A Balwyn-based real estate firm was fined by the Federal Court underquoting 22 properties in Melbourne.
Fletcher & Parker Balwyn has been fined $40,000 for each of the properties that were underquoted by its sales representatives Canterbury and Blackburn offices in 2015. The total penalty – $880,000 – is the highest ever imposed for underquoting in Victoria. Recently, a Melbourne-based real estate firm was fined for the second time for the same offence.
The New Daily reported that agents were aware that vendors would not sell within the price guide and that the property would likely achieve a far higher price. For instance, one property was sold at auction for $1.6 million, more than $700,000 over the advertised price.
Justice Bernard Murphy stressed that the conduct was to create an illusion that properties might be a bargain.
“In my view, Fletchers’ marketing strategy was, at least in part, based upon the view that high sale prices come from competition between emotional or over-excited buyers who have been wrongly persuaded to believe that the property may be within their price range," he told The New Daily.
Fletcher & Parker Balwyn was ordered by the court to publish notices about its deceitful conduct in full-page newspaper ads and on its website. On top of this, the firm was also required to implement a program that will educate their agents of their legal obligations. A compliance office will be set up to ensure that the said program is effectively delivered and maintained.
Fletcher & Parker Balwyn CEO Bradley Brown issued an apology, saying what happened went completely against everything the firm stands for as a business.
“Immediately after these incidents were identified two years ago, we attacked the issue head-on by undertaking a full review and update of our compliance program, revised our training procedures and introduced a stringent live audit and random spot check program," Brown said.
On top of the fine, Fletcher & Parker Balwyn was also asked to pay $40,000 to Consumer Affairs.
Consumer Affairs minister Marlene Kairouz said the department would continue to chase after firms which preyed on unknowing homebuyers.
"Underquoting is dishonest, misleading and against the law — and today's decision shows that if you do it, you'll pay the price," she told ABC News.
Collections: Mortgage News