Underquoting: Village Real Estate fined, Sweeney Estate Agents to contest allegations
Agents knew the owners of a period home in Seddon would not consider selling their renovated property for anything less than $950,000. They even rejected an early offer of $900,000. But when it came to be advertised for auction, hopeful buyers were led to believe offers above $770,000 were still on the table.
In the latest legal action against underquoting in Melbourne, Village Real Estate’s Newport directors have admitted the office last year advertised a property essentially $180,000 below the price they knew the owners would take.
The admission follows a state government crackdown on one of Melbourne property’s most frustrating practices, ahead of a shake-up of the 36-year-old legislation governing the way property prices are quoted in Victoria.
25 Pilgrim Street, Seddon Photo: Supplied
Property Express Pty Ltd, trading as Sweeney Estate Agents Footscray/Yarraville, will also face a tribunal after Consumer Affairs Victoria alleged the office underquoted numerous properties.
A string of agents have been stung by taskforce Vesta, set up in 2015, including Hocking Stuart Richmond, handed a record $330,000 fine in the Federal Court last October. In a case settled earlier this month, Hocking Stuart’s Yarraville franchisee admitted to a vendor it deliberately underquoted to get buyers interested.
Village Real Estate directors Marty Rankin and Huss Saad accepted a $15,000 fine as a part of an enforceable undertaking regarding the Pilgrim Street property in Seddon.
A crowd watches on at the auction 25 Pilgrim Street in Seddon. The property was advertised for $800,000 plus and sold for $995,000. Photo: Luis Enrique Ascui
The three-bedroom house was advertised for as low as “$770,000 plus” in January last year, despite agents having already rejected a private offer of $900,000 the previous month and having been advised the vendors would not consider anything below $950,000.
A crowd of about 60 people watched three young couples fight for the keys at the subsequent February auction, after the advertised price was revised to “$800,000 plus”. Auctioneer Mr Saad announced to bidders they were “playing for keeps” — suggesting it had reached its reserve price — at $950,000. It sold under the hammer for $995,000.
“Our guys mucked up,” Mr Rankin said. “As soon they knew where the vendor’s expectations were, they should have raised the price … we’ve taken this very seriously.”
Agent and auctioneer Huss Saad during the auction of 25 Pilgrim Street, Seddon. Photo: Luis Enrique Ascui
He said underquoting was an unfortunate byproduct of “overquoting” — where agents initially overestimate the sale price to vendors in order to stay competitive and secure a listing. The office has since implemented a comprehensive quoting system that goes “above and beyond” the state government’s new legislation, set to come into effect on July 1.
The Andrews government’s drastic overhaul of advertising will ban common words and symbols “$800,000+” and “offers above $800,000”.
Meanwhile, Sweeney directors Darren Dean and Dean Johnson will defend numerous allegations in the Victorian Civil and Administrative Tribunal later this year, including making misleading representations about the price of five properties. Mr Johnson previously had his licence suspended by VCAT for underquoting in 2011.
Laws aimed at curbing underquoting were passed in Victoria in November. Photo: Greg Newington
“While we intend to defend our conduct, we do acknowledge that on occasions we have not had adequate processes and systems in place to manage the work flow of our busy office,” a spokesman said. “We note there was no consumer complaint to originate this matter and this action has resulted from alleged technical breaches.”
An internal audit of systems and procedures had been instigated and a compliance manager had been appointed, he said.
Consumer affairs minister Marlene Kairouz said the latest action reiterated underquoting was not a smart sales tactic and new laws would help ensure house hunters did not waste time and money on properties they could not afford.
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