Melbourne Real Estate Agency Fined $600,000 for Underquoting Nine Properties
Introduction
A Melbourne real estate agency, Ray White Oakleigh, has been fined $600,000 by the Federal Court for underquoting properties. The agency admitted to advertising nine properties at prices it knew were substantially below their true market value during sales campaigns in 2022 and 2023.
Main Body
The fine was imposed on the former licensee of Ray White Oakleigh, White Ray (Oakleigh) Pty Ltd, following a judgment delivered on Friday. The court found the agency engaged in misleading or deceptive conduct. In some instances, properties were advertised more than 30% below the price agents expected them to achieve. As anticipated by the agents, the homes sold for significantly more than their advertised listings. Justice John Snaden stated that these misrepresentations created false expectations among potential buyers, wasting their time and incurring unnecessary costs as they investigated properties they might not have otherwise considered. The agency earned over $200,000 in commissions from these sales, including bonuses from properties selling above the reserve price. In determining the fine, Justice Snaden considered the company''s status as a small business, noting that while it earned over $4 million in revenue last financial year, its profit was only approximately $215,000. The judgment also accounted for the agency being a first-time offender, the deliberateness of its conduct, and its willingness to address the systemic shortfalls that permitted the underquoting. A Ray White spokesperson confirmed that Ray White Oakleigh now has new owners and licensees who have managed the business since August. The spokesperson acknowledged that under the previous owners, the agency had inadequate systems. The former licensee, Chris Kelepouris, remains with Ray White as founder and principal director of Ray White Ashburton. The spokesperson stated that Ray White has invested heavily in technology systems since the matter arose to assist business owners in identifying potential risk areas and enhancing compliance. Consumer Affairs Victoria had also taken former agent Nick Strilakos to court over alleged misleading conduct; those proceedings were dismissed in June last year after Strilakos agreed to a one-year ban from selling real estate and to undergo price quoting training. Strilakos now works as head of performance at VICPROP. The investigation was initiated following multiple complaints from homebuyers. When announcing court action in 2024, the regulator alleged agents had exchanged messages indicating they believed properties would sell for considerably higher prices and sometimes placed bets on the highest sale price. Victoria''s consumer affairs minister, Paul Edbrooke, described the judgment as a significant win for the underquoting taskforce, noting it was the largest fine imposed since the taskforce began in September 2022. He stated that the penalty sends a message that underquoting is illegal and will have consequences. The judgment precedes planned law reforms aimed at eliminating underquoting. These reforms, prompted by an investigation, will require vendors to disclose reserve prices before auction, mandate free building and pest reports for prospective buyers, and ban the withholding of sale prices. The reforms have bipartisan support, although the Allan government and Consumer Affairs Victoria have faced criticism for insufficient enforcement of existing laws.
Conclusion
The Federal Court has imposed a $600,000 fine on the former licensee of Ray White Oakleigh for underquoting nine properties, marking the largest penalty issued by the underquoting taskforce since its inception. The agency has since changed ownership, and new compliance measures are being implemented.