Policy must work in the real world.
Victoria’s proposed auction reforms are designed to tackle one of the property market’s most persistent concerns: underquoting.
Under the proposed changes, vendors would be required to publicly disclose their reserve price seven days before auction. The objective is understandable. Buyers deserve greater transparency and should have a clearer understanding of vendor expectations before spending money on legal advice, building inspections, finance and other due diligence.
However, Master Advocates Managing Director Mark Errichiello believes the intention of the reforms needs to be separated from how they will work in the real world.
One of his primary concerns is what happens if a vendor’s reserve expectations change after the initial disclosure.
If an increase effectively resets the seven day compliance period, Mark believes the policy could create additional uncertainty for the very buyers it is intended to protect.
What Does Another Seven Days Really Mean?
Property transactions don’t operate in isolation.
An additional week can mean finance pre-approvals moving closer to expiry. Settlement and vacant-possession dates can be affected. Buyers may have work, travel, family or relocation commitments, while buyers’ advocates, agents and auctioneers may already have other commitments scheduled.
Buyers could also miss opportunities to pursue other properties while waiting for a rescheduled auction.
Meanwhile, the market itself continues moving. New buyers can emerge, existing buyers can withdraw and comparable properties can sell, potentially changing sentiment and competition.
Legal, finance, building inspection and due-diligence costs can also continue accumulating.
As Mark explains:
“Consumer protection should mean better information, earlier due diligence, realistic pricing and more housing choice and not simply another clock that may need to be reset.”
Let the Market Determine Value
There is another important distinction buyers should understand: a reserve price is not necessarily market value.
The reserve reflects the vendor’s minimum expectations at a particular point in time. Market value ultimately comes down to what informed buyers are prepared to pay.
This is one of the strengths of the public auction system.
As Mark points out, an auction provides real-time price discovery. Buyers either bid and compete or they don’t. The property subsequently sells, passes in and becomes open to negotiation, or is withdrawn from the market.
Mark acknowledges the reasoning behind preventing vendors from declaring a low reserve seven days before auction only to increase it closer to auction day.
However, he believes this can be addressed without introducing rules that potentially complicate transactions and create unintended consequences.
A More Practical Alternative?
Master Advocates supports the Real Estate Institute of Victoria’s Blueprint approach, which proposes retaining a transparent advertised estimate range of no more than 10%, published through the Statement of Information, with the reserve confirmed within that range in the three-day period before auction.
This approach would encourage vendors and selling agents to have serious discussions about expectations, comparable sales, buyer feedback and likely market outcomes before setting the reserve.
It also recognises that property campaigns evolve.
“Policy should be easy to understand and follow to improve the chances of success for all stakeholders, not increase risk and damages,” Mark says.
Transparency Needs to Go Further
For Master Advocates, genuine consumer protection should also extend beyond reserve prices.
Better access to contracts and Section 32 documentation before properties are publicly marketed could give buyers more time to undertake due diligence.
There is also merit in examining independent building and pest reports as part of vendor disclosure, auction pre-registration and other mechanisms that provide buyers with better information earlier in the process.
More broadly, affordability cannot be separated from housing supply, planning delays, construction costs, stamp duty, land tax, council rates, levies and the cumulative cost of buying, owning and selling property.
The Master Advocates View
Greater transparency is a positive objective, and deliberate underquoting should not be tolerated.
But regulation must also recognise how property transactions actually occur.
Government should establish clear and enforceable consumer protections while genuinely consulting buyers, vendors and industry professionals about their practical consequences.
Better information helps buyers make better decisions. More housing supply creates greater choice. Realistic price guidance improves transparency.
And once those guardrails are established, the market should ultimately be allowed to do what an auction is designed to do, which is to determine value through genuine competition between willing buyers.
Master Advocates x Byron Property Search
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