Victoria’s latest on Underquoting Reform

Underquoting has been one of the most corrosive issues in Victoria’s residential property market for well over a decade. It frustrates buyers, erodes trust, and for omany buyers, it has spelled an emotional guessing game.

In response to the State Government’s recently proposed legislative changes, the Real Estate Institute of Victoria (REIV) has released its own industry-developed blueprint to tackle underquoting. As we move toward 2026, this moment matters…. not just for agents, but for buyers and vendors alike.

What the REIV Blueprint Proposes

The REIV’s plan includes the following.

• Tighter price guides, capped at a 10 per cent range, which includes the reserve
• Section 32 to be available at the commencement of marketing
• Disclosure of the reserve price three business days before auction
• Mandatory disclosure of all unconditional sale prices
• Building and pest reports included in the Section 32
• A demerit-point system for agents, with penalties escalating toward licence suspension

On paper, these measures should reduce misleading price guides and improve access to meaningful data for purchasers. Greater transparency around sale prices alone will help buyers better assess market value and reduce the fog that often surrounds auction campaigns.

But there’s a critical issue that continues to sit largely outside the reform spotlight.

Accountability must extend beyond agents — vendors carry responsibility too

One uncomfortable truth in the underquoting debate is rarely acknowledged loudly enough:

Agents do not set reserve prices — vendors do.

While agents guide strategy and pricing expectations, the reserve price is ultimately controlled by the seller. And more importantly, vendors can change that reserve, including on auction day.

This is sometimes where buyer trust unravels.

A purchaser can do everything right. They can analyse comparable sales, understand the price guide, secure finance, prepare a bidding strategy …. only to discover that the reserve has been shifted well beyond market alignment because of emotion, changed personal circumstances, or unrealistic expectations.

That scenario isn’t always underquoting.
Often, it’s vendor-driven distortion of market reality.

If reform is serious about restoring confidence, accountability must sit on both sides of the transaction:

• Agents should appraise based on their genuine expectation of market value
• Vendors should commit to reserves that reflect genuine selling intent
• Last-minute reserve changes should be scrutinised, not normalised

What this means for buyers heading into 2026

There is reason for cautious optimism.

If the REIV blueprint, (or a hybrid of industry and government reform) is properly implemented:

• Buyers should see more realistic price guides
• Access to complete sales data will improve market literacy
• Building and pest inspections being provided will reduce due diligence costs for buyers, although skepticism about the impartiality of the inspector could come into question. We know anecdotally in other states that this has been an issue.
• Agent behaviour is more likely to shift if enforcement is consistent

However, unless vendor accountability is addressed alongside agent compliance, underquoting will not disappear entirely.

It will simply evolve.

Meaningful underquoting reform won’t come from targeting agents alone.

It will come when both agents and vendors are held accountable for the signals they send to the market.