Consumers should be aware of a rise in property investment spruikers as interest rates hit record lows, according to the Property Investment Professionals of Australia (PIPA).
The not-for-profit association’s chairman, Peter Koulizos, warned consumers of the risks, adding that a confluence of factors was likely to reignite spruiker activity in property markets in the months ahead.
“[This has] the potential to financially devastate the unwary,” he said.
“Interest rates are rock bottom, lending is loosening up, plus first home buyers have been given a helping hand from the government deposit guarantee.”
“While all of these factors are much-needed good news for the property sector generally, they also create the ideal conditions for unscrupulous operators to potentially entrap novice buyers and investors.”
According to Mr Koulizos, spruikers are ‘increasingly cunning’ when convincing buyers about investment ‘opportunities’ and enticing people more easily online.
“It surprises many people that there is currently no legislation to protect consumers from dodgy operators pretending to be property investment experts,” he said.
However, he mentioned that there are a number of indicators that show if someone is about to get stung by a property spruiker.
“One of the key ways that you can differentiate a professional from a pretender is whether they are upfront and honest about any commissions they may receive from [a] transaction,” he said.
Mr Koulizos said because there is no legislation requiring them to do so, spruikers won’t reveal this information to their potential ‘prey’.
“Professional practitioners, on the other hand, often don’t receive any commissions because their property investment advice is independent or they are happy to disclose it to their clients to ensure complete transparency in the process,” he said.
“Using pressure tactics to force buyers to sign agreements, including offer discounts for immediacy, are other obvious signposts that you’re able to do business with a spruiker.”
“Other signals include them not following the same investment strategy themselves – the classic ‘Do as I say, not as I do’ approach – as well as having a short-term mindset, such as no after-sales service.”
Most recently, Mr Koulizos also spoke about Labor’s negative gearing proposal and how that would ‘flood the market with spruikers’ and ‘endanger the financial lives of thousands of Australians’.
He mentioned that the policy would encourage unscrupulous operators into the market looking to take financial advantage of everyday investors.
“When you financially incentivise people to buy a particular product, spruikers are not far behind because they see an opportunity to make a lot of cash very quickly,” he said previously.
Hafizah Osman, REB, 16 July 2019