12 January 2009

Dob in a rental auctioneer

| johnboy
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The ABC brings word that the ACT Tenant’s Union is after your help.

    The ACT Tenants Union is urging people to report any real estate agents who initiate a rent auction for sought after properties.

Basically they’re at the data gathering stage with a view to pushing for new laws against rental auctions if problems are found.

If you have got a recent rental horror story share it in the comments below, but also send it through to the Tenant’s Union.

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iObject said :

The tenants’ union advice people were a great help last time I needed advice about a real estate agent being dodgy, but they really need to be open more to help people who are getting screwed over by unscrupulous rent-auctioning agents…

They’re open something like 9-1 on three days a week, and you have to keep calling till they answer! The people who work there do work very hard, but surely they could put on some more staff?

It’s the Tenants Advice Service,(TAS) not the tenants’ union, which does the advice. The union does the admin side, and advocates for tenants in political, social, legal and other forums etc. TAS is actually available by phone 5 days a week, 9.30 am to 1 pm. They are also open for calls from 4.30 pm to 8.00 pm on Tuesdays. (Phone number is 62472011). However they are Government funded which means the number of staff they have is determined by the level of funding from Government. The ALP is slightly less stingy than the Libs in government, but still stingy. The funding is completely inadequate so at best they have two people dealing with enquiries, and each takes about 45 minutes to sort out properly plus 15 minutes write up time. All advice has to be recorded by the phone operator and then checked by a solicitor. That means at best the two can deal with about 8 people all up per day – sometimes a little more, sometimes a little less. The demand for phone advice is much greater than 8 people a day – more like 30 or 40. The demand far outstrips the ability of the Service to provide adequate access to the phone service with so few staff. People should lobby the ACT Government (John Hargreaves and Simon Corbell) for more TAS funding to employ more staff to deal with the many many tenants who want advice over the phone.

That’s why TAS has a website where many of the common issues are dealt with and this often obviates the need to ring. Have a look at and browse through http://www.tenantsact.org.au/Advice/home.html

I think rental auctions distort the market since in times of rental scarcity (as is now the case in Canberra) the desire to find place to live may well outstrip the capacity to pay. Couple that with inadequate public (subsidised) housing for lower income earners and you have a recipe for disaster. Not to mention that the person with the most money who can make the highest offer may not be the best tenant.

Since auctions may be a breach of the ACT Fair Trading ACT and Commonwealth Trade Practices Act if a rental price is mentioned in the ad, one way round this would be just to say something like ‘Offers over $450 per week welcome.’ As long as it is not bait advertising (ie the $450 has to be around market price, not something markedly below it in an attempt to get people in) then the ad and the auction breach no laws, certainly not the Residential Tenancies Act (assuming it is new tenants they are advertising for.)

The Residential Tenancies Act also has a formula for determining rent increases after 12 months, providing the same tenant (or one of them) is still in the property. It is the ACT Housing CPI (which rises higher than the normal CPI) plus a 20% loading. If the figure is greater than that derived from the formula the Landlord has the onus of proving the increase is not excessive before the Residential tenancies Tribunal. If it is below that figure, the tenant has the onus. The formula can be accessed through the TAS website.

It is unclear to me why the loading exists – it is self fulfilling and guarantees further CPI housing increases are greater year after year. And then we add on a 20% loading.

VYBerlinaV8_the_one_they_all_copy9:04 am 13 Jan 09

It’s a nice idea, but when land is released back of beyond we then hear all the whinging about how it’s “too far out” and “I can’t ride my bike from there”, etc. I’m all for land release to stabilise the market, but people need to realise that if they’re buying for the first time, or on a budget, they don’t necessarily get to live in a nice leafy inner city suburb.

Piratemonkey11:50 pm 12 Jan 09

How about the government just release more land and relieve some of the pressure on the rental market? Sure home owners will cry but how about we look after those in the more precarious positions a little eh?

Hell less money filling the pockets of land lords will push more cash into being spent locally by renters. Not spent on jet setting by retirees. A few nice big chunks of land plus a bunch more apartments and this problem would be gone most quickly.

swamiOFswank10:42 pm 12 Jan 09

I recently rented a place. Allow me to share about the underhanded kind of rental crap that goes on. I found a place on Allhomes advertised by an agent at $365 per week. I phoned them, went to view the house, and when I called them back an hour later to say that I’d like to apply, was told that someone else had just offered $375 and I’d have to match it to apply. Lo and behold, when I returned to the Allhomes listing to check the price, it had of course been altered to $375. At that point I called the agent again and queried the increase, only to be told “that’s what the market seems to think it’s worth”. I certainly didn’t, and therefore didn’t apply – which is my prerogative, I suppose.

Irrespective of whether it was worth that, that kind of real estate agent rubbish is what needs to be stamped out. I imagine they told the other applicant that I was offering more than them.

Then, those that advertise ‘pet friendly’…how about making it clear what kind of pet would be okay – eg cat, dog, bird, fish, axolotl… Don’t waste everyone’s time by saying pet friendly on the ad, then telling me at the inspection that only a certain type will be considered.

Oh…and to the owners who “patched and painted” really really badly with mismatched paint all over the place between the time I inspected the property, signed the lease and then moved in – your painting stinks. The place I rented recently looks like a patched-up bogan shit-hole. Thanks for nothing you disrespectful jerks – you wouldn’t be happy living there with walls and doors like that, I’m sure.

/rental rant

The tenants’ union advice people were a great help last time I needed advice about a real estate agent being dodgy, but they really need to be open more to help people who are getting screwed over by unscrupulous rent-auctioning agents…

They’re open something like 9-1 on three days a week, and you have to keep calling till they answer! The people who work there do work very hard, but surely they could put on some more staff?

I guess you could organise the opposite in times of “rental plenty” – have prospective tenants post their requirements on an online auction site and have landlords bid for their custom – lowest bid for a property acceptable to the tenants wins.

VYBerlinaV8_the_one_they_all_copy3:27 pm 12 Jan 09

Fair point. These things emerge for a reason.

I doubt they would bother with auctions if there wasn’t already a strong rental market.

VYBerlinaV8_the_one_they_all_copy2:48 pm 12 Jan 09

It would be beneficial to the applicant during times of rental ‘plenty’, and beneficial for the landlord during times of rental shortage.

I’m glad I’m not currently looking for a place to rent because I don’t see how an Auction would be beneficial to the applicant other than the fact that they secured the house. I would walk away feeling ripped off, especially if you knew someone in a similar place was renting for much less. Its good if you are a landlord.

VYBerlinaV8_the_one_they_all_copy1:18 pm 12 Jan 09

I tend to do the same, Fiona. I’d rather have a reliable tenant paying a few bucks below market.

The auction question is more about finding the tenants in the first place.

harvyk1 said :

The other interesting point is if you have someone payiong $700 a week for a $350 a week property, how long do you think they will stay in your property once the demand and prices fall? I’d personally rather have someone in a property which I could get $350 per week and yet only charging them $300 if it meant that they would stay there in the long term, given finding new tenants can be expensive, not to meantion the weeks without any rental income.

One of the reasons we don’t rush to put up the rent on our places in Newcastle. We’d rather keep a tennant in and raise the rent $5-10/week rather than rushing to match the current going rate, raising it $30 and losing someone reliable, and weeks of rents and advertising costs…

At our loast place we were renting here in Canberra, the new owner wanted to increase it $55/week to match the local rates… and not offer us a new contract.

Ridiculous, not ‘red’

😉

Thank you.

I keep having to think back to the word roots and morphemes to figure out the spelling. It’s like the word ‘definitely’… I always have to think that it’s from the word ‘finite’ to remember that second i is not an a.

But now I’m off-topic. 🙂

VYBerlinaV8_the_one_they_all_copy1:01 pm 12 Jan 09

I suspect that rental auctions are like other potentially undesirable aspects of modern society. As such, maybe we need to take the same approach: educate, regulate, and let it happen.

The way I see it working is that you either turn up (or teleconference in) at a given time, an auctioneer opens the bidding, you bid what you want, and the highest at the time gets it. Contract signed on the spot (or via fax/email), and the tenant has officially been found. If someone turns up later with a better offer, bad luck.

For higher priced rentals, I think this would work well. It should also be noted that whether or not people select rentals by auction has nothing to do with property availability.

The other interesting point is if you have someone payiong $700 a week for a $350 a week property, how long do you think they will stay in your property once the demand and prices fall? I’d personally rather have someone in a property which I could get $350 per week and yet only charging them $300 if it meant that they would stay there in the long term, given finding new tenants can be expensive, not to meantion the weeks without any rental income.

Sure, I agree completely. As it stands, though, there’s little option to take the route of allowing tenants to bid higher in high-demand times. I’m not naive enough to believe that it will be “like this” forever, but at a time when housing starts have stagnated and many populations are going up, why not allow competition between prospective tenants?

jube_V8Fairlane_235kw12:49 pm 12 Jan 09

I used to work for the largest real estate/property management company in Canberra as a leasing consultant (a few years ago). These silent auctions certainly happened then, but they were never actively sought or encouraged. In every case, it was instigated by the potential tenant – not the landlord.

Most landlords then, even with higher offers, went for the best tenant rather than the best price. There were a few exceptions, though. The idea certainly has picked up more since then from my knowledge, but as said before – the market will determine the price.

Jazz said :

What makes you think that the highest offer isnt the best applicatant?

People buy investment properties as an INVESTMENT. One of the key descisions in doing so is the $ return, so it shouldn’t be surprising that it gets a pretty heavy weighting in dertermining the best applicant. Everything else is subjective.

The best applicant will be the one who pays the rent on time, and for the longest period of time. How long before the applicant paying double the advertised amount decides they want out to a cheaper place? What happens if their job goes and they can no longer afford the much higher amount? Yes these are risks you take with any applicant, but in my mind an applicant paying more than the advertised price this is a much larger risk.

Natecv8, regulation is not a bad thing, I personally am a little wary of the Tenants Union as they have given me bad advise in the past multiple times. I personally think that the rental market is very much aligned to what people will pay. Try placing a house onto the market at $600 a week when the market will only bare $300 and see how far that gets you. On the other hand you’d be well advised to see what else is on the market before picking a price.

The idea of an auction for something your only renting, not buying is a little steep IMHO.

The other interesting point is if you have someone payiong $700 a week for a $350 a week property, how long do you think they will stay in your property once the demand and prices fall? I’d personally rather have someone in a property which I could get $350 per week and yet only charging them $300 if it meant that they would stay there in the long term, given finding new tenants can be expensive, not to meantion the weeks without any rental income.

Just my 2c.

What makes you think that the highest offer isnt the best applicatant?

People buy investment properties as an INVESTMENT. One of the key descisions in doing so is the $ return, so it shouldn’t be surprising that it gets a pretty heavy weighting in dertermining the best applicant. Everything else is subjective.

123qwe said :

Why is a rental auction such a bad thing? If the demand is there, the market will determine the best price, lack of accommodation or otherwise. There are no major gripes when it comes to purchasing a property, so why the tears.

If I had a property for rent, I would want the most for it. If people cant afford it they should lower their sights and re-assess the situation. No point pissing and moaning about it, harden up.

I agree, as long as there remain appropriate safety nets eg the owner can’t cancel a contract because someone with a bigger offer comes along two weeks after the contract was signed.

For some reason this topic always hits a sore spot. People need somewhere to live (true) therefore rental properties should be increased/decreased/cheaper/subsidised/not subsidised/landlords should be shot/etc etc.

Here’s the thing. The idea that this “somewhere to live” should extend to the person’s choice of rental property at their preferred price is plain wrong. Many people have many different options including living with other family or in smaller accomodation but they choose not to. Fair enough.

So why should landlords not be able to rely on market economics to price the supply of this service? We ‘need’ water, electricity, transport, fuel, and a whole host of other services as well and their prices freely fluctuate due to market forces.

I personally like the competition as it provides people with better references and histories. I’ll forgo the extra money. But now you have people with no rental history who can’t find a place to live, who would possibly provide them with this? A landlord who wants to extract the highest rental yield possible for their property, I would think.

The more regulation that goes into this, the more people who will go without a property to rent.

Why is a rental auction such a bad thing? If the demand is there, the market will determine the best price, lack of accommodation or otherwise. There are no major gripes when it comes to purchasing a property, so why the tears.

If I had a property for rent, I would want the most for it. If people cant afford it they should lower their sights and re-assess the situation. No point pissing and moaning about it, harden up.

The assumption with this story is that auctions are wrong, but I have to agree with Berlina. Surely everything else in the economy is based on supply and demand, and what the market will pay. Why should this be any different?

VYBerlinaV8_the_one_they_all_copy11:44 am 12 Jan 09

Fair point, but that’s the landlord’s risk to take if he/she chooses, I think. Also, I’d imagine there’d be a prequalifying process prior to bidding.

This is all starting to sound a bit expensive. Maybe it’d be easier just to shelve the idea…

It doesn’t matter what type of auction it is, the concern is that they are giving houses to the highest bidder, not necessarily the best applicant.

VYBerlinaV8_the_one_they_all_copy11:29 am 12 Jan 09

How would a transparent auction be taking advantage of people? I agree that a silent auction is probably a bit nasty, though.

I think the auctions are poor form because they are taking advantage of people desperate for accommodation. I think applications ahould be decided on the best applicant, not the best price.

VYBerlinaV8_the_one_they_all_copy10:54 am 12 Jan 09

Interesting topic.

I don’t think I’d have a problem with rental auctions if they were held in the same way as a purchase auction, where everyone hears all the bids and can choose to increase their bid, or not. That way, there’s no ‘secrets’, and the market will do what it does. The landlord also bears the risk of not meeting reserve, at which point they may choose to reduce the reserve.

ah, renting… last time i was in a rental property, there were 2 applicants for the house, very expensive, us and another couple. the agency gave it to us. The other couple wanted to know whether it was a skin thing, as they were ugandan. they were new to canberra, and we had an A1 rental record. the agent chose us, but I am certain that it was based on our offer to re-do the garden… which we did.

sometimes, an offer of a service other than money seems to clinch the deal… no auctioning needed.

I should say that with the tenant’s union email still auto-responding that they’re on holidays this story might be a bit of an ABC beat-up.

Oh that was http://www.philipkouvelisrealestate.com.au/ … which was good in not wanting higher bid,s but rediculuous in asking for a written personal reference …

Rental auctions are rediculous. When I got my place, demand was so high that a guy from defence offered to double the up front rent. Luckily LJ Hooker were good enough to look past that and process their applications properly

We offered a higher price than they were asking at a place last time around, but it did us no good.

But our current place is better anyway.

TheScientist10:29 am 12 Jan 09

this has happened when i’ve been looking for a house. no solid evidence though.

made one application and discussed it with an agent, and she said she felt it was unethical to accept such “bids.” i don’t think they all have such scruples though.

I’ll be looking to rent soon, not looking forward to it.

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