Under the hammer: Sydney real estate agency prosecuted for ‘under quoting’

A LEADING Sydney real estate agency is being prosecuted for under quoting and could lose its licence after being accused of advertising two properties at prices below estimates.

Estate agents under the hammer

A LEADING Sydney real ­estate agency is being prosecuted for under quoting and could lose its licence.

The Sunday Telegraph can reveal that NSW Fair Trading has accused Bresic Whitney of advertising two properties — one in Surry Hills and another in Double Bay — at prices below estimates that were given to sellers in written agreements.

The legal action follows an investigation in which its sleuths attended open inspections and auctions often posing as couples interested in buying the property.

Later, they obtained agency agreements and compared the estimated selling price with what potential buyers were told at opens and in advertised price guides.

When confronted yesterday over the allegations, Bresic Whitney director Shannan Whitney said: “It seems we haven’t acted within the regulations on all our properties.”

Mr Whitney said the Surry Hills house at 14 Collins St was advertised with a price guide of over $1.05 million, but the estimate in the agency agreement was $1.1 to $1.2 million.

It sold for $1.07 million.

Real estate agent Nic Krasnostein (middle wearing suit and blue shirt) at the Surry Hills auction in question.

The Double Bay apartment 62/543-545 New South Head Rd had a price guide of over $1.5 million but the estimate in the agency agreement had a low end of $1.6 million, Mr Whitney said. It sold for $1.76 million.

The agency would need to investigate its agents’ actions, Mr Whitney said. The agency had only learnt of the court action on Friday night and was yet to decide whether it would defend the claims.

Mr Whitney said the agent responsible for the Double Bay property was Walter Burfitt-Williams.

When contacted, Mr Burfitt-Williams said: “The owner gave us instructions.”

He referred further questions to Mr Whitney.

Mr Whitney said the agent responsible for the Surry Hills sale was Nic Krasnostein. He would not comment.

Bresic Whitney agent Walter Burfitt-Williams.

Under quoting is often suspected but notoriously difficult to prove, which makes this court action all the more significant — it is the first prosecution over claims of lowballing in more than a decade.

“We believe we’ve found evidence to prove the agent has under quoted,” Commissioner Rod Stowe told The Sunday Telegraph.

Under quoting can bait would-be buyers into participating in an auction then, in the heat of the moment, spending more than they can afford. It can also cause unfounded hope among house hunters.

“Estate agents love to create a false sense of competition on auction day, only to leave consumers out in the cold when the hammer falls,” said consumer group Choice’s Tom Godfrey.

It can also hurt consumers by leading them to shell out hundreds of dollars on building and contract inspections for properties beyond their budget.

It is understood this did not happen in the Surry Hills and Double Bay sales because Bresic Whitney provides such reports for free.

“Sydneysiders are sick and tired of being led down the garden path,” Mr Godfrey said.

“The (state) government should slam the door on this dodgy practice.”

Last week Premier Mike Baird said that if the ­Coalition wins the election, ­under quoting fines would be increased and the use of “offers over” advertising banned.

The legal action against Darlinghurst-based Bresic Whitney is part of a broad ­investigation ordered by Fair Trading Minister Matthew Mason-Cox triggered by ­consumer complaints.

John Rolfe-Comment

FEEL like you’ve been a victim of under quoting? Me too.

In the last boom my wife and I ordered pest and building inspections on six properties. Total cost: nearly $4000.

Cost of Living editor John Rolfe.

As it turned out we had next to no chance of buying most of them — the prices we were told at open homes were nothing like what the houses ended up selling for.

That in itself is not under quoting. In hot markets, such as we have been in for some time, buyer demand can push prices up well beyond agents’ initial expectations.

Under quoting is when an agent states a lower price to prospective buyers (through advertisements or verbally at open inspections) than the number they have already given to the seller in the written agency agreement.

So how can you protect yourself?

Fair Trading Commissioner Rod Stowe — who is so keen to stamp out under quoting he’s been monitoring sales himself, turning up to auctions in his boardies so as not to arouse suspicion — has this tip: “Consumers should be wary about receiving verbal advice from agents and where ever practical insist on receiving advice in writing.

“Specifically ask the agent what is the vendor’s price expectation.”

To that I would add:

● CHECK comparable properties. Does the price on the place you’re interested in seem unrealistically low? If so, consider holding off on outlaying money on due diligence such as contract scrutiny or inspection reports; instead

● FIND out what others are willing to pay. When an agent rings you during the week after an open home, don’t say how much you’re willing to pay. Make them tell you what other buyers’ feedback has been. Press for specifics. How many interested parties are there? Are they all around the same price? What would the owner sell for before auction?

Then the truth will start to emerge.