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Victoria\u2019s new auction and set-date laws explained \u2013 all your questions answered \u2013 for herald sun real estate<\/p>\n
Victorian home sellers will be subjected to the state\u2019s new auction ban laws from next week amid warnings of missing information and unintended consequences.<\/p>\n
Industry groups are warning government delays in releasing key details have put sellers in an unfair position this spring, with yet to be clarified parts of the laws including mandatory documents and new rules for setting home prices.<\/p>\n
And while requirements to disclose sold figures are being dubbed \u201cthe death of undisclosed sales results\u201d, mortgagee auction specialists have cautioned disputes on reserves could end up in court as defaulted owners seek injunctions.<\/p>\n
RELATED: Just two bidders now competing at typical Melbourne auctions<\/a><\/p>\n New Victorian auction law will cost sellers, create legal underquoting<\/a><\/p>\n Expert guide to navigate Victoria\u2019s unpredictable spring market in 2026<\/a><\/p>\n It is also apparent the laws will go much farther than initially purported, with agents signalling even homes being sold via private treaty will be at risk of being subjected to the new requirements after clarifications from Consumer Affairs Victoria this week.<\/p>\n In just over two weeks, from October 1, Victorian home sellers will be forced to disclose their reserve price seven days prior to any auction or set-date for a publicly advertised sale.<\/p>\n They will also have just seven days to release their sale price after they lock in a buyer on a new mandatory document that doesn\u2019t exist yet.<\/p>\n When they are pricing their home, their agent will be required to consider comparable local sales based on criteria that has still not been finalised.<\/p>\n The new laws were gazetted as only applying to those selling homes via auction and other set date methods, such as an expressions of interest or tender approach.<\/p>\n Auction and set-date sale law changes will affect most sellers listing their homes this week.<\/p>\n However, most agents upon receiving an offer, including for private sales, have until now solicited offers from other parties with an interest in the home \u2014 typically with a timeline.<\/p>\n A CAV clarification this week makes it clear that if an agent invites offers by a certain time and date \u201cthis could constitute a fixed-date sale and requires the seller\u2019s reserve price to be disclosed for seven days before the sale can proceed\u201d.<\/p>\n In addition to auction and set-date sales that attract early offers and spark such action, which REA Group data shows is currently 15 per cent of auctions across the state and hundreds of sales a month, that ruling would seemingly capture private treaty sales where an agent had sought to alert other buyers they only had a limited time to finalise any counter offer.<\/p>\n Industry groups have also warned that despite the laws having an October 1 start date, the government will be enforcing the new rules for all auction and set date sales from October 16 \u2014 including for homes that were listed for sale before October 1.<\/p>\n With most auctions running to a typical four-week campaign, a seller putting their home on the market during the course of this week would not have time to auction the home before being subject to the rules without shortening their sales run.<\/p>\n In addition, the requirement to disclose prices will also be fixed from October 1 \u2014 including for homes listed for sale before that date, unless there is a specific agreement with the agent not to disclose the sale value.<\/p>\n The legislation, first announced by the Allan Government, was only pushed through parliament in August after Ben Carroll took over. Picture: NewsWire \/ Andrew Henshaw.<\/p>\n Real Estate Institute of Victoria chief executive Toby Balazs said they were concerned at the lack of information for critical parts of sales planning, during what was already a time of heightened stress as interest rates rose and Melbourne\u2019s market faltered following federal budget changes to investor taxation.<\/p>\n \u201cBut even post that, this legislation doesn\u2019t suitably recognise that there\u2019s two sides of auctions,\u201d Mr Balazs said.<\/p>\n \u201cI think we will see less auctions this spring, so the timing of this new legislation is particularly unfair for a property market that is typically resilient but is under significant challenges at the moment.<\/p>\n \u201cSo we are worried this will make it more opaque for buyers, and for those who sell this is more onerous and involved in terms of them managing the sale in what is, for most people, their largest asset.\u201d<\/p>\n He added that with penalties for agents caught breaching the new laws maximised at an almost $49,000 fine, they were facing a \u201cdisproportionate\u201d penalty on the same level as they would for dummy bidding \u2014 a practice of planting bidders at auctions that was outlawed in 2004.<\/p>\n REIV chief executive Toby Balazs says the changes could make scenarios more \u201copaque\u201d for buyers, and challenging for sellers.<\/p>\n There are growing fears it could cost Melbourne its title as the nation\u2019s auction capital, at least temporarily, with the city yet to record a single Super Saturday auction event this spring, with more than 1000 homes testing the market, an event which had occurred multiple times by this point a year ago.<\/p>\n REA Group data has already revealed significant slides in auction activity leading up to the new laws, with auction volumes typically 40 per cent below where they had been a year ago.<\/p>\n Their data also shows that while 23 per cent of sales in Victoria last year were conducted via auctions, this year it is down to 18 per cent. The level is higher in Melbourne.<\/p>\n REA Group economist Luc Redman said these were signs sellers\u2019 willingness to use an auction was falling in the state.<\/p>\n \u201cThe number of dwellings scheduled for auction is lower than in comparative months in Victoria, while active listings remain robust, meaning that the relative eagerness for sellers to test the market at auction is lower,\u201d Mr Redmond said.<\/p>\n It is also expected that off-market sales will be caught up in the requirements, and effectively required to advertise Property Price Statements for 18 months after they are sold \u2014 this would potentially see them being advertised as sold despite never having been publicly marketed for sale.<\/p>\n PropTrack senior economist Luc Redman has noted auctions\u2019 share of Victoria\u2019s market has declined from a year ago.<\/p>\n Major firms across Victoria have indicated they have sold hundreds of homes since July 1 this year in \u2018off-market\u2019 arrangements, where they have not been officially advertised and correspondence is via text message or word of mouth with known buyers.<\/p>\n Victoria\u2019s largest real estate firm, Ray White, have indicated that they will maintain listings for the 18 months on their agency website as a way to display the sold price and mandatory form without any extra cost for sellers and that it is already standard for their agencies to do this for off-market sales, without charges.<\/p>\n Ray White Victoria chief auctioneer Luke Banitsiotis said while there would be initial confusion, the longer term outlook was that buyers would likely prefer the transparency of disclosed reserves and that they were anticipating more homes would use set date and auction sales once the new rules were understood.<\/p>\n However, he noted that with the new PPS form requiring internal measurements be calculated before a sale could be signed, it was also likely there would be a one or two week delay on getting deals under way that would see many owners step back from the method and openly advertise their home for sale.<\/p>\n \u201cIt\u2019s going to be harder to start it off market,\u201d he said.<\/p>\n \u201cBut it will be the death of undisclosed sales results.\u201d<\/p>\n Ray White Victoria chief auctioneer Luke Banitsiotis is anticipating that once people get over the change, the law changes could lead to buyers prefering auctions.<\/p>\n The firm currently has 300 auctions scheduled for after October 1, but is not yet clear how many will be part of the mandatory use of the new rules from October 16.<\/p>\n Mr Banitsiotis said in many respects the changes would have benefits, but would be viewed unfavourably as a result of other perceived real estate industry failures by the state government, such as raised land tax costs.<\/p>\n \u201cIf people view this as a tool to get the job done, as opposed to holding on to the internal rage over everything the government has done to this state, then it\u2019s a great tool,\u201d he said.<\/p>\n Gordon Legal lawyer Max Grech said the reforms were intended to stamp out misleading sale prices, nd largely targetted at agnets \u2014 but there were some key things home sellers should be across.<\/p>\n \u201cIf agents do not comply with these rules, they may be liable for significant civil penalties,\u201d Mr Grech said.<\/p>\n \u201cVendors will not be held liable for an agent\u2019s breach, but should ensure that the information they provide their agents is correct.\u201d<\/p>\n While the rules would change many things, the lawyer noted that they did not change the formal steps that need to occur before a sale.<\/p>\n \u201cIn Victoria, the contract for the sale of land can only be finalised via the signing of a written contract,\u201d Mr Grech said.<\/p>\n \u201cThis is not the same as being the highest bidder at an open auction.<\/p>\n \u201cVendors and agents alike should be careful to give an accurate reserve price in accordance with their legal obligations, but the changes do not force vendors into signing contacts for the sale of their properties, even if the reserve price is reached at auction.\u201d<\/p>\n In Victoria, a home is not sold when the auction hammer comes down. It is sold when the sale of contract is signed by both the vendor and the buyer.<\/p>\n Bayside-based Ray White agent Kevin Chokshi said he would be advising vendors to disclose their reserve price two weeks ahead of the planned auction, as this would allow them to gauge the market\u2019s interest before being locked in to that figure a week ahead of the sale date.<\/p>\n Furious vendors have also spoken out about their concerns over the legislation.<\/p>\n Damien and wife Veronica are selling a Cheltenham investment property as they can no longer afford to keep it following increases to land tax from the Victorian government a few years back, and said the change in legislation which will impact their auction on October 17 was like being kicked on their way out the door.<\/p>\n \u201cThe only reason I\u2019m selling is because the government has made it that difficult for us that I feel like I have to,\u201d Damien said.<\/p>\n \u201cBut these new rules don\u2019t make sense. They are not logical, I\u2019m not sure why they have done it.\u201d<\/p>\n Tower Property Advisory and Mortgagee Services founder and director Robert Allanadale said the legislation would be problematic for mortgagee sales, as it would heighten risks of defaulted homeowners seeking to interfere with due process \u2014 potentially by seeking an injunction questioning the reserve in court.<\/p>\n Mortgagee sales will typically exclude the former owner of the home, but the new laws will give them insights into valuations that could lead to legal challenges.<\/p>\n \u201cWe would have to let them know what the reserve price is and they always think the property is worth more \u2026 they could then try to take some action to stop the sale, that\u2019s the risk,\u201d Mr Allanadale said.<\/p>\n \u201cIt\u2019s always been a risk, but now it might be higher because they do know the reserve a week out.\u201d<\/p>\n While mortgagee auctions had declined in recent years, Mr Allanadale said he was anticipating their numbers would rise in the future with interest rates expected to jump again later this month and a weakening national economy potentially set to impact employment.<\/p>\n Mr Allanadale said mortgagee sales usually included instruction not to sell to the former owner for this reason, as they had defaulted once before.<\/p>\n Your Questions On Victoria\u2019s New Auction Laws Explained:<\/p>\n \u2013 What are the new laws?<\/p>\n From October 1 you will have to disclose a reserve price seven days prior to any auction or set date sale, including scenarios where an agent invites offers by a particular day and time. Owners who do not display a reserve will be banned from going to auction or using set-date sales methods, but can still sell via private sale.<\/p>\n Sales will also require a new Property Price Statement form be advertised, including everything currently in the Statement of Information, as well as additional features that prove it is comparable to any submitted comparable sales, including bedroom and bathroom numbers, interior size and wider block dimensions.<\/p>\n Additionally, homes sold will be required to display the Property Price Statement with the sale price for 18 months after the deal becomes unconditional and within seven days of this milestone.<\/p>\n The new real estate laws will add complexity to the market, but it is hoped they will address underquoting.<\/p>\n Auction And Set Date Rule Changes Questions Answered:<\/p>\n \u2013 Is there a grace period?<\/p>\n Yes. Homes already on the market before October 1 can still have auctions held up to October 15 without disclosing a reserve price. If it is held on October 16, the reserve price must be disclosed by October 9, and so on.<\/p>\n \u2013 Will home sellers be told what to do?<\/p>\n Yes. Agents must request the reserve price in writing, but a seller can request a statement of advice for setting that reserve including a recommended reserve price, with reasoning.<\/p>\n \u2013 Can you set the reserve price higher than your advertised price?<\/p>\n Yes.<\/p>\n \u2013 Can a seller refuse to disclose a reserve price?<\/p>\n Yes. But they cannot have their home auctioned or proceed with the sale via a set date without having disclosed the reserve for at least seven days. The alternative would be to swap to a private treaty sale.<\/p>\n \u2013 Can you change your reserve?<\/p>\n Yes, but only if you reset the auction date for another seven days (unless you have set your reserve early, and you make the change more than seven days before the planned sale date). However, if the vendor wants they can still go to auction and sell below their reserve, or if there is enough competition, a home could still sell above that figure.<\/p>\n \u2013 What if there are multiple vendors and they can\u2019t agree on a reserve price?<\/p>\n The home will have to be sold via private sale if no decision can be reached.<\/p>\n \u2013 Does the seven-day rule apply if you want to reduce the reserve in the final week?<\/p>\n Yes. You must provide seven days notice for any change to the reserve price.<\/p>\n \u2013 If a buyer makes a timed offer, can agents still approach other buyers?<\/p>\n Yes. However, a board room auction, in which multiple interested parties are pitted against each other, typically after an early offer is made, will require a seven-day delay. CAV have indicated an agent inviting offers with a date and time deadline could also \u201cconstitute a fixed-date sale\u201d and that a reserve price will need to be disclosed for seven days in that scenario.<\/p>\n \u2013 I don\u2019t intend to go to auction, will this impact me?<\/p>\n Possibly. If you sell your home with a set date in any form, be it expressions of interest or a tender process, you will be required to release a reserve price seven days before the auction. This can include if your agent wants to arrange competition between multiple buyers who have shown interest in a private sale listing.<\/p>\n There are many ways to get a sold sticker up at your home in Victoria, and the new laws could impact most of them.<\/p>\n \u2013 Do you have to accept the sale if it passes the reserve at auction?<\/p>\n No. A contract of sale is only finalised once it is in writing and signed by both parties. A vendor can still change their mind up until the contract is signed. Real estate agents do not have the authority to sign on behalf of a vendor.<\/p>\n \u2013 Can you set the reserve early?<\/p>\n Yes. For vendors who want to get market feedback on their intended reserve, but do not want to risk having to change their auction date, some agents are suggesting releasing the planned reserve two weeks before auction and revising it over the following week if needed.<\/p>\n \u2013 Will vendors face consequences for breaches?<\/p>\n No. The changes have been made under the Estate Agents Act, and unless the vendor is subject to that act they will not face individual consequences.<\/p>\n \u2013 What will happen to agents who break the new laws?<\/p>\n Breaches of the new laws will come with a maximum penalty of 240 penalty units, which equates to fines of up to $48,842. There could also be further fines for breaking existing underquoting laws and the Australian Consumer Law.<\/p>\n \u2013 Will the Underquoting Taskforce continue to operate?<\/p>\n Yes. They will continue to monitor sales campaigns and to review agency documentation as well as receiving tip offs. CAV will initially seek to ensure the industry understands the new rules.<\/p>\n \u2013 Will there be fewer auctions this October?<\/p>\n Yes. Auction numbers have already declined about 40 per cent from where they were a year ago. Numbers are expected to decline in the aftermath of the changes, and would ordinarily drop off as a state election approaches \u2014 with one scheduled for November 28.<\/p>\n The full rammifications of the changes will take time to become clear.<\/p>\n \u2013 Will this cost sellers more?<\/p>\n Unclear. While a smooth auction or set-date sale should not increase costs, having to reset an auction date could lead to additional marketing and auctioneer fees.<\/p>\n \u2013 Will there be further changes or clarifications?<\/p>\n Possibly. Consumer Affairs Victoria is currently asking real estate agents and professionals to monitor its website for \u201cguidance material\u201d, including for reserve price disclosure requirements and sold price disclosure requirements.<\/p>\n \u2013 Will this end underquoting?<\/p>\n Experts don\u2019t believe so. Agents and home sellers will still be able to advertise the home at any price where they can find comparable sales that fit the new requirements, until the final week before it is set date or auction when the reserve must be disclosed. There is also nothing forcing them to proceed to auction with the reserve price as indicated, or to make a vendor sign a contract \u2013 even if the home does meet the reserve but does not sell well above it.<\/p>\n Disclosing Sold Price Questions Answered<\/p>\n \u2013 Do I have to disclose the sale price?<\/p>\n Yes, unless the Consumer Affairs Victoria director agrees that disclosing the price will have an impact on a family or personal violence situation.<\/p>\n \u2013 What are the new requirements for displaying a sold price?<\/p>\n It must remain \u201cpublicly available\u201d for at least 18 months as part of the Property Price Statement, which commences from when the sale becomes unconditional \u2014 and the price must be on display no later than 7 days from that point.<\/p>\n \u2013 Will vendors be charged for displaying their sold price?<\/p>\n Unlikely. Most estate agencies can do this without any added cost, and larger online portals are likely to benefit from having more sold price data available.<\/p>\n \u2013 Where will disclosed sale prices be displayed for 18 months?<\/p>\n Unclear. The legislation only requires that the sale price be advertised publicly. In all circumstances it is likely online advertising portals will glean the information and attach it to public details about the address.<\/p>\n Director of Consumer Affairs Victoria Nicole Rich will determine where sales can be exempt from disclosing a price. Picture: NewsWire \/ Diego Fedele.<\/p>\n \u2013 Are there exemptions for displaying a sold price?<\/p>\n Yes, but the director of CAV must approve the exemption, which is expected to typically only be for personal and family violence reasons, or if the CAV director\u2019s decision is still pending. At present prices are disclosed to the Valuer General upon settlement, which can take several months, but may not necessarily become public.<\/p>\n \u2014 When does this apply?<\/p>\n For all homes sold on and after October 1, including for homes that were listed for sale before October 1, unless the agent signed an agreement with the vendor prior to that date that requires the sale price not be disclosed.<\/p>\n \u2013 What will the new Property Price Statement include?<\/p>\n The sale price, local median price, comparable sales of the current Statement of Information, as well as key features (including number of bedrooms, bathrooms, car spaces, internal and exterior sizes in square metres and the type of building), in addition to the same key features for each comparable sale listing. It must have a web link displayed next to the home\u2019s advertised price, and have a QR code link from any physical advertisements, such as sale boards.<\/p>\n \u2013 When will the new Property Price Statement form be released?<\/p>\n Unknown. Consumer Affairs Victoria have yet to confirm when this will be released, though have indicated it will be before October 1, when it will be required to be available for all homes. Sellers who have a home listed prior to this date will be required to produce both the new form and the current Statement of Information, if they are slated to go to auction or a set date from October 16 onwards.<\/p>\n Source: Consumer Affairs Victoria, Gordon Legal, Ray White<\/p>\n Real estate agents seeking additional information can find more here<\/a>.<\/p>\n Sign up to the Herald Sun Weekly Real Estate Update. Click here <\/a>to get the latest Victorian property market news delivered direct to your inbox.<\/p>\n MORE: \u2018Disgraceful\u2019: Families told to surrender backyards<\/a><\/p>\n<\/p>\n
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