“It’s a slap on the face with a wet lettuce. If you get $ 110,000 in fees for selling a house and you get a $ 10,000 fine, that’s nothing, ”he said.
Consumer Affairs Victoria does not disclose which agents were fined, how much they were fined, and which sales were factored into the undercutting.
Under Victorian laws, agents can be fined up to $ 33,000 for engaging in undercutting, while the practice can result in penalties of up to $ 10 million for them. corporations and $ 500,000 for individuals under Australian consumer law.
Mr Morrell, who is leading a campaign for stronger protections for potential buyers, said undercutting was rife in Melbourne.
He regularly sees homes selling for over $ 1 million above the top of their advertised ranges and has filed a dozen complaints with Consumer Affairs Victoria this year. He said agents undercut the properties because they wanted to glean information on prospective buyers.
“It’s endemic. If you quote something that clearly represents incredible value, 300 to 400 people will rush over it. You can get more trades on a single trade. There are also a lot of beatings to the chest: “Look at me, I got $ 600,000 more than the reserve,” he said.
The president of the Real Estate Institute of Victoria, Adam Docking, said most agents hate undercutting and the practice is rare.
He said there was a lot of misconception about undercutting, with many mistakenly assuming it happened when properties sold above their estimated range.
He said the surge in Victoria’s real estate market and the pandemic had made it more difficult for agents to accurately assess properties.
“It can take weeks from when the property is first appraised to when it comes to market,” he said.
Blatant undercutting, says Docking, occurs when bids above a property’s estimated range are rejected or when a property rises above the high end of its range. He thinks the current sanctions are an adequate deterrent.
Woodards Blackburn manager Cameron Way said it made no sense for agents to cite properties at too low levels to gather information on other potential buyers.
“Most agents today are extremely short on time considering all the challenges they face each week, and therefore dealing with a few hundred more buyers, perhaps, because you are intentionally undercutting a ownership is absurd and wastes a lot of time, ”he said.
Consumer Affairs Victoria received 383 inquiries and complaints of undercutting between February and the end of April, an increase of 129% from the same period last year.
A spokeswoman said the undercutting could distort the real estate market and cause potential buyers to waste time and money inspecting properties that were never in their price range.
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