If you've ever sat down to negotiate after a failed interview only to ask for more money, you might understand the Melbourne property market right now. But here is the thing: almost two in five Victorian sellers who cannot attract a winning bid at auction are doing exactly that.
According to Homer App data, 39 per cent of properties in Victoria that passed in at auction from last September through to the end of February, and were re-listed within two weeks, were advertised at higher than the top of their auction price guide. In plain English, this means homes sold themselves during the auction (to buyers and agents) as worth less than initially advertised. Then the vendor said, "Right, now we know what that was worth to people ready to bid. Let us ask for more."
Henry Pedersen, founder of Homer App, finds the pattern revealing. He believes it shows owners and agents are not being honest about their expected price, and are not accepting what bidding on the day reveals about what the home is actually worth. The practice is not new, but the scale at which it happens varies wildly across Melbourne suburbs. Melbourne's north west and south east regions had the highest proportion of pass-ins relisted for more money. In the outer north, Kalkallo took the crown for the highest share of homes listed for higher than the guide, at 88 per cent. By contrast, Ferntree Gully was a rare pocket where over 80 per cent of homes were relisted for lower than the auction price guide.
The psychology at work is as old as human nature. Sellers invested in homes emotionally and financially sometimes cling to expectations shaped by peak prices or memories of similar properties selling well years ago. Julie DeBondt-Barker, buyer's agent at Property Home Base, said it could be a sign that the market is cooling down a bit, and that agents are not communicating that clearly enough when they list the property. She noted the pattern tends to appear more often with four-bedroom family homes, where vendors have deeper attachment, than with one-bedroom apartments.
None of this would matter much if it did not waste buyers' time and money. Tom Edney and his partner had been looking for a home since June, inspecting about 130 homes before they bought in Ferntree Gully last month. They paid almost $80,000 above the top of the guide for their eventual purchase. What saved them was reading the market clearly. Their mortgage broker encourages buyers to look at comparable sales instead of trusting price guides. Not everyone has that discipline or expertise.
Victoria is moving to fix this. New laws will require agents to publish the actual reserve price at least seven days before auction day or fixed date of sale, and real estate agents that fail to disclose the reserve price within the time frame will not be allowed to proceed to auction or sale. Under the proposed reforms, Australian-first laws will compel sold prices to be made public, complementing earlier measures that require reserve prices to be published ahead of auctions. This creates something genuinely new: buyers know not just what agents say homes are worth, but what vendors actually expect to receive.
The reform addresses a real injury. Previous research found that more than a quarter of buyers had experienced underquoting, with many actually paying for inspections and legal checks for properties that were ultimately outside their budget, and one in seven reported being encouraged by a real estate agent to offer above the top of the advertised price range.
Not everyone welcomes the change. The reforms freeze price-setting at the very point when campaigns typically gather the most meaningful market feedback, and agents fear sellers will set overly high reserves early to play it safe, with buyers potentially anchoring to those figures and reducing bidding intensity, potentially resulting in fewer competitive auctions and lower clearance rates.
The debate over reserve disclosure reveals something deeper: how trust erodes in markets where basic information remains hidden until the final moment. Whether seven-day disclosure is the perfect solution, it at least forces everyone to stop pretending. And that, in a market built partly on hope, is probably overdue.