Victoria forces disclosure of auction reserve prices in crackdown on underquoting
- Victoria will soon require auction reserve prices to be published at least a week before auction day under new laws to be introduced in 2026.
- The reform aims to curb underquoting and give buyers more transparency before bidding.
- Auctions can’t proceed if the reserve hasn’t been disclosed in time and agents must update all marketing materials once it’s published.
The change is aimed at minimising disappointment among purchasers, many of whom have found themselves attending auctions for properties with opaque or shifting reserves they couldn't meet.
It comes in addition to Victoria's strict laws against underquoting, a practice some real estate agents have previously used to drum up interest in a property.
There are multiple ways for a property sale to be classed as an underquote; a common one is for a property to pass-in at auction for not meeting the reserve, when the highest bid was higher than the top of the published price guide.
The new laws, to be introduced in 2026, will allow real estate agents to run a campaign assessing interest in a property before revealing a reserve figure at least a week before an auction date.
The changes will also impact properties being sold with a fixed date of sale, a tactic similar to an auction, wherein private bids are tendered over the course of a campaign.
"Underquoting isn't fair and it's young Victorians and families paying the price," Victorian minister for consumer affairs Nick Staikos said.
Victorian real estate agents are already required to provide an estimated selling price based on comparable property sales and must present these in a Statement of Information.
The state also has an underquoting taskforce in place and encourages concerned Victorians to report instances of alleged underquoting.
Publishing the reserve price ahead of an auction is expected to give potential bidders the time and confidence to perform building and pest inspections and other checks and balances before the hammer is raised.
If a reserve price is not publicised at least a week out from an auction, that auction will not be able to proceed under the new rules.
Agents will also need to update all marketing materials to include the reserve price once it's published.
Underquoting can carry fines of up to $11,000 for each breach under Victorian law, up to a total of nearly $38,000 for individual agents.
The state's underquoting taskforce has issued more than 200 infringements, totalling $2.3 million worth of fines, since its 2022 inception.
For reference, at most given weekends, upwards of 1,000 properties go to auction in Greater Melbourne.
NSW proposes greater fines for underquoting
Elsewhere, the NSW Government recently proposed reforms that would see agents fined up to $110,000 or three times their commission, whichever is greater, for underquoting.
Right now, underquoting agents can be penalised up to $22,000 in NSW.
The NSW Government also proposed a system similar to Victoria's, requiring agents to publish statements of information and update price guides regularly to prevent above-guide offers from being rejected.
The proposed changes are subject to consultation and expected to be introduced to the NSW Parliament in 2026.
Too far or not far enough?
The Victorian Greens welcomed the changes announced on Thursday, but argued they don't go far enough.
The party believes reserve prices should be revealed the moment a property hits the market.
"First home buyers have been getting completely screwed for years, wasting time and spending thousands on inspections for homes they were never going to afford," Victorian Greens housing spokesperson Gabrielle de Vietri said.
"Being told the reserve early is helpful, but it doesn't change the reality that most young people can't afford the reserve in the first place."
The party argues the state government's demolition of public housing and the federal government's expansion of the 5% Deposit Scheme are reducing housing affordability for first home buyers.
The Real Estate Institute of Victoria (REIV) also welcomed the state government's announcement, but cautioned against "an overly narrow and reactive approach".
It noted it plans to publish the outcome of its discussions with other industry participants on the creation of a blueprint for price guides.
"We have been developing suitable solutions that strike the right balance between greater price transparency and protecting a vendor's right to achieve the best possible price," REIV CEO Toby Balazs said.
"Informed by extensive stakeholder input, the group's report will aim to guide the more nuanced regulatory response required to give buyers increased price transparency without compromising vendor rights."
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