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Consumer Affairs Victoria (CAV) has blown the whistle on a south-eastern agency accused of underquoting at least 11 sales.
The watchdog has initiated Federal Court proceedings against Ray White Oakleigh and senior sales executive Nick Strilakos for allegedly engaging in “misleading and deceptive conduct” and making “false and misleading statements” in breach of the Australian Consumer Law.
CAV claims that the agency advertised properties at significantly lower prices than their market value in at least 11 sales across south-east Melbourne, including listings in Rowville, Mulgrave, Bentleigh East, Oakleigh South and Blackburn South between February 2022 and November 2023.
Following multiple complaints from prospective buyers, CAV’s underquoting taskforce launched an investigation into the alleged misconduct.
The investigation revealed that in most of the 11 sales, the agency entered into agreements with sellers before subsequently reducing the properties’ estimated selling prices when listing them online.
The properties then sold for prices well above the advertised price ranges.
Unspecified agents at Ray White Oakleigh are also alleged to have exchanged messages with each other, where they stated their belief that properties would sell for significantly higher prices, and in certain cases, placed bets or made guesses on the sale prices.
Across seven of the 11 cases, vendors reportedly agreed to pay the agency a low flat commission which typically ranged from between 2.2 per cent and 2.5 per cent of a house’s sale price, up to the vendor’s reserve.
If the final sale price was in excess of the reserve, the agents were then paid a considerably higher rate of 22–25 per cent of the sale proceeds above the reserve, with the vendors usually setting their reserve prices in line with the lower estimates.
Penalties for making a false or misleading statement relating to land under the Australian Consumer Law are up to $2.5 million for an individual and $50 million for a company.
Within this Federal Court action, the watchdog is pursuing “declarations, pecuniary penalty orders, adverse publicity orders, and orders that the agents establish compliance and training programs”.
Consumer Affairs director Nicole Rich commented that the proceedings serve as a “warning to real estate agents that deceptive conduct has no place in Victoria’s real estate market”.
“Underquoting is an unfair practice that can mislead prospective buyers into spending time and money on properties that were always outside their budget and can distort the market,” she said.
The director acknowledged that suspected underquoting is more likely to be reported by prospective purchasers, and emphasised it is “very concerning to see that underquoting practices may also deceive vendors and leave them significantly out of pocket”.
“It is critical that estate agents act in the best interests of the clients who trust them to sell their properties. This case raises serious concerns about the impacts of underquoting,” Rich said.
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