New reserve price law ‘disadvantages’ home owners

VICTORIANS trying to sell their homes will be disadvantaged under new laws requiring vendors to publish their reserve price a week before an auction, a leading buyers’ advocate said.

The Victorian government introduced legislation to parliament prohibiting agents from taking a property to auction unless the vendor’s exact reserve is published a full seven days prior. The law could be in place from October 1.

The legislation also mandates sold prices must be made public – so buyers can see what homes in their area are really worth.

Melbourne buyers’ advocate and Property Investment Professionals of Australia chair Cate Bakos said forcing vendors to lock in a price a week before auction would result in fewer properties being sold on the street.

“I’m not for a minute suggesting that underquoting is all right, because it’s not,” she said.

“Forcing a vendor to lock in a decision on price seven days prior is a very long time.

“You’re really taking away a lot of an agent’s and a vendor’s ability to pivot when they need.”

The Real Estate Institute of Victoria was “flabbergasted” the government ignored “common sense and evidence-based expert warnings” to push ahead with the changes.

REIV chief executive Toby Balazs said the law would have a counter-productive effect.

“While the government’s efforts to address underquoting and improve the transparency of property transactions are well intended, its decision to move ahead with these laws will result in a real estate market with less transparency,” he said.

The REIV’s position called for a 10 per cent price guide that includes the reserve price of a home be published three business days ahead of auction.

Renters minister Paul Edbrooke said the law was designed to stamp out underquoting, an illegal practice where agents advertised a property at a price they knew to be below the vendor’s reserve.