuation by a licensed valuer which came in at $795,000.  

I only mention this because I dont think there is any complete right way to sell a house. Sometimes auctions do get higher prices.

Now the auction above there was 7 people bidding so this was the reason the price was so high.

Can I ask are you in Melbourne?

# Peter Mericka said on March 12, 2009 9:57 PM:

Hi Qmann,

Is this an example of incompetent estate agents being influenced by a valuation obtained for the purposes of a divorce settlement, and mistakenly "advising" the vendor to set the price $100,000 below what it was really worth?

Did the vendor's estate agents really have no idea as to what the 7 bidders were likely to pay?  Was there no attempt to negotiate a sale pre-auction with any of the 7 bidders?  What did the 7 bidders know that the real estate agents didn't?

How is that these supposedly professional real estate agents could be so out of touch with the reality of their local market?

There is something very smelly about this result, Qmann.  Do you have the video recording of this auction?

Yes, I am in Melbourne.

# Qmann said on March 12, 2009 10:36 PM:

Do you live on the same planet as I do?

I think you watch way too much x-files, it is pretty simple,

it is simple that in this instance the auction system worked best,

How can the agents be influenced by a valuation they did not see?

Also you must have super human powers that the rest of us don't have if you know exactly what a buyer is prepared to pay for a property.

One of the agents was a Jenman agent who also put a similar price on the property, there were a lot of comparable sales for this homes in the area.

So what you are trying to tell me is;

the valuer was influenced by the fact the owners were getting divorced, which he didn't know

the agents were influenced by the valuer, which they didn't know had been through the home

the agents should have known exactly how much each buyer was prepared to pay (which by the way they may or may not have)

and finally the agents are out of touch with the values of their area, because they used comparable sales in that area to base the price listed on the home,

OK

You obviously have your own agenda to push so you make allegations about anything you can.

Simple fact is sometimes auctions get higher prices not all of the time but sometimes.

I dont have a video of this auction as it was my home being sold,

Also in regards to an attempt to pre-auction sale I decided that I wanted the home to be sold at auction not before.

So to answer your questions, no there was no incompetance of the agents behalf, nore the valuer, I had set a reserve of $805,000 and I am glad I didn't sell before hand for $805,000. Also I dont think the agents were out of touch with their market.

Lastly there is nothing smelly about the result in fact yes there is and it smells like roses.

I agree with you that there are some very shadey figures in real estate who need to be weeded out of the industry and certain practises should be made illegal.

I think that to get a s agents license you should do as a minimum the full license course but unfortunatley things will never change.

It is not helped though by people who will just find anything they can and poke holes into it.

This is the fact

In some situations auction will reap the highest price, in others private sale will and in other EOI will,  

# Peter Mericka said on March 13, 2009 5:15 PM:

Hi Qmann,

Your statement "in this instance the auction system worked best" is a perfect example of the logical fallacy "post hoc ergo proctor hoc".  In other words, because an auction preceded an unexpectedly high price, the auction must have caused the high price.

This form of logic is regularly trotted out by real estate agents; which leads me to a further observation - a nonsense argument that is advanced with monotonous regularity does not gain credibility over time.

Qmann, you are the first real estate agent I have ever heard of who did not know the value of his own home!  I hope you come cheap.