Ray White agent to face court over alleged underquoting

Ray White Oakleigh and agent Nick Strilakos have been accused of underquoting on at least 11 properties by Consumer Affairs Victoria, and will face Federal Court over the alleged breaches of consumer law.

Ray White Oakleigh and Strilakos could face fines of up to $50 million and $2.5 million, respectively.

The watchdog said the real estate agency and Strilakos had engaged in alleged misleading and deceptive conduct and making false and misleading statements by advertising the homes “well below” their market value and, in some cases, taking larger commissions if properties sold above the low reserves influenced by underquoting.

Consumer Affairs Victoria director Nicole Rich said the alleged conduct had also affected some sellers.

“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,” she said.

“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.”

The case was investigated by Consumer Affairs Victoria’s underquoting taskforce and had been initiated by multiple complaints from buyers, the watchdog said.

It said the 11 properties were in the south-eastern Melbourne suburbs of Rowville, Mulgrave, Bentleigh East, Oakleigh South and Blackburn South, and the alleged deceptive conduct took place from February 2022 to November 2023.

Consumer Affairs Victoria said messages between Ray White Oakleigh agents indicated that they thought the homes would sell for more than their asking prices, and in some cases, taking bets or guesses on the higher price it would sell for.

It said that in seven of the 11 cases of accused underquoting, the vendors agreed to pay a flat commission between 2 per cent and 2.5 per cent on the sale of their home, but if the price went over the reserve, the agents would then receive as much as 25 per cent of proceeds that exceeded the vendor’s lowest acceptable price.

Consumer Affairs Victoria said the vendors “typically” set their reserves with the agents’ lower price estimates.

The practice is well-known in industry circles and is a key concern of critics of underquoting.

In addition to the multimillion-dollar fines, Consumer Affairs Victoria said it was also pursuing declarations, pecuniary penalty orders, adverse publicity orders, and orders that the agents establish compliance and training programs.

Ray White Oakleigh and Strilakos are yet to file a defence, and the matter will go to court at a later date.