The Block 2021: Calls for Hampton houses to be investigated for underquoting

The latest Block sales should be subject to an underquoting investigation, a leading Melbourne buyer’s advocate has declared.

The latest Block sales should be subject to an underquoting investigation, a leading Melbourne buyer’s advocate has declared.

David Morrell, of Morrell and Koren, said dramatic gap between the five Hampton properties’ advertised price ranges and the reserve prices for their televised auctions last weekend – which in all cases, were hundreds of thousands of dollar higher – was startling.

Scott Cam and Shelly Craft outside Bronte Court before the Block auctions last wekend. Picture: Supplied

But Ray White Cheltenham director Kevin Choski, who sold Josh and Luke’s house, said this assessment was unfair given “the market has shifted so fast and so significantly” since the agents involved in the show and the vendor, Channel Nine, had set the price guides amid a lockdown more than two months ago.

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Four of the five Bronte Court houses were initially advertised with $2.6m-$2.8m price guides, which, in most cases, were raised to $2.8m-$3m days out from the auction.

The Block teams were all visibly shocked when they learned their reserve prices had been increased. Picture: Supplied

But they each went under the hammer with a $3.4m reserve, selling for between $3.696m and $4,044,444.44.

The final property, Kirsty and Jesse’s larger House 5, had a $3.2m-$3.4m price guide but a $4.1m reserve. It fetched $4,401,523.67.

Block host Scott Cam’s initial reaction when the teams were told their reserve prices on the show’s finale were $3.5 million for four homes (and $4.2m for Kirsty and Jesse) was that it was “too high”.

A Nine spokesperson said the reserves were set “based on several factors, including independent valuations”.

“The agent price guide is set in accordance with relevant legislation, including comparable sales, and was revised upwards by several of the agents during the sales campaign,” the spokesperson added.

“Representatives from Consumer Affairs Victoria were present at every Block auction.”

Mr Choski said the agents were originally “told the reserves would likely to be in the range” by the show’s producers, who acted as a “middle man” between them and Nine.

“Then, days prior to the auction, we heard from the contestants the reserves were going to be much higher,” he said.

The Block teams were worried their homes would not sell after the reserve prices were increased. Picture: Supplied

He said he and most of his fellow Block agents raised their advertised quotes as a result, but they weren’t given their finalised reserves until just before the auctions.

“I don’t think it necessarily has anything to do with underquoting,” Mr Choski said.

“The market has picked up a lot. And there were so many different factors at play.

“When you’re dealing with a regular vendor, you know their expectations. But in this instance, we really had nothing do to with the vendor.”

Realestate.com.au data shows Hampton’s median house price jumped 12.6 per cent to $2,210,500 in the last quarter.

But Mr Morrell argued “the vendor has a bit to answer for” and CAV should probe the pricing.

“It’s typical of what’s happening in the industry, where it’s not regulated with any veracity,” Mr Morrell said.

“They should be fined, it’s that blatant.”

Mitch and Mark were the winners of the The Block, after their house sold for $4,044,444.44. Picture: Supplied

Underquoting is difficult to prove. While an agent cannot advertise or quote a price that is below the seller’s reserve price, the agent’s own estimate or a genuine offer, there is no obligation on a seller to tell the agent their reserve price before auction.

A reserve being set higher than a price guide, or a property selling well above its reserve, are also not evidence of underquoting.

CAV would not comment on whether it had received complaints about quoting on The Block or whether it was investigating.

But a spokesperson said the consumer watchdog was “taking a strong approach to underquoting with regular monitoring of the market, including attending The Block auctions, and reviewing market activity where there are concerns”.

Advantage Property Consulting director and regular Block buyer Frank Valentic said while the “vendor can make (the reserve) anything on the day”, the pricing this season didn’t “set a good example for the market”.

Another buyer’s advocate who purchased a property this season, Industry Insider director Andrew Date, said he believed the “reserves were what the properties were worth”.

“The guide price was a bit on the conservative side,” he said. “Something must have changed during the campaign.”

Real Estate Institute of Victoria president Adam Docking declined to comment directly on The Block’s pricing, but said: “Any agents, programs or platforms that deliberately mislead the public should certainly be investigated by CAV and penalised for any wrongdoing.”

CAV has issued more than $300,000 in fines for underquoting since May.

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