One in 10 Victorian auctions in doubt as tough new laws start

Dozens of Victorian home sellers will have their auction plans changed in the first week of new laws controlling the sales method being in full force.

About one in ten Victorian homes scheduled to go to auction this weekend did not have their reserve price advertised seven days prior in a potential breach of the underquoting laws implemented at the start of the month.

This weekend will be the first with the laws in full force, with a grace period for those that were advertised for sale prior to October 1 expiring at the end of this Thursday.

A Herald Sun review of the about 394 homes listed for auction on online portals from Friday to Sunday this week found 42 without a reserve price disclosed.

This included a handful where offers had been accepted for the home, but that might be facing a scenario where they will not be able to proceed to auction as planned if the offer falls through during the week.

Under new laws designed to tackle underquoting in the state agents planning an auction on a Saturday must disclose the reserve price on a newly created Property Price Statement form by the Saturday before the auction — October 10 for those who had planned an auction on the 17th.

Agents with properties advertised for auction this Friday and Saturday without a reserve disclosed by Monday morning have revealed they were dealing with confusion from owners, or even unsure of the new rules themselves.

In many instances agents indicated they would postpone the auction or that they were converting it to an alternative sales method, but others indicated they were not sure how they would proceed after being contacted.

There is no breach of the new rules unless the agents attempt to proceed with the planned auctions this weekend without having disclosed their reserve price for at least seven days on the new Property Price Statement form.

However, several were still publishing Statement of Information forms on their listings instead of the PPS, which is a breach of the new rules.

Dozens of homes were spotted in the review on Saturday night, and a handful had their reserves set by Monday morning.

It was not clear if they advertised the reserve between 8pm and midnight on Saturday, and if that would still be acceptable for the new rules.

In one instance an agent handling a mortgagee sale has revealed they were forced to postpone their auction because the wrong person in the mortgagee firm’s office had signed off on the reserve price, and the new legislation required it be a specific individual within the firm.

Barry Plant’s Paul Filippone has a Pascoe Vale property that was listed for auction this weekend, but where the owners had accepted an early offer for the home.

Mr Filippone said the situation had been explained to the vendors who had decided to accept the offer knowing that if they did they would be unable to proceed with their auction as planned, even if the buyer failed to proceed.

He was not prepared to speculate on how many home sellers would face this situation, but indicated it would require agents to explain the situation clearly for sellers

Shelter Real Estate’s Zali Reynolds was also among those required to push back an auction and said with all the paper work that came along with the new rules, sellers were effectively having to set their reserve on the Wednesday ahead of the Saturday 11 days away in order to get everything through.

Ms Reynolds said for many sales that was simply not enough time to get a clear understanding of buyer appetites in the current market.

The result would be fewer homes going to auction, and for those that did, potentially longer auction timelines — which would come with additional costs from staging to marketing and even open-for-inspection fees for vendors to pay.

The state government published information and guidance on the Consumer Affairs Victoria website in the lead up to the new laws being implemented, and sent emails on a number of occassions to more than 14,000 real estate agents and agent representatives.

CAV also spoke about the changes at a Real Estate Institute of Victoria Sales and Buyers’ Agent Conference last month.

Real Estate Institute of Victoria chief executive Toby Balazs said given the significance of the changes it was going to take some time to get everything bedded down.

“We do understand that this is a massive change to the Victorian real estate sector and there’s likely to be a period of time where both vendors and agents need to adjust,” Mr Balazs said.

He added that it was their hope CAV would look to educate the industry and work with them in the initial roll out of the new laws.

There are more than 550 auctions slated across the state this week, however a significant number were planned from Monday to Thursday — still part of a grace period for homes listed for sale prior to October 1 and going to auction by no later than October 15.

The auction listings review does not include other homes being sold by set-date methods, which would likely be hundreds more that are also subject to the new rules.