Victoria’s real estate market faces overhaul amid underquoting controversy
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Victoria’s real estate auction market is poised for significant reform as the state’s government faces mounting pressure to address the persistent issue of underquoting—a problem that has lingered for over 16 years. Calls for mandatory reserve price disclosure are gaining traction as a potential solution to this long-standing issue, which has left many homebuyers frustrated and disillusioned.
The debate over underquoting, where properties are advertised at prices significantly lower than their eventual sale price, has been ongoing since at least 2009. Industry experts have criticised the state’s legislation, which was last updated in 2017, as inadequate in protecting homebuyers. The Herald Sun reported on a forum in 2023, led by prominent real estate figures John Keating of Keatings Real Estate and David Morrell of Morrell and Koren buyers agency, which advocated for mandatory reserve disclosure as a means to improve transparency and fairness in the market.
The Real Estate Institute of Victoria (REIV), which had previously not supported the proposal, has now indicated a shift in stance. In a statement, the REIV expressed its support for reforms aimed at strengthening professionalism and public trust, and specifically denounced “unlawful underquoting.” Acting REIV chief executive Jacob Caine emphasised the need for practical reforms, stating, “We urge the Victorian Government to undertake a thorough consultation process involving sector stakeholders, like the REIV and its members, aimed at arriving at a clear and robust legal framework for underquoting.”
Caine also highlighted the complexity of the issue, noting that a sale above the reserve price doesn’t necessarily prove underquoting, as property values can fluctuate rapidly. “While the immediate focus is rightly on underquoting, this shouldn’t distract from the way in which continuing housing supply issues are compounding the problem and the vital need for property sector settings that deliver a fairer and more efficient property market for all Victorians,” he added.
Despite the ongoing debate, there is evidence to suggest that underquoting is not as widespread as some might believe. According to Caine, only 49 fines were issued in the past 12 months, out of approximately 30,000 auctions held across Victoria. “Though, certainly, within those 30,000 there are people who have underquoted and gotten away with it,” he acknowledged. “But agents are the number one group making complaints and that’s because the sector despises the practice.”
John Keating, managing director of Keatings Real Estate, has been a long-time advocate for change, having published reserve prices for homes since 2003. He has pushed for mandatory disclosure since 2009, when the Herald Sun first reported on the issue. Keating remains hopeful that the current discussion will lead to meaningful reform, stating, “It’s not just another regular media bashing of the auction practice, which has been done and faded away before.”
Prominent buyer’s agent Cate Bakos also criticised the current legislation, describing it as “so wrong” and in need of change. She argued that the Statement of Information legislation, introduced in 2017 to address underquoting, has often exacerbated the issue by allowing unscrupulous agents to justify poorly priced properties. “The statement of information is a terrible way to police this,” Bakos said, adding that if legislation were changed, vendors would likely comply.
Bakos suggested that a simple change could involve requiring agents to provide buyers with the same three comparable sales they present to vendors when listing a property. This would help ensure greater transparency and fairness for buyers. Additionally, she proposed that vendors be required to provide building and pest inspections upfront, rather than leaving buyers to bear the cost for each property they consider.
Julie DeBondt-Barker, another high-profile buyer’s agent with Property Home Base, acknowledged that while solutions like disclosing vendor’s reserves or requiring prices to be within 10 per cent of them make sense, they could face resistance due to potential complicating factors. However, she advocated for greater transparency, suggesting that all auction results should be published. “And that would give a little bit more transparency to the buyers,” she said.
As the Victorian government considers its next steps, the pressure from industry experts and stakeholders continues to build. With the REIV now backing reforms, the prospect of mandatory reserve price disclosure may finally be within reach, offering hope to frustrated homebuyers across the state.