Victoria's announcement of a new law forcing property owners to declare a home's reserve price a week before an auction has attracted criticism from two unexpected industry insiders.
The state government on Thursday revealed an Australian-first law to be introduced next year requiring real estate agents to publish the minimum amount a seller will accept for a property being offered for auction or fixed-date sale.
Those who failed to disclose the reserve price within the time frame would not be able to proceed with the auction or sale.
"I think it's appalling to be honest," said buyer's advocate Lauren Staley.
The government said the law was designed to protect buyers from underquoting.
But Ms Staley said it would unfairly penalise vendors, who she said would be forced to lay all their cards on the table.
"There needs to be some work done on the system that we've got, but I think that we get a lot of buyers throwing their toys out of the cot because they miss out on a property.
"There's got to be some onus on the buyer to do their own due diligence when it comes to this."
Ms Staley said she did not believe the policy would be effective at stamping out underquoting.
"Where you get two people who have got deep pockets and they're willing to spend whatever it takes to buy a home, that's something that an agent can't predict and a vendor can't predict," she said.
"Declaring a reserve or showing your hand seven days before an auction, I don't think it's going to have any impact on that outcome.
"The real issue is affordability and that's not being tackled whatsoever in this particular reform."
Cate Bakos is a fellow buyer's advocate.
She is also the chair of Property Investment Professional of Australia, which advocates to strengthen consumer protections for property investors.
She said locking vendors into setting a reserve before a crucial time in a sales campaign could also stop them from lowering their price.
"Those seven days are quite crucial for the agents and the vendors to understand where the buyers are at," Ms Bakos said.
"We're not giving conversation to what happens … if their circumstances or market conditions or a very recent comparable sale changes their feelings about their property's value."
Ms Bakos said underquoting was still a problem in the real estate industry but the Victorian government's attempted fix would fall short of improving things for buyers.
"If the buyers are only able to be confident in that final seven days that they've got a grip on the value [of a property], they will have a much shorter period of time to conduct their due diligence.
"It will be a challenge for buyers to get building inspections and contract reviews all coordinated within that final week."
Ms Bakos said it was also yet to be seen whether some vendors would set unrealistic reserves.
"The difference between reserve and likely selling price needs a little bit of attention," Ms Bakos said.
"If a vendor was very confident that they had really strong interest on their property, they could set their reserve at $1 and the property will sell under heavy competition and give them a great result."
But managing director of the Australian Housing and Urban Research Institute, Michael Fotheringham, believed the law was a good step forward for Victorian home buyers.
"I think it's reasonable for people wanting to buy a home to have an accurate sense of how much a property is likely to sell for."
Dr Fotheringham said vendors should have a reasonable sense of the market before the final week of a sale campaign and the new law would make the industry more transparent.
"That's the real estate agent's job to advise them on the market and what's realistic," he said.
"It feels disingenuous to have such wild divergences between the ranges being put up as likely prices week after week, and week after week seeing the prices going much, much higher."
No other state mandates advertising of reserve prices
If the laws pass in 2026, Victoria will be the only state in Australia that mandates the advertising of a reserve price for an auction.
In New South Wales and South Australia, vendors must advise their agent of their reserve price and it is kept confidential from the bidders.
In the ACT, vendors are not required to set a price.
But if they do, it must also be put in writing and given to the auctioneer who keeps it confidential until the property is declared on the market.
In Queensland, Tasmania and Northern Territory, vendors are not required to set a reserve, but that leaves them exposed to having to accept the highest bid made at the auction.
"In NSW at the moment, there have been a series of round tables looking at underquoting, looking at an approach to it," Dr Fotheringham said.
"I suspect other states and territories will watch [Victoria's new law] with great interest and may well follow suit."
When it comes to advertising prices, Queensland has taken the opposite approach to Victoria.
Queensland has banned vendors and real estate agents from providing price guides for properties being sold at auction.
Ms Bakos said she believed Queensland had the better approach to real estate auctions than Victoria.
"The onus is completely on the buyer to do their own homework and to work out where they think the value sits," she said.
"That's quite a dramatic stance as well.
"I would argue that it's a healthier stance than a misleading price quote."
