oc | Thursday 13th May

The Block Apology

The Block Articles in excess of 15,300 reads

This is what you don't see on TV

This is what you don’t see on TV

The heartbroken buyer, who followed the rules, was the winning bidder only to be cheated out of it. Every Saturday Melbourne buyers ask, what more could they have done. Above the quote, above the reserve, highest bidder, followed the CAV and the auctioneer read out rules and they didn’t sell it to me.

Wrong Call


1. Block Recap

2. Real Life Melbourne Auctions every weekend

3. Buyer Solutions

To The Block we “apologise”.

Over the years, we used to mistakenly think your show was nothing more than a bit of light entertainment, not reflective of what goes on in the real world.

However, after watching The Block Pass-in and the way you treated the dudded buyer, we now know your show to be a true reflection of what we at James Buyer Advocates witness every Saturday at Melbourne Auctions.

Unfortunately for many buyers, it is real life, it’s no joke and it’s WRONG.


Dealing with the highest bidder under AUCTION CONDITIONS.

Seller Reserve $2,620,000

Highest Bidder’s Offer $2,715,000

Sold to another buyer (who didn’t even bid), not the highest bidder it was passed into, who followed the rules laid down.

Consumer Affairs Victoria said this is OK.

The Block confirms the charade that we as buyers know is currently Victoria’s auction system.

Hey Scott, Hey Bill, Hey Frank, Hey Consumer Affairs what am I missing. These guys are

The Block Finale –  The Reserve (the quote) was on the screen all the way through negotiations. The buyers who it was passed into, offered above the reserve and yet it was not sold to them


THE BLOCK has, in many ways, highlighted or legitimised(?) what we see every weekend.

Example: Home for auction

  • Lovely little Double-Fronter Period Home – Inner Melbourne
  • 500 sq metres of land
  • Good condition – ready to move in

Advertised range: $3,000,000 to 3,300,000.

Seller Reserve: $4,000,000.

Highest bidder offer: $4,150,000.

Sold to a different buyer: Above $4,150,000 (a non-bidder).

After a change in May to follow the rules of fairness (led by new CAV guidelines), our industry is reverting back to type. However, as you saw on The Block, it’s not always led by the agent. Here is how, many spring auctions are working every weekend – accepted and condoned by the CAV.

Step One: The agent finds three comparable properties between $2,800,000 and $3,300,000 and so advertises the home on realestate.com.au with a quote of $3,000,000 to $3,300,000.

Step Two: The agent runs the campaign and has three buyers on auction day, all having spent considerable time and money on due diligence, e.g. solicitor checks, pest and building, architectural opinions for an extra bedroom, based on the $3,000,000 to $3,300,000 quote.

The seller can clearly see his/her own advertising on the Internet.

Step Three: The Auctioneer asks for the reserve a few minutes before the auction and the seller says nothing. In reality, it doesn’t matter what figure the seller says as CAV/State Legislation considers any number OK, despite the advertising.

The Auctioneer goes out and reads out the Auction rules …………which CAV have now confirmed are BALONEY to buyers.

The three bidders all bid and ask is it “on the market” at $3,400,000. The auctioneer comes inside and asks the owner will he or she sell at that price.

The owner says NO, I want $4,000,000.

So, the auctioneer goes back out and the passes in to the highest bidder at $3,800,000, a full $500,000 over the quote.

Step Four: The highest bidder comes inside and the agent says the seller’s reserve is $4,000,000. The agent may even say the reserve is $5,000,000. CAV says it’s ok for the seller to say or do anything they like, irrespective of what their agent advertised the home at.

After pressure from several agents, the stressed individual/couple go well over what is sensible and agree to actually pay more than the reserve – they offer $4,100,000 because they feel incredible pressure locked in a room.

Nonetheless, the two kids are excited as this is their dream home and even though their Mum and Dad are $300,000 above their final bid at auction and $100,000 above the reserve THEY STILL DON’T BUY IT.

The seller says I’m not accepting $4,100,000.

The agent points out to the seller, these buyers did the right thing and are actually above reserve.

The seller says I don’t have to sell it – go out there and ask for more money from the buyer.

The buyer is distraught but agrees to another $50,000 – now making them well above reserve and almost $1,000,000 above the quote.

The owner still says no (just like THE BLOCK) and says to the agent, “go speak to those overseas people” who didn’t even bid and see if they will pay more.

The agent did as instructed and the home was sold to the overseas people for a higher price – despite the local family buyer being:

  • the highest bidder above the quote
  • passed-in to them
  • offering above an inflated reserve
  • following all the rules read out at Auction and outlined by Consumer Affairs.
Buying families do the right thing, follow the rules read out, are the highest bidder - the seller/agent does the wrong thing and people think that is OK.

Buying families do the right thing, follow the rules read out, are the highest bidder – the seller/agent does the wrong thing and people think that is OK.

Step 5 and Postscript: The devastated family ring Consumer Affairs on Monday to lodge a complaint – CAV says to them

Nothing wrong – don’t you watch National TV?

Something is rotten in Denmark (the state of Victoria) with auctions.

HammerWashThere are three main sides to this story

  • After The Block pass-in articles we received hundreds of notes and calls (almost universally positive) and maybe 50 calls of congratulations for speaking up, from selling agents.
  • The rang us and asked could they circulate The Block articles within the Estate Agents Council. We said yes (so the government has read them).
  • Social media was split. If you are a seller, then what Scott did was brilliant and if you are a buyer then what Scott did was “smelly” at best.

However, that was two weeks ago – this is now.

Despite the backslapping and urging from the above agents to get the boots into the CAV, we have not seen any major public comment from them or other key agents about The Block. What this really shows is the power the CAV has over selling agents, as the majority are “sh..scared” of being targeted by the CAV, in case that leads to an audit, some problems and then court time. Selling agents know The Block was wrong.

The REIV has remained silent in the mainstream media – not even a word of clarification. They know The Block was wrong.

Nothing from The Block’s major sponsor, The Age …….maybe they don’t know The Block was wrong – but it was.

If you subscribe to The Block being OK, do you subscribe to it being OK for a retailer to use bait pricing – saying fridges for sale at $1,000 – only to find when you drive there, they are $1,500.

We all despise this guy, we all complain about him - but who is instructing or allowing him to behave deceptively - who is the accessory to his misleading conduct - The agent's directors, the government, society - maybe you the seller?

We all despise this guy, we all complain about him – but who is instructing or allowing him to behave deceptively – who is the accessory to his misleading conduct – The agent’s directors, the government, society – maybe you the seller?

And please if we hear again that’s not a quote, that’s a reserve.

Every crook, or should we say every crooked lawyer, agent, seller or PR person starts down the definition, reasonable doubt, word semantic track.

If your best defence for deceptive conduct is word semantics, then surely you’re on the ethical slippery slope.

DEFINITION of ‘Reserve Price’ A minimum dollar amount that the owner of an item up for auction will accept as the winning bid in the auction. The reserve price prevents the auction from being won at a price that is lower than the item’s owner will accept.

CAV: Rating 6/10 (down from 8/10 three weeks ago).  Whilst CAV’s presence on The Block and subsequent silence has been wrong and a PR nightmare for the government department; we at James Buyer Advocates still support the CAV’s overall work on Underquoting.

Please make no mistake, we totally support the overall Underquoting goals and strategy of the CAV.

That is the carrot and stick (rules and education on one hand – agent prosecutions on the other).

It cannot be up to the CAV to monitor every single transaction – it cannot be up to the CAV to alone fix the home buying markets.

Despite The Block debacle, overall we think they are doing a good job – but it’s time, to step back up to the plate – some agents are losing their way again, with regards to ethical quoting and their masters (sellers) are getting just as bad.

AGENTS/ADVOCATES: Rating 1/10 (down from 7/10 in May). Our profession seems incapable as a group, of establishing a set of principles, conventions as to what is ethical and what is not. We are far more to blame for what we saw on The Block, than say the CAV or even society. We as an overall profession have shown zero leadership on ethical behaviour at auctions – we are always being dragged along behind – and as for our umbrella organisation the REIV – where are you on this matter?

SELLERS: Rating 6/10 Yes, I know you don’t trust selling agents or buyer advocates, but does that make it ok to partake in misleading and deceptive conduct? Only you will know it – but if you advertise a price and you know it’s not what you will sell at – then you are involved in misleading and deceptive conduct.

BUYERS: Rating 6/10 As buyers we are not the paragons of virtue AND we do need to have some understanding that valuing and pricing are not exact sciences and treat the better agents with some respect. Sellers do and should have some rights to change their mind, withdraw etc.

However for now talk is cheap, at James Buyer Advocates we have bought over 1000 high-end family homes and there are current solutions for buyers.


Example – Case Studies

You read our article on 3 Merton, Albert Park in our last Market News. In the same week we were involved in an auction where the property was passed in and a Clayton’s Reserve given, a full $1 million over the of the quote.

There was significant attempted Agent Powerlifting after the auction.

Over the next high-powered post auction hour, the final result ended up only $18,000 over the highest bid offered under the hammer (i.e. at the quote) and $982,000 below the Clayton’s reserve – the pressure was immense.

There were many other bidders there – it was a ding dong fight.

These sorts of negotiations are not for the inexperienced, nor the faint at heart – well not unless you wanted to pay the million extra OR miss out on the home.

Buyers – don’t give up – get prepared.

1. Use the “Reserve” question smartly. Our clients authorise us to ask “Mr Auctioneer is the reserve within the quote range”.

When he dismisses us, we keep asking the question at regular times, as it’s a very fair question to ask.

So, during the auctioneer’s speech why not ask publicly and politely, is there a reserve within the range and when you get the brush off, ask again.

What is wrong with the question, you’ve advertised between “x and y”, why not tell us.

Keep asking, the “on the market” question, especially above the range – don’t be intimidated by aggressive auctioneer responses – you are not breaking the law to repeatedly (within reason) ask these questions.

The auctioneer’s non-response or brush off is actually far more unreasonable than your question.

Imagine going into an Apple store and you ask how much for the iPhone and they say, “not telling you”.

2. Backward bidding after a pass-in – we do regularly; last week we went backwards $300,000.

If it passes in and we are told a Clayton’s Reserve (bulltish figure) – then we at times make the next offer BELOW our pass-in figure, our previous offer. Sometimes we lose – but the sellers know we do this and they have more to lose than us – there is always another home, but in this market not always another buyer. We have walked many times below our pass-in figure and yes, we have bought BELOW our first offers and yes others have bought below what we offered, after we walked.

Ten days ago, a home was bought $200,000 below what we offered pre-auction – our offer was basically unconditional and on an acceptable settlement – we walked.

As buyers you need to understand facts and the balance of probabilities – at almost half the Victorian auctions if you bid – you are the only bidder. Ducks and Lones on Super Saturday were 44%. Of course, please engage a professional if this is not something you think you can do – it’s not a walk in the park, holding hands with the agent, singing Kumbaya.

How many times have we seen a home passed-in at $2,800,000 and sold at $3,400,000, when the quote was $3,000,000 and there was only one bidder – what were they thinking, or not thinking?

3. Walk Away when you have plenty in the tank (if it’s a rotten auction). We have done this twice in the last week – one we had an extra $500,000 in the tank and one over $100,000 – the owners received a combined $600,000 less, than if the auction had been transparent. WOW.

Many of our buying clients refused to accept crooked auctions where the reserve was either not stated or well above the quote. We stopped bidding during the auction and we walked away – the sellers got a lot less – hundreds of thousands of dollars in fact.

We walk away and although it seems hard, it’s invigorating – we still have both of last week’s buying clients (and thank you to them for their bravery); although we have since bought for one.

We have twice weekly negotiation council meetings for our buyers - some of our strategies we put into place months in advance of the negotiation. We sometimes see lone individuals going into an auction pass-in - no plan, no support, no way. Agents have sophisticated software, practised techniques, demanding sellers and usually 3 to 5 bodies at an auction. You can hope it'll be ok if you want - but as you can see that often does not work. Be prepared, get some real help.

At James Buyer Advocates we have twice weekly council meetings for our buyers – some of our auction strategies we put into place months in advance of the . We witness lone individuals going into an auction pass-in – no plan, no support, no way. Agents have sophisticated software, practised techniques, demanding sellers and usually 3 to 5 bodies at an auction (some to take it in turn, to pressure you up). As well, as you can see via The Block, sellers have the law and those that administer the law clearly on their side. Example – how can you know who the agents are talking to, if you only have one person at an auction and you are in one room locked away? You can hope it’ll be ok if you want – but as you can see that often does not work. This is serious, be prepared, get some real help BEFORE the auction.

Some Melbourne auction facts

4. 4 in 5 high-end family homes don’t actually sell at auction, under the hammer – eg off market, private sale – you need to have significant negotiation skills.

5. Of the homes that went to auction on Super Saturday only 1 in 3 homes (approx.) were sold under the hammer – in other words 2 in 3 homes require significant negotiation skills and can involve the following:

a) Agent Pressure Powerlifting

(high-end post auction driving the price up – often well over the quote). What protocols do the agencies have for two/three big men in a room with a scared family / one woman buyer pushing into them for more money. It appears zero – it’s open slather…………..no protocols – the police have protocols when dealing with criminals, as to what is acceptable pressuring and what is not. Agents?


b) Clayton’s Reserves

(the reserve you have, when you don’t have a reserve)


c) Seller Misleading and Deceptive Conduct

Very real at auctions in Melbourne and now has effectively been given the GREEN LIGHT.

If you think auctions are open and transparent, then surely The Block proves once and for all, you as a buyer, need to think again – you need to be prepared to fight back and prepare before the auction.

Next Week

James Buyer Advocates returns to the Markets with Auction Reporting.

We discuss the widespread Spring 2017 return of “Dummy Bidding” via the Quote and Reserve and “Sergeant Schultz” agents (I know nothing, I know nothing).

We discuss the gaps tricky selling agents and sellers have worked through in the Sale of Land Act 1962 and 2014 Auction Amendments. Those gaps exacerbate a disconnect over seller management and reserve communication between seller-agent-buyer; with specific reference to Section 7 and how it interconnects with point 8 in all Schedules. There are solutions.

We outline the best of reputable agent suggestions for a tweaking of the legislative architecture and new electronic scoreboards required for Modern Auctions.

Links Footnotes

Other James Articles on The Block:

Link to Are you serious Scott Cam – are you serious CAV article 

Link to Block and CAV Press Release

Link to Open Letter to Daniel Andrews and CAV 

Consumer Affairs Victoria – Auction Guidelines and Legislation:

Victoria Legislation – 2014 Public Auctions

CAV Guidelines


Mal James


0408 107 988

Licensed Buyer Agent (Victorian Government – Consumer Affairs)

REIV Member Licensed Buyer Agent


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