Legal Action Launched against Two Melbourne Real Estate Agencies over Underquoting Allegations
Friday 6 January 2017 @ 9.48 a.m. | Legal Research
Consumer Affairs Victoria (CAV) has launched legal action in the Federal Court against two real estate agencies over allegations of underquoting in Melbourne.
CAV alleged the agencies marketed properties knowing the vendors would not sell for a price within the listed range, or that the properties were unlikely to sell for the price listed.
The Allegations
CAV accused Fletcher and Parker in Balwyn of offences relating to 25 properties it marketed in 2015, and Hocking Stuart Doncaster of breaches involving nine properties in 2014 and 2015.
Complaints relating to underquoting to CAV have risen from 123 in 2013-2014, to 339 in 2015-2016, leading to the creation of Taskforce Vesta in mid-2015 to investigate the practice.
About the Taskforce
Taskforce Vesta monitored 200 properties from first online listing to final sale throughout 2015-2016.
The taskforce, charged with cracking down on underquoting, has reported on the outcomes of its work during 2015-2016.
Of the 176 properties that sold within the monitoring period:
- 48, or around 27 per cent, sold within the agent’s estimated price;
- 53, or around 30 per cent, sold at between 0.1 to 10 per cent above the estimated price;
- 45, or around 26 per cent, sold between 10.1 and 19.9 per cent above the estimated price;
- 12 properties, or around seven per cent, sold at 20 per cent or more than the estimated price; and
- 18, or around 10 per cent, sold at less than the estimated price.
Then Consumer Affairs Minister, Jane Garrett said the taskforce was established to stamp the practice out. She was quoted at the time as saying:
"I've ordered 200 comprehensive inspections to be taken, surprise inspections, for real estate agents right across Victoria. From that we have some 340 files opened and a number of active investigations and prosecutions."
Consumer Affairs Victoria Director Simon Cohen recently said:
“Buyers should be able to rely on advertised prices, and underquoting undermines their confidence in real estate agents and the property market. The results of Taskforce Vesta show that more often than not, properties are sold for prices that significantly exceed estate agent estimates. Consumer Affairs Victoria is determined to level the playing field for Victorian home buyers by continuing to target estate agents who deliberately underquote property prices.”
Previous Prosecutions
The CAV was successful in another case in late 2016 against Hocking Stuart Richmond [Director of Consumer Affairs Victoria v Hocking Stuart (Richmond) Pty Ltd (No 2) [2016] FCA 1435 (2 December 2016)], which saw the agency fined $330,000 plus $80,000 in legal costs.
In that case, Justice Middleton said the agency's price ranges created the "illusion of a bargain" and consumers were likely to be "significantly inconvenienced, disappointed and deceived".
In the case of Director of Consumer Affairs Victoria v Hocking Stuart (Richmond) Pty Ltd [2016] FCA 1184 (6 October 2016), Middleton J., said at para 60:
"Some may have missed the opportunity to buy elsewhere, being lured into a bargain that did not, and was never going to, eventuate. Similarly the vendors of other properties, who were not marketing their properties in the same way, may have missed out on getting potential purchasers into their properties."
In a statement, the agency said it regretted the "mistakes" it had made.
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Sources:
Underquoting: Consumer watchdog launches action against Melbourne agency - realestate.com.au
Two Melbourne real estate agencies face legal challenge over underquoting allegations - abc.net.au
Taskforce Vesta reveals underquoting findings - Consumer Affairs Victoria Media release
Director of Consumer Affairs Victoria v Hocking Stuart (Richmond) Pty Ltd (No 2) [2016] FCA 1435 (2 December 2016)
Director of Consumer Affairs Victoria v Hocking Stuart (Richmond) Pty Ltd [2016] FCA 1184 (6 October 2016)
