Why Proposed Laws For Auction Price Guides Won’t Work

The Victorian government has proposed new laws that would require sellers and agents to publish their reserve price seven days before an auction. These proposals haven’t passed parliament yet, but if they do, they will certainly throw a cat among the pigeons. Victoria wants change because they receive thousands of complaints about underquoting. This is when an agent tells buyers they can buy a property for less than the owner will actually sell it for. But underquoting is not when a buyer simply pays more than someone else or when competition pushes the price higher.

If that’s what people think underquoting is, these laws won’t fix anything. The real issue is that lobby groups around auctions are confused. They pushed for price guides, then said price guides weren’t good enough and now they’re trying something new. The reality is that both buyers and sellers can change their minds on price and that isn’t the problem. The system is. An auction is a “no-price” strategy, so why have a price guide at all? In Queensland, we don’t use price guides. Yes, it can frustrate buyers, but it’s still less misleading than unrealistic guides that set false expectations.

A “no-price” auction forces buyers to understand the market. No one buys an expensive item like a car or jewellery without knowing if they’re overpaying. Property should be the same. Buyers shouldn’t rely on someone paid by the seller to educate them on price, that’s the buyer’s or buyer’s agent’s responsibility. Victoria is already in a tough property market. If they want to make changes, they should return auctions to what they are meant to be – a “no-price” market lead selling strategy.