Forest Hill: homeseller advertises reserve in move that gets six bidders, $100k premium, calls for price guide change

The Victorian government is facing renewed calls to amend home price advertising legislation from some of the state’s top real estate figures.

It comes after a Forest Hill home seller made the unusual decision to advertise their home’s reserve price weeks ahead of auction and yesterday sold the residence more than $100,000 above expectations.

The result was one of 848 reported to PropTrack that yielded a 61 per cent clearance rate yesterday.

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Fletchers Blackburn’s Robert Sheahan handled the 57 Barter Cres sale and said with six bidders at the auction, all leaving comfortable that the eventual $1.08m result had been transparent, it was surprising sellers were not required to disclose their reserve.

“I think that the reserve being disclosed is the way of the future,” Mr Sheahan said.

“Why is there not more discussion about looking at this as a strategy?”

Ray White Victoria chief executive Domenic Belfiore said he believed the state’s laws around home pricing needed to be looked at.

“I’m a massive advocate for auctions, but I think the time has come to revise the legislation,” Mr Belfiore said.

The head of Victoria’s biggest real estate agency added that he personally felt disclosing reserves would benefit both homebuyers and sellers, with the latter able to see quickly within a few open for inspections if their home was priced correctly for sale or not. However, Mr Belfiore acknowledged this may not reflect the views of other Ray White directors.

Real Estate Institute of Victoria chief executive Kelly Ryan yesterday said while they believed vendors should have a right to decide if they disclosed their reserve, the Institute were “supportive of anything that makes the industry more transparent”.

Mr Sheahan said all the buyers he spoke with after the auction had “loved it”.

“They knew what it was, and while they got outbid, they had seen that as soon as it hit the reserve it was on the market,” he said.

“So if the other bidders weren’t there, it would have sold for that price.”

The property was initially listed with a typical quoted price range, but after 50 groups attended the first open for inspection, and a discussion with the vendor, the property was changed to a $925,000 advertised reserve.

When he put it under the hammer yesterday, the first bid came in low, before a second bid pushed it onto the market.

With six buyers chasing it, the home wound up selling for $1.08m.

“It was a crazy result,” Mr Sheahan said.

“A buyer’s advocate bought it for a younger local family. And they are besides themselves.”

A director at his firm, the agent said he’d done the same thing with a Mitcham property in the past month, only that home had been struggling to engage anyone with an advertised price range.

“It wasn’t going well, there was not a lot of interest … so I said would you be prepared to disclose the reserve, and that changed the campaign,” he said.

“As soon as we changed to that, buyer inspections increased and ultimately we had two buyers who turned up and bid.”

The agent, who has more than a decade of experience selling Melbourne homes, added that with all the regulations over auction sales and underquoting in Victoria it was surprising that requiring vendors to make this disclosure wasn’t required.

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