Victoria’s reserve disclosure laws: How will your strategy change?

To help agents transition, a 14-day buffer will be in place, with the rules officially applying to sales from 16 October.

Additionally, final sale prices will need to be publicly disclosed within seven days, on the new Property Price Statement (PPS), which will replace the existing Statement of Information (SOI).

Barry Plant chief auctioneer, James Hatzimoisis, said that while the new rules wouldn’t drastically affect campaigns, professionals needed to prepare to ensure their strategies were up to scratch.

“Seven days out, they're going to have to publish the vendor's reserve price on all marketing material, all online portals; they’re going to have to change the PPS form and what have you,” he told REB.

“So it doesn't really change the campaigns a great deal other than some tweaks along the way to cover for the new legislation.”

Here’s what it means for your campaign:

Getting the right price

In light of the new laws, Hatzimoisis said agents should ensure reserve prices reflected the market feedback, ensuring the price wasn’t too low or too high.

He said that getting the price right was about maintaining solid communication with sellers and making sure they were up to date with all available information.

“We want them to have as much buyer feedback as possible, and then we can guide them along the journey as to where we feel is going to be the best strategy for them to get the right outcome,” he said.

“If we can arm them with the most amount of information relevant to their property, it's going to allow them to price their property to sell.”

He said working more closely with the vendor not only ensured the reserve price was reasonable and could attract enough buyers, but also meant they would meet the disclosure deadline.

Under the new rules, if the reserve price is not made public seven days ahead of the auction or fixed-price sale, it cannot go ahead.

“The vendor can accept the agent’s advice and set the reserve according to the agent's recommendation … or they can ask the agent to reassess and come back with another one. But everything has to be done in writing."

Private sales

According to Hatzimoisis, agents will have to be mindful of which private sales could fall under the definition of “fixed-date sales”.

He said that usually, when a private sale attracted multiple interested buyers, agents may ask them to submit their highest or best offer by a certain time.

“That may then constitute it becoming a fixed-date sale because you're putting a deadline on it,” he said.

As a result, he said the sale would have to comply with the new requirements, delaying it by a week.

“So agents are going to have to use different dialogue and not put dates on private sales, not have specific cut-off dates and cut-off times.”

Auction day

While the changes would prompt agents to rethink their campaign strategy slightly, Hatzimoisis said Victoria's fundamental rules had not changed, and auctions would be conducted under the regular conditions.

According to Hatzimoisis, auctioneers can still use vendor bids to start slow auctions and build momentum among hesitant bidders.

However, he said one important point agents and auctioneers needed to remember was that vendors can still sell the property for less than the reserve price.

“Once the auction commences, a vendor is free to make a decision, so if the property is going to have active bidding and it sells for over their reserve, so be it,” he said.

“But if it stops shy of their reserve or below their reserve, they’ve still got the right to accept that offer.”

Preparing agencies now

Given the increased administrative tasks required, Hatzimoisis said agencies were likely to face extra workflow pressures during campaigns.

“The paper trail is going to be a little bit more in depth. So we have to ensure that our offices’ processes are updated and are in place to align with all the new requirements,” he said.

He said agents should already be preparing for the new laws to take effect, which could include hiring extra staff to help with administrative tasks.

However, he said that for most offices, it was simply a matter of training and educating professionals to ensure they were prepared for the changes.

“We've been doing these training sessions with all of our officers, and I'm sure other people have been as well,” he said.

Hatzimoisis said one of the most important aspects of the changes was the new PPS form, which required specific details about the property such as the square meterage floor area.

“Agents should be trying to get all of that information for their existing listings by either talking to their vendors and seeing if they've got floor plans, or getting it measured to have that information ready to go.

He encouraged agents to maintain open communication with administration teams to make sure everyone was across the tasks that had to be done, and keep all records updated in CRMs so nothing would be missed.

“So it's about updating their processes to get everything in line to be ready to go.”