Nigel O’Neil, the chief executive of Woodards, said moving to the Queensland model risked pushing the industry back 20 years, before mandatory statements of information documents were introduced, when buyers had to rely on verbal conversations with agents.
In explaining why the new working group had been established, REIV interim chief executive Jacob Caine said the Bidding Blind investigation had put the issue of underquoting back in the spotlight, demanding that the sector revisit ideas that had been floated over past decades.
Caine said that Victoria’s Consumer Affairs Minister Nick Staikos and Opposition Leader Brad Battin would be invited to participate.
“The leader of the opposition said he’s keen to work with the REIV. Minister Staikos said he’s keen to work with the REIV in terms of finding solutions. So we hope that those public comments will translate into actual participation in the working group,” Caine said.
The REIV has engaged government advisory firm Counsel House to build the terms of reference for the working group, chair the panel and develop a report. The process is due to start later this month and involve six weeks of interviews, discussions, and consultation with stakeholders.
One of the ideas set to be debated is the mandatory pre-auction disclosure of reserve prices, an idea that now has the conditional support of the REIV, and was backed by 92 per cent of the 8324 people who responded to this masthead’s property pricing survey. But the proposal remains very unpopular with some in the industry.
“I can tell you that the disclosure of reserve price will not fix it because what will happen is no vendor will give you the honest reserve, they’ll tell you a higher price,” said Belfiore, one of many agency heads who also argued that underquoting was not as common as critics claimed.
Also likely to be considered is the prospect of requiring free building and pest inspection reports to be given to prospective buyers, a step some consumer advocates say could effectively eradicate the financial cost of underquoting. In the ACT, where this model is in force, the successful purchaser reimburses the home seller for the reports after the sale.
“I think it’s definitely worth exploring,” said O’Neil, from Woodards. “It doesn’t make sense to me, and never has, that say seven or eight buyers would get seven or eight different pest and building inspections on a property.
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“That’s one of the key costs incurred, other than time, by potential buyers, and that’s one of the key reasons why they get upset when the price goes well above what the expectation was.”
Both these ideas – mandated reserve disclosure and free pest and building reports – were investigated in a taxpayer-funded review into Victoria’s property market, commissioned in 2022 and informed by widespread public consultation, but the final report was never released by the government.
This week, the Victorian government again refused to explain why the findings of the review remain secret, though a spokesman confirmed the consumer affairs minister would be represented at the REIV’s meetings.
“Victoria leads the nation in stamping out underquoting as the only state with an underquoting taskforce, and we will continue to engage with the sector and advocates about how we can make the property market fairer,” Staikos said in a statement.
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Luke Banitsiotis, a partner at Woodards Blackburn, one of the 11 confirmed members of the new working group, said he would pose several suggestions for reform, including changing rules so that home sale results could not be withheld from the public.
“You go to some of the inner-city markets – the Stonningtons, the Baysides, the Boroondaras – you’re lucky to get half the results reported. How’s a buyer meant to understand the market when there’s no data?”
Banitsiotis, the 2024 Australasian Auctioneer of the Year, said he would also advocate for a system where the only price guidance allowed to be provided to buyers was the government’s value of a home, such as the capital improved value.
“If you remove the agent from quoting a figure, well you’re going to remove underquoting because at the end of the day, an auction in its truest form determines market value,” he said.
Lauren Jones, a buyer’s agent in Queensland, has experience of navigating a market where no price guides are the norm, and says while it works well for home sellers, who sometimes get “crazy” offers well above what they were expecting, it disadvantages buyers.
“It’s probably one of the main pain points I see,” Jones said.
Price guides could be provided only for private sales in Queensland, Jones explained.
“Anything up here that does have a sale price generally, is bait pricing, so they’re underquoting and trying to get as many people through the door as possible, or it’s overpriced [maybe because it’s passed in at auction].”
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