A Balwyn-based real estate agency has been fined a record $880,000 for underquoting 22 properties in some of Melbourne's blue chip suburbs, the strongest penalty for the practice in Victoria.
In handing down the fine on Thursday, Justice Bernard Murphy said the size of the punishment would deter other agencies from similar behaviour, given several recent Consumer Affairs prosecutions, "and common experience" pointed to "a widespread problem of underquoting by residential real estate agencies".
Fletcher and Parker (Balwyn) Pty Ltd was fined $40,000 for each of the 22 properties that was underquoted by sales representatives in its Canterbury and Blackburn offices in 2015.
The agency had a cavalier attitude to its responsibilities, Justice Murphy said. The evidence included:
- The quote of the week in one 2015 sales meeting was: "market the f--- out of it and then underquote the shit out of it - good vendor management";
- Sales staff were at least once provided training which focused on cases where underquoting had seemingly led to a high sales price and a significant spike in interest;
- One agent telling a vendor the best way to get "a record price" was to advertise a property with a low price, and later remove the price guide altogether;
- Sales agents describing Consumer Affairs as "a toothless tiger";
- Agents in the Canterbury and Blackburn office were warned by the chief executive to ensure their price quotes aligned with price estimates.
Justice Murphy highlighted one example where the seller of a Balwyn North property asked her agent why her house was marketed between $1.1 million and $1.2 million when the agency estimated it would sell for between $1.5 million and $1.65 million.
She was told the quote was low because "it brings in a broader market range" and 'people with a low budget will often come up, and it will also catch the people with bigger budgets as well".
The $880,000 penalty is more than double the commission it made from the 22 properties and constitutes more than one third of the company's profit for the last financial year.
Thursday's case was the latest in a string of prosections for underquoting, the biggest of which was last year when the Richmond office of Hocking Stuart was fined $330,000 for underquoting on 11 properties listed for sale in Richmond and Kew.
Fletcher and Parker Balwyn chief executive Bradley Brown apologised to those affected.
"I want to apologise to all the homebuyers whose valuable time we wasted as a result of this unacceptable conduct by a few members of our team," he said.
"This type of behaviour went completely against everything we stand for as a business and how we treat our customers, which is why we have taken significant steps since the incidents were uncovered in 2015 to ensure they never happen again."
Mr Brown acknowledged that homebuyers faced enough challenges in the market.
"They don't need underquoting, and we don't tolerate it either, which is why we have put strict compliance measures in place to stamp it out for good," he said.
Justice Murphy ordered Fletcher and Parker publish notices about its misleading and deceptive conduct in full-page newspaper ads and on its website, and to pay $40,000 to Consumer Affairs, the prosecuting agency.
Consumer affairs minister Marlene Kairouz said: "Underquoting is dishonest, misleading and against the law - and today's decision shows that if you do it, you'll pay the price."