A Yarraville real estate agency has been fined after deliberately misleading buyers by underquoting properties by up to hundreds of thousands of dollars.
L&L Dardha Real Estate, trading as Hocking Stuart Yarraville, must pay $45,000 to the Victorian Consumer Law Fund after admitting it had broken laws relating to the sale of six residential properties across the inner-west.
Directors Leo and Leigh Dardha acknowledged they had made false and misleading representations, knowing the vendors were not likely to sell the property for the advertised price.
They also admitted to advertising properties online at prices likely to mislead potential purchasers.
Investigations by Consumer Affairs Victoria’s underquoting taskforce, Taskforce Vesta, found the underquoting to have taken place on six properties in Footscray, West Footscray, Yarraville, Altona North and Brooklyn.
The investigation included a property at 63 Ballarat Road, Footscray that was advertised with a selling price of $1 million-plus despite undergoing significant renovation since it was sold for $1.33 million in 2014.
The vendors set a reserve price of $1.55 million and the property sold in December 2015 for $2.11 million.
The property had also been advertised online with a hidden search price of $600,000, bringing it up in searches for properties when that price range was nominated by consumers.
The agents advertised a property at 1 Gordon Parade, Yarraville with a price guide of “mid to high $800,000s”, despite a request by the vendor that it be promoted at $895,000.
Agent Leigh Dardha sent an email response stating “With the quote range leave this with me we are going to start of (sic) at $850plus (sic) to get people through the door and then bump the price up the second week of the campaign. It’s just a little marking (sic) ploy we do.”
The vendor set a reserve price of $1.05 million and the property was passed in at $997,500.
Consumer Affairs Victoria documents reveal the signed authority for a West Footscray property at 704 Barkly Street stated an agent’s estimated selling range of $600,000 to $660,000, yet almost 20 emails to prospective purchasers advertised the price range as $550,000 plus.
CAV investigators found the company’s “genuine belief as to the property’s likely selling price” was reflected in an email to a prospective purchaser stating “This one is definitely going to auction and they are looking for over $700,000”.
Vendors set a reserve price of $690,000 and the property sold in December 2015 for $687,500.
An authority on 10 Churchill Avenue, Maidstone was signed in June 2015 with an agent’s estimated selling range of $490,000 to $550,000, however the property was advertised with a price range of $470,000 to $510,000.
Other breaches of the law were recorded in Altona North and Brooklyn.
The agents have admitted to the breaches and agreed to display a notice at its Yarraville office acknowledging the contraventions, as well as implementing a complaints handling system and providing regular training for staff.
Hocking Stuart Yarraville director Leo Dardha said the agency sincerely regrets “the mistakes made in 2015”.
“Our team has since worked hard with our franchisor’s compliance team to ensure this doesn’t happen again and are in the process of implementing Consumer Affairs Victoria’s requirements.” Hocking Stuart chief executive Simon Jovanovic said the company categorically rejects unlawful activity and he is disappointed the Yarraville office did the wrong thing in 2015.
“We have worked with this office to ensure it doesn’t happen again… if any of our franchisees are found to be engaged in this conduct, there will be severe penalties that may include suspension or termination of the franchisee.”
Acting consumer affairs minister Lisa Neville said underquoting is illegal and the undertakings serve as a serious warning to agents doing the wrong thing.
“Victorian home buyers deserve a fair go. There’s nothing clever about deceiving people who are making one of the biggest purchases of their life.”