LACK of communication has been blamed for the Real Estate Institute of Victoria being embroiled in a curious underquoting deal, related to a residential development site it sold in Camberwell this week.
The Butler Street property was recently independently valued at $3 million and marketed at "$3 million-plus" during a five-week campaign launched last month by agency GormanKelly.
At auction on Wednesday, two developers pushed the price to $3.5 million, or 17% more than the quoted price.
But instead of selling, the property was passed in, with the REIV later accepting a price believed to be $3.75 million, or 25% more than the quoted price.
It's speculated that the REIV's reserve was $3.7 million.
According to its own controversial guidelines, the REIV says underquoting has occurred when a property's sale price is more than 15% more than the quoted price.
The REIV introduced these guidelines in response to a Consumer Affairs Victoria crackdown on underquoting that gave real estate agents a 10% margin of error.
CAV also deemed "plus price" quoting (for example, "$3 million-plus") misleading, but the REIV disagrees and has encouraged its members to continue using it.
The Butler Street sale has highlighted a grey area in legislation relating to disclosure between selling agent and vendor, and whether the REIV should have been allowed to list a reserve price higher than the $3.3 million that would have been enforced by CAV, had a quoted price ever been published.
REIV chief executive Enzo Raimondo said the REIV in May provided GormanKelly with a letter that suggested the property be marketed at more than $3.5 million, but that the agent did not need to rely on this by at the time of market, according to legislation.
He said that because the property was never advertised with an estimated price, and because the REIV board was unaware of the price GormanKelly was quoting, the industry body was within its rights to set a high reserve.
Mr Raimondo said an unsolicited offer of $3.6 million was rejected by the REIV for the site months earlier. He declined to tell Capital Gain what Wednesday's reserve price was, citing a confidentiality agreement with the buyer, a neighbouring residential developer.
GormanKelly director Stephen Gorman said he was aware of the REIV's reserve price 10 minutes before the auction and that it was higher than he expected, higher than the price his agency had advised.
He said the REIV was within its rights to choose a reserve price on auction day according to the situation, adding this was what most vendors did.
"The REIV's reserve was ultimately vindicated by achieving the price because there were two parties interested at that level," Mr Gorman said.
The likelihood both the REIV and GormanKelly could claim they were innocent of breaching underquoting guidelines supports claims by prospective house buyers and advocates that they are vulnerable to smoke and mirrors and that an offence is difficult to prove.
CAV, which the REIV has attacked for trying to curb underquoting, declined to comment, saying it only speaks after any matter has been fully investigated. This seems unlikely given only a handful of formal complaints have been lodged with CAV since underquoting laws were introduced in 2004.
CAV has always believed the practice of underquoting is directly linked to the seller's asking price, reserve or agent's estimated selling price, rather than the eventual selling price.
Any consumer, whether affected by the sale of the Camberwell site or not, can lodge a complaint with CAV.
Printcraft House sold
SOUTH Australia-based developer Karidis Corporation has sold a Melbourne central business district office building it bought from Telstra three years ago for a price believed to be $8.3 million.
Printcraft House at 428 Little Bourke Street was owned and used by the telecommunications giant until about 2003, before it consolidated its staff into other premises and sold the building with vacant possession in 2005.
On buying the 83-year-old, four-level building, the new owners immediately lodged plans for a refurbishment, seeking strata titles for the various floors and improving the building quality from C-grade to A-grade.
Since 2005, vacancy levels for A-grade offices in the city have halved from 8.1% to 4.1%.
CB Richard Ellis' Mark Wizel and Sebastian Drapac sold the property with Colliers International's Matthew Stagg and Pat Burke.
Mr Wizel confirmed a private investor had bought the office as a whole and was seeking office tenants.
Like a dose of Salta
MEDICOS will have a chance to lease space at the former Mercy Maternity Hospital in East Melbourne, which Salta Properties is developing into luxury apartments.
With the 150 Clarendon Street site less than a year from completion, and 72% of apartments sold, Salta has put up 360 square metres of commercial space for lease, now configured as a 130 sq m ground-floor shop, and 230 sq m of consulting suites.
Salta, which is leasing out the property itself rather than through an agent, is targeting medical, health and wellbeing uses for its suites.
The suites could be combined into a tenancy of 360 sq m and are available for occupation the same time as the apartments, in the middle of next year.
The more the merrier
AFTER months of keeping it quiet, Industry Superannuation Property Trust has released a partial list of the tenants who have joined Suncorp-Metway in 447 Collins Street.
The insurance giant, which is awaiting the completion of its offices at Bourke Junction, leased 15,000 square metres - or about half of the building - after former sole occupant AXA Asia Pacific moved to Docklands.
ISPT has announced that the 22-level, B-grade building will also be home to Telstra and Health Super, which have reportedly taken about 6000 sq m and 1100 sq m respectively.
Sources said oil and gas services contractor Production Services Network would occupy as much as 1500 sq m when they relocate from 15 William Street, although ISPT refused to identify other prospective or confirmed tenants. CHRIS VEDELAGO