A Victorian real estate agent has been barred by a local newspaper from warning readers of how widespread underquoting is in his industry.
Greg Cooper, director of Cooper Newman Real Estate, tried this week to buy ad space in Leader newspapers, a Melbourne division of News Corp.
An executive at Leader refused the request on Tuesday, citing the company’s national advertising terms, which give the publisher “absolute discretion” to decline any advertisement “without giving any reason”.
When Mr Cooper pushed for an explanation, another executive replied by email: “Unfortunately we are unable to accept any further real estate related advertising from Cooper Newman Real Estate.”
The New Daily asked the newspaper group why the ad was refused and whether it had anything to do with the revenue the company made from real estate advertising.
The spokesperson denied it was because of News Corp’s reliance on real estate revenue, and denied Mr Cooper’s firm was indefinitely banned from advertising, but failed to provide a reason for the rejection.
“We don’t discuss details of our advertising clients,” they said.
‘Too many are tainted’
The ad was an attempt to inform Melburnians of a pervasive problem, as well as to advertise his firm, Mr Cooper said.
‘Underquoting’ is when an agent tells a prospective buyer that a property will sell for a price the agent knows is below market value in order to encourage interest in the property. It is commonly used to attract more buyers to an auction.
Mr Cooper said the practice was so widespread, with so many agents “tainted” by it, that he could not employ inside the industry.
“The vast majority of agents undertake it, unfortunately. I would say the percentage is probably up around 80 to 90 per cent,” he told The New Daily.
“From the word go when they come into the industry, agents are taught, ‘This is how you do it.’ It has simply become the way things are done.
“We endeavour to source our staff from out of the industry and then train them as to how we would like them to do it, rather than have to untrain them.”
Underquoting is also widespread in Sydney and Brisbane, but not Tasmania, Mr Cooper said.
Real estate consumer advocate Neil Jenman, who has campaigned for decades to make the industry more ethical, told The New Daily in August that with tricks like underquoting, “everybody loses except the agents”.
To ensure the auction is well attended, agents underquote the expected sales price to the buyer, who is then pressured by the auctioneer’s “street theatre” to exceed their budget, Mr Jenman said.
For each failed bidding attempt, hopeful buyers shell out an “absolutely incredible” amount in the vicinity of $1000 for building inspection and legal fees, he estimated.
“An auction agent will say, ‘We had 10 spirited bidders.’ But what about the nine people who lost $1000 each? What about the nine people who got their hearts broken and their wallets walloped?”
‘The illusion of a bargain’
Mr Cooper’s failed ad quoted from a recent Federal Court case in which a rival Melbourne agency, Hocking Stuart in Richmond, was fined a record $330,000 for underquoting 11 properties.
Justice John Middleton, who presided over the case, said in his verdict that the agency’s quoted prices created the “illusion of a bargain” and prospective buyers were likely to be “significantly inconvenienced, disappointed and deceived”.
“Some may have missed the opportunity to buy elsewhere, being lured into a bargain that did not, and was never going to, eventuate,” Justice Middleton said.
Rather than conducting public auctions, Mr Cooper’s agency uses ‘silent auctions‘ where buyers are quoted a minimum price and then invited to submit written bids.
Read Mr Cooper’s ad below: