It can be hard to tell when a property “advisor” you’re dealing with is the real deal, or whether they’re more interested in lining their own pockets.
After all, they can come across as one in the same: professional, confident, experienced and seemingly with your best interests at heart.
So as an investor, how can you tell the difference between the two?
Unfortunately, investors are all too often blindsided by “spruikers” who are masquerading as qualified property investment professionals – and the financial consequences could be catastrophic, according to two peak industry bodies.
Too many stories of investors and everyday Australians who have lost their life savings in dodgy deals has prompted the Property Investment Professionals of Australia (PIPA) and the Property Investors Council of Australia (PICA) to join forces, in an effort to warn consumers about unscrupulous operators.
“PIPA has heard of buyers being offered ‘cash back’ deals of tens of thousands of dollars to encourage them to buy inferior properties,” said Peter Koulizos, PIPA chairman.
“Of course, the ‘cash’ isn’t real because it’s built into the sales price so, in essence, buyers are paying for their own supposed windfalls.”
PICA chairman Ben Kingsley added that property investment spruikers often made their money by accepting huge commissions, worth up to $50,000 per deal, to promote substandard property investment ‘opportunities’ to investors.
How can investors protect themselves against these dodgy operators?
By asking as many questions as possible, Kingsley said.
“These fake advisers will never disclose how they make their money if a consumer should ever ask, which should be a big red flag to anyone enticed by their slick marketing campaigns,” Mr Kingsley said.
“It’s quite common for developers to offer commissions of $50,000 or more as well as gold Rolexes for help to offload subpar stock – and unfortunately, huge commissions are the sole motivation for faux advisers.”
It’s also a good idea to ask if they are a member of PICA or PIPA, as members of these bodies have completed specialist education in property investment advice or are licenced buyer’s agents.
“Consumers should only work with licensed buyer’s agents and advisers that have completed a QPIA, who are also members of PIPA, because of our strict code of conduct that includes full disclosure of commissions,” Koulizos said.
Sarah Megginson, Your Investment Property, 18 November 2019