Picture this: you're excited about a property auction, thinking you've got a shot at a bargain based on the ad, only to discover at the last minute that the real reserve price is way higher. That's the sneaky practice of underquoting in action, and it's leaving homebuyers – especially young families – feeling tricked and priced out. But Victoria is stepping up with groundbreaking rules to put an end to this once and for all, and it's about time we talk about how this could change the game for everyone in the housing market.
In a bold move that's setting a national precedent, real estate agents across Victoria will soon face a legal obligation to disclose a property's reserve price – the minimum amount the seller will accept – at least one full week before the auction kicks off or before a set-date private sale happens. This announcement came straight from the Allan government on Thursday, with plans to push the legislation through parliament sometime next year. If agents don't meet this deadline and share the reserve openly, they simply won't be allowed to go ahead with the auction or sale at all. It's a tough-love approach designed to build trust and transparency right from the start.
For those new to the real estate world, underquoting is basically when some agents list a home at an artificially low price in their ads, even though they know it could sell for much more – or that's what the owner expects. The goal? To lure in more potential buyers, spark a frenzy of interest, and drive up bids through competition. It's like baiting a hook with a shiny lure, but it often leaves people feeling misled when the hammer falls at a price far above what was hinted.
Victoria's Consumer Affairs Minister, Nick Staikos, couldn't have put it better: the government is committed to making the housing market a level playing field for all. 'Underquoting just isn't right, and it's our younger Victorians and everyday families who end up footing the bill,' he emphasized in his official statement. And he's spot on – in a market where affordability is already a huge struggle, these tactics only make it harder for first-time buyers to get a fair go.
But here's where it gets really eye-opening: a deep dive by Guardian Australia into last year's property sales data revealed just how widespread this issue is across Australia. They defined underquoting as any deal where the final sale price topped the pre-sale guide by more than 10%, and the numbers were stark. It was most common in big cities like Sydney, affecting a whopping 20% of sales, and Perth at 18%. On the flip side, places like Canberra, Hobart, and Darwin saw far less of it, with rates much lower. Interestingly, the gap between advertised guides and actual prices was even bigger for standalone houses compared to townhouses or apartments. And get this – auctions amplified the problem way more than private negotiations, where buyers might have more room to haggle directly.
Under these new Victorian rules, agents won't just mention the reserve once; they'll have to overhaul every bit of marketing material – from online listings to flyers – to include it clearly. Any old ads that omit this key detail? They'll need to be pulled immediately. No more hiding behind vague price ranges to keep buyers guessing.
This push comes hot on the heels of another recent government crackdown earlier this month, where they rolled out tougher standards for how agents pick 'comparable sales' to set those initial price guides. For beginners, think of comparables as similar homes nearby that recently sold – the idea is to give a realistic benchmark for what your target property might fetch. The new guidelines insist agents choose the three most spot-on local matches, taking into account details like the home's age, any upgrades or renovations, and overall condition. To keep things honest, Consumer Affairs Victoria (CAV) now has the power to demand proof from agents on how they selected those comps, complete with records. Ignore that request, and you're looking at hefty penalties that could sting.
And this is the part most people miss when comparing states: just last week, over in New South Wales, their government unveiled similar reforms. There, agents will have to slap price guides on every single ad and hand over a detailed 'statement of information' to buyers, backed by solid data on estimated sale values – much like Victoria's current setup but with more teeth. Break the rules by underquoting in NSW? You could face fines up to $22,000, plus forfeiting your commission and fees from that very sale. Ouch.
Back in Victoria, the consequences are no joke either: underquoting agents risk fines exceeding $11,000 for each violation, or even steeper penalties over $38,000 if it violates the broader Estate Agents Act. It's clear both states are ramping up the pressure to clean up the industry.
But here's where it gets controversial – despite all these regulations piling up, do they actually make a dent? Graham Cooke, the head of consumer research at Finder, has shared with Guardian Australia in the past that these kinds of rules often fall short in practice. Underquoting, he argues, stubbornly persists because enforcement can be tricky, and some agents find ways to skirt the edges. Is it a case of too little, too late, or could Victoria's mandatory reserve disclosure finally be the game-changer that sticks? What do you think – will forcing agents to show their cards upfront level the playing field, or is the real issue deeper in how the market values properties? Drop your agreement, disagreement, or hot takes in the comments below; I'd love to hear how this affects your view of buying or selling in today's wild housing scene.
