‘Superior’ system helps WA market

Western Australia’s relatively immature real estate market, and its more efficient contracting system, were two convincing reasons to keep the current sales system, according to Real Estate Institute of Western Australia (REIWA) president Greg Rossen.

In WA, just 2 per cent of properties are sold by auction, compared with almost 20 per cent in Sydney and Melbourne.

A licensed auctioneer, Mr Rossen said it was WA’s “superior” contracting system for sales that kept the number of auctions to a minimum.

“Melbourne is based on the British exchange of contracts, where a price and terms are agreed on, then solicitors draw up contracts, which are then exchanged,” he said.

“In the Sydney market ‘gazumping’ regularly happens due to the fact it can take up to a month to exchange contracts.”

WA does not experience any of these time delays due to the Joint Form of General Conditions used in 99 per cent of sales, which is approved by both REIWA and the Law Society.

“Because it is such an effective and user-friendly system, people are less inclined to auction their property,” Mr Rossen said.

“The Sydney and Melbourne markets are also a lot more mature. They have a large population base with more people wanting to bid.”

A typical auctioneer in Perth would do between 20 and 50 auctions per year, according to Mr Rossen, mainly in the upper ends of the market.

“Typically, inner-city suburb properties with higher values tend to lend themselves better to auction – the target buyers are more likely to meet auction terms and conditions, which include a 5 to 10 per cent deposit on the fall of the hammer and the balance in 30 days,” he said.

“When looking at the suitability of a property for auction there are several considerations to be balanced – the suitability of the property type, market conditions, the seller’s circumstance, the style of improvements, and the potential buyers.

“An agent needs to give weighting to each factor and allow a seller to make an informed decision on whether to auction or not.”