A Melbourne real estate agency that underquoted blue ribbon properties has been fined $880,000 - the largest penalty for underquoting in Victoria - for its cavalier strategy to "quote them low and watch them go".
The Federal Court on Thursday fined Fletcher & Parker (Balwyn) Pty Ltd $40,000 for each of the 22 properties that its Canterbury and Blackburn offices admitted underquoting during 2015.
The fine is more than double the commissions Fletcher made from the sales and constitutes more than a third of its profit for the last financial year.
It must also pay $40,000 towards Consumer Affairs Victoria, which took the agency to court, and publish notices about its misleading and deceptive conduct in full-page newspaper ads and on its website.
Justice Bernard Murphy said Fletcher staff had a cavalier disregard for the business’s legal obligations and knew about the risks of underquoting, but still did it.
Business records tendered to court included comments from staff saying “quote them low and watch them go” and “market the f*** out of it and then underquote the s*** out of it”.
Management warned sales agents and directors about underquoting and the possibility of large fines and bad publicity, but some agents were dismissive.
In 2014 one director, Timothy Heavyside, forwarded an article to colleagues about Consumer Affairs’ crackdown and said “looks like (Consumer Affairs) are a toothless tiger”.
Mr Heavyside was involved in 15 of the 22 underquoting cases.
Justice Murphy said the number of recent prosecutions by the state’s consumer watchdog shows underquoting is widespread.
“It requires a penalty to be set at a level that means the game of underquoting is not worth the cost,” he said.
Some of the houses sold by Fletcher went for hundreds of thousands of dollars more than the quoted price.
Interested buyers in one Box Hill property were told the auction would start at $1.1 million before the house sold for $1.731 million in May 2015.
Internally, Fletchers had estimated a sale price between $1.65 million and $1.75 million.
The real estate agency apologised for the underquoting following Thursday’s judgment.
“I want to apologise to all the homebuyers whose valuable time we wasted,” CEO Bradley Brown said in a statement.
Minister for Consumer Affairs Marlene Kairouz said Fletcher’s fine is the largest penalty for underquoting in Victoria.
“Underquoting is dishonest, misleading and against the law – and today’s decision shows that if you do it, you’ll pay the price,” she said in a statement.
Fletcher has agreed to appoint a compliance adviser to make sure staff adhere to their obligations.