Consumer Affairs Victoria (CAV) is taking Ray White Oakleigh and estate agent Nick Strilakos to the Federal Court for alleged misleading and deceptive conduct and making false and misleading statements in breach of the Australian Consumer Law.
CAV’s Underquoting Taskforce investigated the agency and estate agent after receiving multiple complaints from prospective buyers.
CAV alleges that Ray White Oakleigh advertised properties at prices well below their market value in at least 11 property sales across Melbourne’s southeast, in Rowville, Mulgrave, Bentleigh East, Oakleigh South and Blackburn South from February 2022 to November 2023.
In most of these cases, after entering into agreements with sellers, the agency subsequently dropped their estimated selling prices and then advertised the properties at those lower prices. The properties then sold for prices well above the advertised price ranges.
Ray White Oakleigh agents also sent messages to each other indicating they believed properties would sell for considerably higher prices and in some cases, taking bets or guesses on the higher price.
In 7 of the 11 cases, the vendors agreed to pay the agency a low flat commission, typically between 2.2 to 2.5 % of the sale price, up to the vendor's reserve. If the sale price went above the reserve, the agents would be paid a much higher rate of 22 to 25 % of the sale proceeds above the reserve. The vendors typically set their reserve prices in line with the lower estimates.
CAV is seeking declarations, pecuniary penalty orders, adverse publicity orders and orders that the agents establish compliance and training programs.
Penalties for making a false or misleading statement in relation to land under the Australian Consumer Law are up to $2.5 million for an individual and $50 million for a company.
CAV Director Nicole Rich said the Federal Court action serves 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.”
“While prospective purchasers are more likely to report suspected underquoting to us, 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 new concerns about the impacts of underquoting.”
"Our underquoting taskforce was recently made permanent in recognition that there is more for us to do. We continue to take a zero-tolerance approach to detect and stamp out underquoting for good."
CAV encourages anyone buying or selling a property to report any concerns about underquoting or deceptive practices in property sales on our website through our dedicated complaints webform.