HUGE Changes Announced To Underquoting In Victoria
In This Week’s How's The Market | Edition 140
HUGE Changes Announced To Underquoting In Victoria
The Questions Nobody's Answering
So what are the changes?
Currently, vendors can set a reserve or asking price as late as auction day – and at a level higher than advertised.
Not only that, vendors can and do move their reserve during the auction, or the pass in negotiations which I don’t think enough people talk about.
The new laws will require agents to publish the actual reserve price at least seven days before auction day or fixed date of sale, and real estate agents that fail to disclose the reserve price within the time frame will not be allowed to proceed to auction or sale.
Real estate agents would also need to update all marketing materials to reflect the reserve price and stop using any previous advertising that does not contain the reserve price.
The Questions Nobody's Answering
Can reserves be updated after publication?
If they can't change, vendors make decisions with less information before seeing market response.
If they can change, agents could publish low reserves to drive interest, then increase them auction day.
Even if bidding reaches the published reserve, vendors aren't legally obligated to accept.
They can't be forced to sign the contract. Expect more published low reserves followed by vendor refusals to sell.
How This Hurts Vendors
Here's the nightmare scenario agents are worried about:
A property is quoted $950,000 to $1,000,000. The agent calls interested buyers. Every buyer lowballs: "Maybe $900,000," despite having $1,050,000 available.
The agent reports back: "All interest is at $900,000. Drop the reserve."
The property that would've sold for over $1 million now has a published reserve of $900,000.
The vendor just lost $100,000+ because buyers misled the agent and the number got locked in a week early.
The Loopholes Are Massive
Quote the property low for three weeks.
Get 40 groups through who think the reserve will be in that range.
Week four, publish the reserve higher.
You've already captured the interest.
Or publish a low reserve to get bidders registered.
When it doesn't significantly exceed that number, vendor refuses to sign.
Property passes in, negotiations happen privately.
The published reserve becomes meaningless.
What This Really Means For You
If you're a buyer:
Expect more agent calls before publication week.
Published reserves might mean less than you think.
They can change auction day.
Vendors can refuse to sell even if bidding reaches the published number.
If you're a vendor:
You'll commit to a reserve before seeing how the market responds to your campaign.
You'll need to trust your agent's advice more than ever.
Expect significantly more paperwork.
The Bottom Line
Will these rules stop underquoting?
No.
The agencies that quote ethically will continue doing so.
The agencies that underquote will find the loopholes.
It's a solution looking for a problem in a market where less than half of properties are selling at auction anyway.
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What The Agents Are Saying
We spoke to multiple agents across Melbourne about these changes.
The responses split into two camps.
Some agents told us they've always kept reserves within quoted ranges.
These changes won't affect how they quote, but will massively increase their workload.
They'll need more buyer conversations before publication week.
Other agents see this as a fundamental misunderstanding of how auctions work.
Reserves change constantly.
Mid-auction, after auction, throughout campaigns.
One agent explained: "We encourage bidding to start low because you want more people involved.
If someone drops out early, that tells you their maximum budget."
Auctioneers regularly stop mid-auction to speak with vendors.
Sometimes dropping reserves when interest is soft.
Sometimes increasing them to strengthen negotiating positions after pass-ins.
Under these new rules, that entire strategic process gets thrown out.
The Wow Factor!
2a Kinane Street, Brighton, Vic 3186
A Bayside Masterpiece
Why it WOWs:
Set on 1,744 m² with 45m frontage and full-size tennis court
Marble-floored foyer and sweeping staircase leading to light-filled living spaces
Ground-floor master with spa, walk-in wardrobes, and underfloor heating
Chef’s kitchen with Miele appliances, granite benchtops, walk-in pantry, and bar
Pool, spa, sauna, rooftop terrace with 360° city and bay views, 6-car garage
Price guide : $13,000,000 - $14,300,000
Final Thoughts
Publishing reserve prices seven days before auction sounds like transparency, but it strips away the strategic flexibility that makes auctions work.
Vendors will be forced to lock in prices before seeing market response, while savvy agents will find ways around the rules just like they always have.
If you or someone you know would like assistance to buy this year, book in a call and we can discuss if we can help.
Thanks for reading this far!
We value feedback and if you have any suggestions on what you would like covered in the future please email me at tristan@tomii.com.au
Happy Buying!
Note: This is general advice and does not take into consideration your objectives, situations or needs. Please consider if this advice is suitable for you and your circumstances and speak to a professional before making any financial decisions.
