If you’ve ever fallen in love with a property at auction, only to discover the vendor’s reserve price was far higher than the advertised guide, you’re not alone. In Victoria, underquoting — advertising a property at a price lower than it is reasonably expected to sell for — has long been illegal under the Estate Agents Act 1980. But ask any frustrated bidder, and they’ll tell you: the law, as it stands, isn’t working.
According to The Age, the practice remains “notoriously difficult to prove”. Now, the state’s peak real estate body — the Real Estate Institute of Victoria (REIV) — has taken a surprising turn, supporting a major policy shift: mandatory disclosure of a property’s reserve price before auction.
The Current Law — and Its Limits
Under Victorian underquoting laws, agents must provide an Estimated Selling Price (ESP) in the sales authority, supported by at least three recent comparable sales, and publish it in a Statement of Information alongside the suburb’s median price.
The advertised price must not be less than:
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the ESP,
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the vendor’s written asking price, or
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a written offer already rejected by the vendor.
If the ESP changes, advertising must be updated promptly — within one business day for online listings.
These rules aim to give buyers clarity and protect them from misleading price guides. But here’s the rub: vendors are not required to tell the agent their reserve price — the minimum they’re prepared to accept at auction — and even if they do, the reserve can legally be higher than the advertised range.
This means you can have situations where bidding passes the top of the price guide, yet the property is “passed in” because the reserve is set much higher.
The Push for Reserve Price Disclosure
The REIV has now backed a system requiring vendors to publish the reserve price — the very figure that decides whether the hammer falls — before the auction. REIV President Jacob Caine has suggested this should happen later in the auction campaign, after feedback from buyers, rather than from day one.
Consumer advocates, including the Consumer Policy Research Centre, say this would save buyers thousands in wasted costs on building and pest reports for properties they never had a realistic chance of buying. The model mirrors the ACT system, where buyers also receive free inspection reports.
Public sentiment seems overwhelmingly in favour — The Age’s survey found 92% of readers support disclosing reserves.
Why Enforcement Has Been Tricky
Part of the problem lies in proving intent. The law focuses on whether the advertised price is “reasonable” given comparable sales and market conditions. But price guides can be defended as estimates, and reserve prices can be adjusted right up to auction day. Without a requirement to align guides with reserves, enforcement remains reactive and complex.
Even when fines are issued, they can be dwarfed by the commission from a successful sale, creating little deterrence.
What Could Change for Victorian Auctions
If reserve disclosure becomes law, buyers will know the true threshold for purchase — removing the guessing game and potentially cooling bidding wars driven by false expectations.
A middle-ground approach has also been floated: vendors would not have to disclose the exact reserve, but would have to ensure it sits within the advertised price range. This would preserve some flexibility while still keeping the guide honest.
What Buyers and Sellers Should Do Now
For buyers:
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Always review the Statement of Information and comparable sales.
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Ask direct questions about the vendor’s price expectations — even if agents can’t disclose the reserve, you may glean useful insights.
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Be cautious about investing in pre-auction reports unless you’re confident your budget aligns with likely outcomes.
For sellers:
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Understand that underquoting breaches can lead to hefty penalties and reputational damage.
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Providing a transparent price strategy may attract more serious, financially ready bidders.
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Keep in mind that proposed reforms could soon change your obligations.
The Bottom Line
Underquoting laws in Victoria are well-intentioned but flawed in practice. Without linking price guides to the vendor’s reserve, buyers remain vulnerable to disappointment — and unnecessary expense. The REIV’s new stance signals a significant shift, and if the government acts, Victoria could join the ACT in making property auctions more transparent and fair.