Underquoting Victorian real estate agents hit with $500k in fines, prompting calls for more to be done

Dodgy real estate agents underquoting properties as much as $1m have been slapped with fines by a taskforce cracking down on the dodgy practice. But the public wants more action.

The hammer is being brought down on dodgy real estate agents who underquote.

Dozens of “grubby” real estate agents underquoting homes by as much as $1m have been fined more than $520,000.

But while industry heavyweights welcomed a fall in the number of agencies being fined in the state’s latest underquoting report, a leading buyer’s agent has called the penalties, which total less than Melbourne’s $898,000 median house price, “disappointing”.

The $3.8m underquoting taskforce established by the Andrews’ Government under Consumer Affairs Victoria issued 48 fines for breaches of underquoting legislation in the 12 months to June 30, and a further 37 official warnings.

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In total, 29 real estate agencies were reprimanded.

Underquoting laws make it illegal to advertise or advise a property price below a seller’s auction reserve or asking price, under any rejected written offer or for less than the agent’s current estimated selling price.

An inner-Melbourne agent was hit with a $22,000 fine after selling a property at auction for $2.1m after initially listing it for sale at $1.1m-$1.2m.

The fine also included a second breach by the same agent, who sold another address for $1.1m after listing it for just $700,000-$770,000 and editing the indicative sale price in the property’s statement of information four times during the time it was on the market.

Minister for Consumer Affairs Victoria Danny Pearson described underquoting as a “scourge” and said his department was stamping out the “unacceptable behaviour”.

Danny Pearson outside the Victorian parliament. Picture: NCA NewsWire/David Geraghty.

“Dodgy practices are not on and every agent is on notice,” Mr Pearson said.

“If you see something that doesn’t seem right, make a report and that will help the taskforce do its work.”

Morrell & Koren buyer’s advocate David Morrell said the number of fines served by the taskforce was “disappointing but not surprising”.

“I’m sick and tired of the government saying they’re going to clean it up … they need to have a conviction for spending more than $3m worth of taxpayer’s money on the taskforce,” Mr Morrell said.

“We all know that underquoting happens in more than 50 per cent of properties and we’re seeing outrageous underquotes of 30-40 per cent (under the final sale price).”

He added that some “grubby” real estate agents were sidestepping the system by failing to list three comparable sales in their statement of information or claiming “they couldn’t find any”.

“It’s misleading, deceptive and what we call a fraud on purchase,” Mr Morrell said.

Morrell & Koren buyer’s advocate David Morrell (centre) has been speaking out against underquoting for years.

Despite this, industry heavyweights noted the foul play is thinning out as more are penalised, with 86 agencies warned or reprimanded by Consumer Affairs Victoria in the prior financial year when fines totalled just $360,000.

Barry Plant chief executive Mike McCarthy said the industry had “come a long way” in making sure buyers weren’t misled and had improved significantly.

“But there are still significant levels of notices and breaches showing work still needs to be done,” Mr McCarthy said.

However, Real Estate Institute of Victoria chief executive Quentin Kilian said with more than 5000 agents registered in Victoria, including 2500 REIV members, it was a good sign that the taskforce only issued 48 fines.

Real Estate Institute of Victoria chief executive Quentin Kilian.

“If CAV catches them we have no sympathy, whether they’re members or not,” Mr Kilian said.

He added there was also a “disjoint” among the public about the definition of underquoting and as a result, the REIV provided regular training for members on the issue.

“Many of the phone calls CAV gets are not really underquoting, it’s more about an expectation of how much they might be able to buy for compared to some enthusiastic or euphoric bidding on the day which takes it to a certain price range,” Mr Kilian said.

Underquoting can incur penalties of more than $36,000 and the loss of sales commissions, while the most serious offences can lead to penalties up to $10m for corporations and $500,000 for individuals.

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