Real estate agency faces $720k fine for underquoting

A Federal Court justice has found a real estate agency deceived househunters by advertising 20 homes for “significantly lower” than their expected sale prices and has recommended one of the largest penalties ever handed down in Victoria.

A Melbourne real estate agency misled and deceived househunters by advertising 20 homes for “significantly lower” than they were expected to sell for, a Federal Court justice has found.

Justice Debra Mortimer declared in her published judgment that there was a “deliberateness” to Melbourne South Eastern Real Estate’s underquoting — which involved marketing properties in the city’s east and southeast with misleading display prices and online search parameters — known as “blind prices” — in 2014 and 2015.

One Mt Waverley house sold for almost $400,000 more than the blind price set by the agency, which trades as Barry Plant Mt Waverley.

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Justice Mortimer has recommended the agency be fined $720,000 following legal action brought by Consumer Affairs Victoria — one of the largest penalties ever handed down in Victoria for underquoting.

It has also been ordered to pay $30,000 in costs, undertake a compliance program and make public notices of its conduct at its office, on its website and on realestate.com.au.

The agency and CAV have until Thursday to make further submissions on the matter.

Barry Plant Group chief executive Mike McCarthy said the office had “already completed a compliance program … going back to when we first became aware there were breaches”.

“To the best of our knowledge they’ve been compliant since then,” he said.

Barry Plant Mt Waverley, which is headed by officer in effective control Robert Namour, accepted the fine would be “appropriate” at a Federal Court hearing in May.

The penalty includes $30,000 for each of the five properties advertised with misleading display prices and $38,000 for each of the 15 it ­advertised with misleading search parameters.

Justice Mortimer said the properties — in Ashwood, ­Burwood, Burwood East, Chadstone and Mt Waverley — ended up selling “well in ­excess” of their advertised ­prices.

She said there was a “pattern of not including any display price at all”, a practice that meant “intentionally … not (giving) consumers any ‘upfront’ indication of what the likely selling price might be”.

Underquoting in the real estate business has the potential to mislead and deceive househunters. Picture: Supplied

In the case of two Mt Waverley homes, the agency had instructions from the vendors “not to sell them below a certain price, which was … more or substantially more than either the display price or the blind price,” Justice Mortimer said.

The vendors of one of them, 17 Gordon Rd, said they wouldn’t accept an offer of less than $1.2 million. But a blind price was ultimately set at $950,000 and the property sold for $1.333 million.

Justice Mortimer said this example showed “the deliberateness of the strategies employed”, adding househunters were “entitled not to be misled about the likely selling price of a property”.

Fletcher & Parker Balwyn was hit with a record $880,000 fine last December for underquoting 22 properties.

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