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Record $880,000 underquoting penalty for real estate agency

Record $880,000 underquoting penalty for real estate agency
December 14, 2017 Josh Rowe
record underquoting penalty real estate agency fletchers

Record $880,000 underquoting penalty for real estate agency

The Federal Court has handed down the largest penalty for underquoting in Victoria’s history, with an eastern Melbourne real estate agency fined $880,000. Fletcher & Parker (Balwyn) Pty Ltd was today found to have engaged in misleading or deceptive conduct, and to have made false or misleading representations about the sale of land.

It follows a sweeping crack down on underquoting by the Victorian Government and the introduction of new underquoting laws to stamp out the practice. Fletcher and Parker (Balwyn) – operating as the “Fletchers” Blackburn and Canterbury offices – will be forced to pay $880,000 in fines, $40,000 in costs to Consumer Affairs Victoria and implement a program to educate its agents about their legal obligations.

“Underquoting is dishonest, misleading and against the law – and today’s decision shows that if you do it, you’ll pay the price.” – Minister for Consumer Affairs, Gaming and Liquor Regulation Marlene Kairouz.

The agency must appoint a compliance officer to ensure that the program is effectively designed, delivered and maintained and acknowledge their contraventions in the local newspaper in which they advertise, and on property websites, and display a notice in their office for six months.

The record-breaking outcome is the result of ongoing investigations by Consumer Affair Victoria (CAV) through their Taskforce Vesta. The taskforce found that Fletcher’s marketed and negotiated the sale of 22 properties in Melbourne’s east during 2015 either knowing the vendors would not sell for a price within the listed range, or that the property was unlikely to sell for the price listed.

The Honourable Justice Murphy noted that minutes of a Fletchers internal sales meeting record under the heading “General Business” that the “quote of the week” was “market the f**k out of it and then underquote the sh*t out of it – good vendor management”

This record penalty comes a week after the Federal Court handed down a $160,000 penalty to Hocking Stuart Doncaster for underquoting nine properties in Melbourne’s east. CAV has been active during the spring auction season, with inspectors issuing 50 agents with notices to supply documents. Inspectors are conducting follow-up inspections and any serious contraventions of the new laws will be referred to Taskforce Vesta for further investigation.

“In the past fortnight the Federal Court has handed down more than $1 million in penalties for underquoting, which is a clear message to all agents that it won’t be tolerated in Victoria.” – Minister for Consumer Affairs, Gaming and Liquor Regulation Marlene Kairouz

The worst suburbs for misquoting of property prices in November were:

VICSuburbSold Price vs List Price
Source: REALas.com November 2017
1Essendon17.0%
2Pascoe Vale South16.5%
3Cheltenham15.5%
4Ascot Vale15.1%
5Reservoir15.1%
6Niddrie15.0%
7Highett14.9%
8Maribyrnong14.8%
9Maidstone14.7%
10Moonee Ponds14.0%
This survey is for Victorian auctions in November 2017. Only suburbs with 4 or more publicly available quotes and auction results were included. The “Sold Price vs List Price” is the average percentage difference between the sold price and the public agency quote.

 

NSWSuburbSold Price vs List Price
Source: REALas.com November 2017
1Lane Cove North10.3%
2Seven Hills10.0%
3Ballina9.7%
4Manly8.9%
5Gladesville8.8%
6Marrickville7.8%
7Randwick7.4%
8Cromer7.1%
9Ashfield6.9%
10Mosman6.9%
This survey is for New South Wales auctions in November 2017. Only suburbs with 4 or more publicly available quotes and auction results were included. The “Sold Price vs List Price” is the average percentage difference between the sold price and the public agency quote.

 

Read the full judgement Director of Consumer Affairs Victoria v Fletcher & Parker (Balwyn) Pty Ltd [2017] FCA 1521 (14 December 2017).

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    The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of REALas.