Major changes proposed to fix underquoting in Victoria by the state’s leading real estate body come with a sting for home sellers.
Victorian home sellers would be forced to get costly building and pest inspections done before selling and to disclose their eventual sale price under proposed industry reforms.
Meanwhile dodgy real estate agents would be switched to a “demerit point” system with only those who consistently get caught being penalised, and potentially losing their license.
In a counter proposal to government plans to fight underquoting, the offering from the state’s top real estate lobby group slams the state’s suggested approach released in November last year as “heavy handed” and “counter-productive”.
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The Real Estate Institute of Victoria’s approach would force the disclosure of all home sale prices, leaving home sellers unable to maintain privacy over their finances, as well as a “demerit point” system for dodgy agents that could cost them their license.
The Real Estate Institute of Victoria have today released their own Blueprint for Marketing of Residential Real Estate in Victoria, calling for a 10 per cent price guide that includes the reserve price of a home three business days ahead of the auction.
It varies significantly from the government’s own plans, which were announced late last year and would force home sellers to list their exact reserve price a full week ahead of the auction or be barred from selling.
The government has indicated they planned to undertake further consultation with the industry prior to legislating their proposal.
Underquoting has proven a sticky issue in Victoria that has resisted past law changes and the establishment of an Underquoting Taskforce by Consumer Affairs Victoria.
Designed by an REIV Strategic Working Group, the blueprint also proposes to deal with underquoting outside of the auction market by forcing private sale vendors to adopt a litany of changes including advertising a single, vendor-advised asking price, compulsory disclosure of all sale prices once a contract becomes unconditional, enhanced comparable sales requirements and stronger enforcement.
Additional proposals would require that the contract of sale’s Section 32 document be ready at the commencement of marketing, potentially delaying some urgent sales, as well as requiring that this document include a building and pest report conducted by a registered inspector.
Such reports would cost vendors hundreds of dollars, though most buyers would be saved from paying the sum repeatedly.
REIV chief executive Toby Balazs said a vendor advised asking price would aim to be the figure at which they would absolutely sell the home, which might be higher than a reserve price, and that changes to comparable sales would allow for up to six properties to justify an estimate.
Building inspections paid for by the home seller would be mandatory under the proposal.
In limited circumstances, agents would also be able to list comparable sales from more than 2km away (in metropolitan areas) and from more than six months ago, but with a requirement that this would need to be justified on the Statement of Information, Mr Balasz said he did not believe this would be exploited by dodgy agents.
The proposal for stronger enforcement would see things like a demerit point system, where an agent who had made a mistake would be likely to be warned, but those who consistently did the wrong thing would build up points towards fines and even losing their license.
“I liken it to a driver’s license, if you lose enough points because you consistently get fines, then you lose the right to drive,” he said.
Mr Balazs added that government’s proposal had been made while the Strategic Working Group was still finalising their proposal, which the government had known was not far from completion, and labelled their actions as “unexpected and deeply concerning”.
Melbourne is considered the auction capital of Australia, and the proposal would force sellers to disclose reserve prices three days before going under the hammer.
“With the potential to trigger inflated reserve prices, a fall in clearance rates and an
increase in offers prior to auction, the Government’s proposal threatens to compromise
the transparency and effectiveness of the public auction process,” Mr Balazs said.
“It’s a heavy-handed, counter-productive approach that discriminates against vendors by
denying them the right to receive the best price for their home.”
However, he warned the government off trying to pick and choose from the Blueprint and their own proposal, noting their suggestions were designed as a package and would not necessarily suit as a mix of the two proposals.
Prominent buyer’s agent and Property Investors Council of Australia chair Cate Bakos said vendors might still find a three-day timeline for reserve disclosure problematic ahead of an auction as things could change in that time.
The property market would have significant changes under the REIV’s proposals.
However, Ms Bakos lauded proposals for additional enforcement, specifically noting it should come with more “people on the ground” in Consumer Affairs Victoria’s enforcement body the Underquoting Taskforce, and suggested higher fines.
“That’s what will stop underquoting, you can have all the rules under the sun, but what matters is how they are enforced,” Ms Bakos said.
The state government has indicated they intend to finalise plans for the underquoting overhaul in the first half of 2026 before submitting a bill to parliament.
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