Fletcher & Parker, Balwyn, fined $880,000 for underquoting

A MELBOURNE real estate agency has been slapped with an almost $900,000 fine for rampant underquoting, which included training sessions on the tactic. During one sales meeting agents were told to: “underquote the sh** out of it”.

Fletcher & Parker, Balywn, has been fined heavily for underquoting.

A MELBOURNE real estate agency has been slapped with a record almost $900,000 fine for rampant underquoting in the city’s east.

Fletcher & Parker, Balwyn, was ordered in the Federal Court to pay a $40,000 penalty for each of the 22 properties it was found to have underquoted — totalling $880,000.

It’s the largest penalty ever handed down for underquoting in Victoria.

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The agency will also have to pay $40,000 in costs, following legal action brought by Consumer Affairs Victoria as part of its Taskforce Vesta crackdown on the dodgy tactic.

One Fletchers vendor was told “if we tell a buyer what you actually want it destroys the campaign” and another agent referred to the consumer watchdog as “a toothless tiger.”

The agency’s “quote of the week” from a sales meeting was: “market the f**k out of it and then underquote the sh** out of it — good vendor management,” court documents reveal.

Justice Bernard Murphy judged Fletchers’ conduct “plainly deliberate and serious.”

Fletchers director Tim Heavyside.

“The evidence shows that such conduct was an accepted practice at Fletchers’ Canterbury and Blackburn offices. It occurred throughout 2015 and involved a number of Fletchers’ shareholders and directors as well as employed sales consultants, both senior and junior,” he wrote in his summary.

“The use of underquoting as a marketing strategy was commonplace and accepted at senior levels in those offices. On at least one occasion Fletchers’ sales staff were provided sales training which focused on an example where underquoting had apparently resulted in a significant spike in buyer interest.”

Hundreds of thousands of dollars split the sale and advertised prices of most of the homes.

The properties were in Box Hill North, Box Hill South, Forest Hill, Hawthorn East, Blackburn, Blackburn North, Surrey Hills, Vermont, Vermont South, Mitcham, Balwyn North, Kew and Camberwell.

CRACKDOWN ON REAL ESTATE UNDERQUOTING IN VICTORIA

One property, a three-bedroom house in Dorene Court, Vermont South, sold for $1.6 million in September 2015 after first hitting the market with an advertised guide of $900,000-plus.

Court documents reveal that vendor was told by Fletchers agent Michael Richardson “if we tell a buyer what you actually want it destroys the campaign.”

Mr Richardson explained the deliberate practice of underquoting to the vendor when asked about the low quote, writing via email the price quote “is not the sale price.”

He told the vendor “record prices come from emotional buyers when they compete ... this is your best strategy.”

In other instances, properties in Forest Hill and Box Hill South respectively soared to sale prices more than $400,000 and $500,000 beyond what they were initially quoted for.

Court documents show Fletchers director Tim Heavyside, involved in 15 of the breaches, referred to Consumer Affairs as “a toothless tiger” when forwarding to other directors an email featuring an article about an underquoting blitz coming up empty-handed.

Fletchers agent Michael Richardson.

Fletchers chief executive Bradley Brown apologised to homebuyers whose time was wasted as a result of the “unacceptable conduct” by team members.

“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,” he said.

“Immediately after these incidents were identified two years ago, we attacked the issue head on by undertaking a full review and update of our compliance program, revised our training procedures and introduced a stringent live audit and random spot check program.”

Minister for Consumer Affairs, Gaming and Liquor Regulation Marlene Kairouz said the penalty showed underquoting agencies would pay the price.

“In the past fortnight the Federal Court has handed down more than $1 million in penalties for underquoting, which is a clear message to all agents that it won’t be tolerated in Victoria,” she said.

“This outcome will give homebuyers the confidence that this dodgy practice is being stamped out.”

Consumer Affairs Victoria agreed not to proceed in relation to Fletchers’ conduct in respect to the sale of three properties initially alleged to have been underquoted.

The agency contravened sections 18 and 30 of Australian Consumer Law.

Section 18 prohibits misleading and deceptive conduct in trade and commerce and section 30, false and misleading representations in connection to the sale and promotion of land.

It was also ordered to ensure its compliance program meets the requirements of the court and to make public notices of its conduct.

Hocking Stuart, Richmond, was fined $330,000 by the Federal Court last year for underquoting on 11 inner-Melbourne properties.

The agency was also ordered to pay up to $90,000 in costs.

Last week, Hocking Stuart, Doncaster was ordered to pay $160,000 for breaching consumer laws by “plainly deliberate” underquoting following action brought by CAV.

The branch was also ordered to pay $10,000 in costs for misleading potential buyers between June 2014 and December 2015.