The offices of 60 Victorian real estate agents have been raided as part of an investigation led by Consumer Affairs Victoria into the alleged practice of “under-quoting”.
More than 1,000 property sales files have been investigated, and some agents are reportedly facing prosecution with those culpable facing fines of up to $220,000 for the practice.
CAV director Claire Noone was not available for comment this morning, but told News that some agents even denied investigators access to their office, but soon relented.
“After being advised that failure to allow entry and inspection of files were both offences under the Estate Agents Act, CAV successfully gained entry,” she said, also warning other agents to keep on their guard.
“Any agent engaging in dubious practices will be thoroughly investigated,” she said.
The raids focussed on western and northern suburbs, such as Brunswick, Clifton Hill, Coburg, Craigieburn, Essendon, Pascoe Vale, Point Cook and Werribee. Up to 80 investigators were involved.
The raids come after the Australian Competition and Consumer Commission announced new laws that would see homeowners and vendors fined up to $220,000 for under-quoting.
Under-quoting refers to a practice whereby a salesperson advertises a price that is lower than the vendor is willing to consider, so more buyers can inspect the property.
The expectations of the vendor must be made in writing before any marketing process begins, while any other evaluations of the price must also be made in writing and acknowledged by both the salesperson and the vendor.
ACCC chairman Graeme Samuel said the laws will help stamp out the practice of under-quoting by allowing courts to penalise the offenders with “substantial fines”.
“That $220,000 [fine] is a large chunk out of the sale price of your house. So clean up your act now because, if you do not, the ACCC and state bodies will come down on you.
But some doubt has been cast on the veracity of the problem of under-quoting, with Housing Industry Association senior economist Harley Dale saying the issue has not been brought to their attention.
“If that kind of thing is occurring it’s not something we have heard about, and certainly not an issue that’s been raised by our members.”
Real Estate Institute of Victoria spokesperson Robert Larocca says the REIV welcomes the investigation but maintains under-quoting is not a practice that is widespread in the industry.
“The reports to consumer affairs are running about 50 or 60 a month out of about 100,000 property transactions, so we’re not entirely sure if there are agencies out there breaking the law but the investigations will show that.”
Larocca also points out that just because a property sells for higher than its advertised price does not mean it was under-quoted, and buyers should be able to recognise the difference.
“We think in most circumstances what is happening is not under-quoting, but it is simply a symptom of Melbourne being the strongest property market in terms of auctions. The laws regarding under-quoting do not restrict a property selling for more than it is advertised. It is no surprise that properties are selling for higher than they were originally quoted, but that is an issue of demand and not necessarily under-quoting.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
