“Market the f— out of it and then underquote the shit out of it – good vendor management”: Fletchers sales quote

“Market the f— out of it and then underquote the shit out of it – good vendor management”: Fletchers sales quote
“Market the f— out of it and then underquote the shit out of it – good vendor management”: Fletchers sales quote

The Fletchers Balwyn-headquartered real estate agency has been fined $880,000 for underquoting on 22 properties in 2015, the strongest penalty ever for the outlawed practice in Victoria.

Justice Bernard Murphy said the size of the punishment ought deter other agencies from similar behaviour, which he described as widespread.

The 22 offences took place after Bradley Brown, the agency's chief executive officer, sent an email in 2014 to group sales staff informing them that Consumer Affairs had written to Fletchers seeking documents. He advised them to stay on top of their quote range, that in a rising market there was danger in underquoting and that Fletchers faced risks of large fines and bad press.

Fletcher and Parker (Balwyn) Pty Ltd was fined $40,000 for each underquoted property by sales representatives in its Canterbury and Blackburn offices in 2015.

At the time of the contravening conduct the maximum penalty for each contravention was $1.1 million.

Its leading agent Tim Heavyside was "involved" in 15 of Fletchers’ 22 contraventions, the judgement noted.

The Fletcher agency began in the then newly developing suburb of North Balwyn in the late 1930s.

The $880,000 penalty was reportedly more than double the commission it made from the sales, costing around one third of the company’s recent annual profit.

The Federal Court's Justice Murphy highlighted one sale where the seller of a BALWYN NORTH property asked her agent why her house was marketed between $1.1 million and $1.2 million when the agency estimated it would sell for between $1.5 million and $1.65 million.

She was told the quote was low because “it brings in a broader market range” and "people with a low budget will often come up, and it will also catch the people with bigger budgets as well”.

The agency had a cavalier attitude to its responsibilities, Justice Murphy said. The evidence included the quote of the week at one 2015 sales meeting as “market the f— out of it and then underquote the shit out of it – good vendor management."

A sales agent Michael Richardson went as far as to acknowledge that “if [Fletchers] tell a buyer what (the vendor) actually want it destroys the campaign”.

Cristina Fotia, part of the sales team at Fletchers, sent an email to Blackburn office staff which included statements that: A wise man once taught me when I first started real estate… Quote them low watch them go and Safe to say we are doing a good job at it!!;

One of the properties Fletchers sold was a three-bedroom house in Dorene Court, Vermont South (below). It sold for $1.6 million in September 2015 after first hitting the market with an advertised guide of $900,000-plus.

“Market the f— out of it and then underquote the shit out of it – good vendor management”: Fletchers sales quote

Another property in Monash Street, BOX HILL SOUTH, sold for $1.731 million in May 2015 after being advertised for $1.1 million-plus (below). Fletchers advertised the property online on real.estate.com.au, in the Weekly Review magazine and in the Places magazine with a price quote of $1.1 million plus.

In the authority Fletchers based the estimated commission payable on the BOX HILL SOUTH sale prices of $1.65 million and $1.75 million. Jacqui Versteegen, a member of the Fletchers sales team, sent an email to Fletchers’ sales and marketing group regarding the Monash Street Property and provided a price guide “POA (over $1.350M)”.

“Market the f— out of it and then underquote the shit out of it – good vendor management”: Fletchers sales quote

Michael Richardson, an employed sales agent and auctioneer in the Fletchers’ sales team, advised the Monash Street vendor that senior staff from Fletchers’ Canterbury office believed potential buyers should be provided a price quote of “$1.25 million plus”.

Richardson said that buyers in Surrey Hills had been adding on $200,000-300,000 to an advertised sale price and that at a quoted price of $1.25 million plus Fletchers wanted buyers to think $1.45 million/$1.55 million. Mr Richardson said that was the best way to “get a record price”. He said that he wanted six bidders that were willing to bid strongly around that mark and the competition would push the price up.

Fletchers admitted misleading or deceptive conduct in relation to the sale of 22 properties in 2015, being properties situated at

(a)    6 Monash Street, BOX HILL SOUTH;

(b)    2 Troy Court, Forest Hill;

(c)    8/842 Toorak Road, Hawthorn East;

(d)    9 Marina Street, Vermont

(e)    3 Gunyah Road, Blackburn North;

(f)    8 Polydor Place, Blackburn North; 

(g)    34 Moona Street, BURWOOD EAST

(h)    38 Bentley Street, Surrey Hills; 

(i)    Dorene Court, Vermont South

(j)    3/12 Arcadia Street, BOX HILL SOUTH

(k)    4 Kitchener Street, BOX HILL SOUTH

(l)    3/43 Glen Ebor Avenue, Blackburn; 

(m)    54 Linda Avenue, Box Hill North; 

(n)    46 Barter Crescent, Forest Hill; 

(o)    20 Gordon Crescent, Blackburn; 

(p)    307 Station Street, BOX HILL SOUTH

(q)    2/15 Olympiad Crescent, Box Hill North; 

(r)    1/445 Mitcham Road, Mitcham; 

(s)    45 Tannock Street, BALWYN NORTH

(t)    87 Stevenson Street, Kew; 

(u)    18 Lynden Street, Camberwell; and

(v)    3/12 Charlotte Street, BLACKBURN SOUTH

Victorian Consumer Affairs has agreed not to proceed in relation to Fletchers conduct in respect to the sale of three properties, situated at 33 Gray Street, Doncaster, 10/8 The Avenue, Windsor and 2 Bermuda Drive, BLACKBURN SOUTH.

The underquoting took place before new price guidance rules were introduced by the Victorian Government.

Tags: 
Underquoting Melbourne Auctions

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