Minister for Consumer Affairs and Renters Paul Edbrooke has introduced laws to stamp out underquoting to state parliament. Picture: Mark Stewart
People 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 says.
The state government introduced legislation into parliament on Wednesday to tackle dodgy real estate agents from underquoting properties by prohibiting agents from taking a home to auction unless the vendor’s exact reserve price is published a full seven days prior.
The law would be in place from October 1.
The legislation also mandates that sold prices must be made public – so buyers can see what homes in their area are really worth.
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Melbourne buyers advocate and Property Investment Professionals of Australia chair Cake Bakos said forcing sellers to lock in a price a week prior to an 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 added.
“Forcing a vendor to lock in a decision (on price) seven days prior is a very long time,” Ms Bakos said.
“You’re really taking away a lot of an agent’s and a vendor’s ability to pivot when they need, especially in a rapidly moving market or an intense market,” she added.
Property Investment Professionals of Australia chair Cake Bakos said the changes could result in fewer property sales being conducted in public.
Ms Bakos said the government didn’t want to listen to the industry on the unintended consequences of its reforms.
“I wouldn’t classify them as a government that likes to talk to industry,” Ms Bakos said.
“I think the decisions were made prior to good consultation.”
The Real Estate Institute of Victoria was “flabbergasted” the state government ignored “commonsense 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 on price transparency, leading to more price negotiations to occur in the dark, behind closed doors.
“While the government’s effort 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,” Mr Balazs said.
REIV chief executive Toby Balazs said the government had ignored commonsense and evidence-based expert warnings to push ahead with its plans.
The REIV’s own position called for a 10 per cent price guide that includes the reserve price of a home be published three business days ahead of an auction.
Minister for Consumer Affairs and Renters Paul Edbrooke said the legislation was designed to stamp out underquoting, an illegal practice where agents advertise a property at a price they know to be below the vendor’s reserve.
“We’re stamping out underquoting. These new laws mean no more wasting your Saturday at auctions trying to buy a home that you could never afford,” Mr Edbrooke said.
Agents who underquote already face fines of more than $48,000 and risk losing their commission.
The government also introduced a cap to the cost to break a lease to a maximum of four weeks, a guarantee that renters have the right to additional keys or fobs and to be able to pay their bond online, directly to the Residential Tenancies Bond Authority.
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