Hocking Stuart real estate agency in Richmond fined for rife underquoting on 11 properties
UPDATE: Here are the 11 properties Hocking Stuart used to fool desperate homebuyers. The Richmond real estate agents have been fined $330,000 for underquoting.
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REAL estate agents Hocking Stuart have been fined $330,000 for underquoting on 11 inner-city properties in Melbourne.
The Richmond agency has also been ordered to pay up to $90,000 in costs.
Consumer Affairs Victoria took legal action against the Bridge Rd office in February, claiming it breached Australian Consumer Law by underquoting properties in Richmond and Kew in 2014 and 2015.
One of the worst instances saw a property in 14 Lyndhurst St, Richmond was advertised at $800,000 to $880,000 before selling for $1.102 million.
Another home at 39 Barkers Rd in Kew was advertised for $700,000 to $770,000 and was sold at $955,000.
RELATED: Real estate agent Hocking Stuart admits underquoting Richmond properties
CAV had previously told the Federal Court the agency should lose its $200,000 in commissions and be fined about $50,000 per property scrutinised.
It is illegal for an agent to advertise or advise a price that is less than the seller’s auction reserve or asking price, or their own current estimate of the likely selling price.
Justice John Middleton said when delivering his judgment: “Buyers should be able to rely on correct information to make an informed decision.”
“In view of the ‘illusion of a bargain’ created by Hocking Stuart, Richmond, in respect of each property, many consumers seeking to buy a home were likely to be significantly inconvenienced, disappointed and deceived.
“Some may have missed the opportunity to buy elsewhere, being lured to a bargain that did not, and was never going to, eventuate.”
Hocking Stuart CEO Simon Jovanovic said following the decision the brand took the matter seriously and the office had since implemented a “rigorous” in-house compliance program.
“As Justice Middleton referred to in his judgment, this is a substantial penalty for a company the size of Hocking Stuart, Richmond. We are disappointed with the severity of the penalty handed down and the example being made of our Richmond office for what is an issue that impacts the real estate industry as a whole,” Mr Jovanovic said.
Underquoting is aimed at luring more potential buyers to a fake bargain and is considered rife in Melbourne’s booming property market — but is difficult to prove.
Hocking Stuart admitted to the ploy in court in early August.
Sitesh Bhojani, for the director of CAV, said at the time the agency needed to be hit with a significant fine to ensure other agencies realised underquoting was not worth it.
Mr Bhojani told the court one Hocking Stuart, Richmond, agent, Daniel Atsis, told a vendor who had expressed concerns about the advertising of his property via email that “unfortunately there’s a culture of underquoting in Richmond. The price range is used more as a marketing tool than an indication.”
The court heard that another implicated agent, Trent Stewart, wrote to a client: “We want to get the best price for you, and the best way to do that is to create an illusion of a bargain”.
Mr Bhojani said the office director Peter Perrignon had also sent a written appraisal to the vendors of a two-bedroom cottage at 278 Mary St estimating its value at $850,000-$900,000.
But the property hit the market in July 2014 advertised from $700,000-$770,000, and eventually sold at auction for $955,000, he said.
Mr Bhojani said Mr Perrignon quoted the same range for a property in Kew, telling the sellers in an email: “We have it as $700,000-$770,000 as a starting point, but it has no relevance to what we both think it’s worth.”
Federal Court Justice John Middleton said in August deterrence was important in such a case.
The consumer watchdog’s half-year report revealed in April there were 12 major underquoting investigations underway following CAV inspections.
But CAV is yet to take legal action against any other agencies.