© Ben Piper 2019
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  1. announce at the auction before bidding starts that she or he is allowed to make that bid;

  2. and when making the bid, announce that the bid is a “vendor bid” or that it is made on behalf of the seller.









Once the Government began getting serious about enforcing the laws, which seemed to start happening in about 2015, we got a glimpse of what might have been under the 2004 laws.  Unfortunately that happened 10 years too late, and in the meantime underquoting was as bad as anything seen before 2004. 

The relevant law is the Estate Agents Act 1980, sections 47A – 47D.  The easiest way to find an electronic copy of any Victorian law is to go to the “LawToday” website.

There is an exception to this if the agent reasonably believes that fewer than 3 comparable properties were sold in the preceding 6 months in the relevant area.  There have been suggestions (by me (see footnote 30)) that this also creates a potential loophole for the working of the new laws.

This does not apply if the offer is rejected for reasons other than the price offered.

See section 47C(2A) of the Estate Agents Act 1980.

On 3 June 2017 The Age reported that early indications were that the new laws had resulted in reductions of underquoting.  The report referred to data collected by price predictor tool realAs.  The data showed that in May 2016 there was an average price difference of 28.4% between the quoted price and the sold price in the worst Melbourne suburb for underquoting.  The difference for the first 3 weeks of May 2017 was 20.8%.  

While that does not seem to be much of an improvement, particularly given the nature of the new laws, it should be noted that in May 2017 the new laws had not been in operation for very long.  Also, the figures need to be interpreted with caution, as some part of the percentage difference can be attributed to price estimates not keeping up with reality in a rising market.  

It is also unclear how bad the underquoting situation was in 2016.  Certainly in the years immediately before then underquoting was rampant, but in 2016 there were a considerable number of high profile prosecutions of high profile agents who underquoted, and these cases resulted in very substantial fines, and undertakings by the agents to desist from underquoting.  It is therefore possible that by 2016 things were improving, regardless of the new laws. 

You might also find an informal survey I conducted of interest: see “Determining market price” in Chapter 6.

The 2003 law was the Estate Agents and Sale of Land Acts (Amendment) Act 2003.  If you want to see the current version of this law with respect to auctions, it is best to look at Division 4 of Part II of the Sale of Land Act 1962.

The law also makes provision for part owners to bid at auctions in circumstances where they want to buy the house in their own right.  As that is a pretty unusual occurrence, I am not dealing with it in this Guide (and also because it is not something that affects any of the advice that I give in this Guide – for our purposes they are effectively just another bidder).  I note that if part owners may be bidding, the law requires the auctioneer to explain at the start of the auction that it may happen, and also how it will work.  There are also specific sets of auctions rules for these circumstances.

The current version of these Regulations is called the Sale of Land (Public Auctions) Regulations 2014.

Some auction rules before this time actually ‘authorised’ unannounced auctioneer bidding on behalf of the seller.  

There is a very old law (known to law students as the Statute of Frauds) that prevented, and that in its modern form still prevents, anything legally binding happening with land until a document has been signed by both parties to a transaction in relation to land.  Thus, simply being the winning bidder at an auction of land does not give you any rights in relation to the land until you and the seller of the land have signed a contract of sale.  There are other legal rights you have if the seller doesn’t sign the contract (and similarly, the seller will have certain rights if you don’t sign the contract), but in neither case do those rights directly involve the land itself.

By that I mean that an auctioneer commits no express offence under the Sale of Land Act by failing to comply with this rule.  To do anything about the auctioneer you would have to start the processes that would see disciplinary action taken against the auctioneer for failing to comply with the law.  Unfortunately, even if that is ultimately successful, it won’t help you in any way to get the house you missed out on.

There is nothing in the rules that stops the situation I have described.  First, there is nothing in the rules that applies to sellers.  Second, there is nothing in the rules that stops an auctioneer from passing offers on to a seller after an auction.  Third, once a seller has refused to sign, the rule does not restrict what the auctioneer can do in any way.

Division 3 of the Property, Stock and Business Agents Act 2002 No 66.

Part 5, Divisions 2 and 3, and Part 6 contain the provisions of chief interest to house auctions.  This Act is also supplemented by the Property, Stock and Business Agents Regulations 2014.

See regulation 12(3) of the Property, Stock and Business Agents Regulations 2014.

See section 71 of the Property, Stock and Business Agents Act 2002 No 66.

See sections 66 and 66A of the Property, Stock and Business Agents Act 2002 No 66.

See section 66A of the Property, Stock and Business Agents Act 2002 No 66.

See section 76A of the Property, Stock and Business Agents Act 2002 No 66.

See section 78 of the Property, Stock and Business Agents Act 2002 No 66.

See https://www.fairtrading.nsw.gov.au/ in the information it provides under the heading “Gazumping”.

Section 77(1) of the Property, Stock and Business Agents Act 2002 authorises the making of regulations that prescribe conditions that are to be applicable to auctions of land.  Regulation 15 of the Property, Stock and Business Agents Regulation 2014 actually prescribes those conditions.

I note that this requirement also applies even if a failure to comply with the auctions conditions was a criminal offence.