The Real Estate Institute of Victoria (REIV) has announced its strong opposition to the Victorian government's proposed auction laws and has presented an alternative set of reforms.
Government's Proposed Auction Laws
Late last year, Consumer Affairs Minister Nick Staikos stated the government's intention to introduce new laws to address underquoting. These laws would require real estate agents to publish the owner's exact reserve price at least seven days before an auction or fixed-date sale. This initiative follows the "Bidding Blind" investigation, which identified that more than half of 26,000 Melbourne properties auctioned sold above their advertised price range, indicating potential issues with existing underquoting regulations.
REIV Opposition and Alternative Proposal
The REIV, which represents over 5000 real estate professionals, initially indicated potential support for reserve price disclosure but has now formally opposed the government's plan, deeming it impractical. The organization argues that disclosing an exact reserve seven days in advance could lead vendors to set cautiously higher reserves, potentially inflating prices and trapping sellers at lower figures on auction day.
REIV's Alternative Blueprint includes:
- Reserve Price Confirmation: Instead of an exact disclosure, vendors would confirm their reserve price is within the advertised 10 percent price range at least three days before an auction.
- Private Sale Pricing: For private sales, properties would be advertised at a single "owner's asking price" rather than a 10 percent range, signifying the vendor's desired sale price.
- Demerit Point System: Introduction of a license demerit point system for agents, which could lead to suspensions or bans for repeat offenders or serious infractions.
- Free Building Inspections: Providing prospective buyers with free building and pest inspection reports, with the cost to be absorbed by the successful buyer. This aims to reduce expenses for buyers who currently pay for multiple reports.
- Sale Price Disclosure: Requiring the disclosure of sale prices for all residential properties once a contract becomes unconditional, addressing the current practice of withholding sale prices.
REIV chief executive Toby Balazs indicated that their blueprint offers a