"The legislation is a toothless tiger" said Mr Koren, who has called for new standards to the way property is marketed and sold at auctions. "Most agents know it’s not worth the paper it’s written on."
Another industry source said estate agents can still impose a reserve price considerably higher than the estimated price range listed on the sales authority and in any advertisements.
According to the source, agents are within their legal rights to advertise a property for ‘$600,000 plus’, despite it having a reserve price of $725,000. The source added that in most cases, agents know a property will fetch far more than that on auction day.
This is deceptive behaviour according to Mr Koren who believes the industry would benefit from a more simplified approach. "If a property is well priced there’s no reason why the reserve should not be disclosed from the outset" said former auctioneer Mr Koren.
"Melbourne is the auction capital of the world and strategies need to be implemented that make the auction process fair, open and transparent to all" said Mr Koren. "If Melbourne real estate agents behaved this deceptively in the United States, they’d be tied to the nearest maple tree with the gavel firmly shoved where the sun don’t shine."