A Melbourne real estate agency has been fined $600,000 after it admitted underquoting nine properties, advertising them at prices it knew were “substantially below” their true market value.
Ray White Oakleigh’s former licensee – the business has since been taken over by a new owner – was found to have engaged in misleading or deceptive conduct during the sale campaigns in 2022 and 2023, in a federal court judgment given on Friday.
In some of the cases, the properties were advertised more than 30 per cent below the amount that Ray White agents expected them to fetch. As expected by the agents, the homes eventually sold for much more than their advertised listings.
Justice John Snaden said these misrepresentations created false expectations among potential buyers, wasting their time and inflicting potentially unnecessary costs as they investigated properties they might not have otherwise considered.
The agency earned more than $200,000 in commissions from the underquoted property sales, some of which came from “bonuses” because the properties sold above the reserve.
In explaining the fine dispensed to the former licensee of Ray White Oakleigh – named White Ray (Oakleigh) Pty Ltd – Snaden considered the fact the company was a small business.
Although it earned more than $4 million in revenue last financial year, it booked a profit of only about $215,000.
Snaden’s judgment also took into account the agency’s status as a first-time offender, the deliberateness of its conduct and its willingness to address the “systemic shortfalls” that allowed the underquoting to occur.
A Ray White spokesperson said Ray White Oakleigh now had new owners and licensees, who had managed the business since August. The spokesperson acknowledged that, under the previous owners, the agency had inadequate systems in place.
The former licensee of Ray White Oakleigh, Chris Kelepouris, remains with Ray White, where he is the founder and principal director of Ray White Ashburton.
“Ray White has invested heavily in technology systems since this matter first arose to assist its business owners identify potential risk areas and enhance its compliance framework,” a spokesperson said.
“We fully agree with Consumer Affairs Victoria that deceptive conduct has no place in the real estate market.”
Consumer Affairs had also taken former Ray White Oakleigh agent Nick Strilakos to court over alleged misleading and deceptive conduct. These proceedings were dismissed in June last year after Strilakos agreed not to sell real estate for a year, and undergo training on price quoting.
Strilakos now works in a corporate role at another real estate company, VICPROP, where he is the group’s head of performance.
The initial Consumer Affairs Victoria (CAV) investigation into Ray White Oakleigh was sparked by multiple complaints received by members of the public looking to buy a home.
When announcing the court action in 2024, the regulator alleged that agents at the firm had sent messages to each other indicating they believed the properties would sell for “considerably higher prices” and sometimes took bets on guessing the highest price.
Victoria’s newly appointed consumer affairs minister, Paul Edbrooke, described the judgment as a “big win” for Consumer Affairs Victoria’s underquoting taskforce, as it was the largest fine handed out for underquoting since the taskforce commenced in September 2022.
“This sends a message to agents underquoting is illegal – and you will face consequences,” he said.
The judgment comes before a string of looming law reforms aimed at stamping out underquoting.
Triggered by this masthead’s Bidding Blind investigation, the landmark changes announced by the Allan government will force vendors to reveal their reserve price before auction, require sellers to provide prospective buyers free building and pest reports and deliver a ban on withholding sale prices.
The reforms have bipartisan support, though the Allan government and Consumer Affairs Victoria have faced criticism for being too soft in their enforcement of existing laws governing real estate agents.
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