As real estate markets rise in many locations across Australia, consumers need to be wary of spruikers masquerading as qualified real estate professionals.
Hotspotting is aware of numerous instances in 2019 of prospective investors being duped by marketeers who claim to be buyers’ agents acting in their best interests. Shonky operators often receive a fee from the investor client as well as kickbacks from developers if the unsuspecting investor buys an off-the-plan apartment.
Two peak industry bodies are warning that both home-buyers and novice investors are being blindsided by spruikers masquerading as property investment professionals, with the financial consequences dire.
The Property Investment Professionals of Australia (PIPA) and the Property Investors Council of Australia (PICA) have joined forces to warn consumers that unscrupulous operators could cost them their life savings.
PIPA chairman Peter Koulizos says that, with property markets rebounding, fly-by-night spruikers are once more coming out of the woodwork with the aim of snaring the unwary.
“PIPA has heard of buyers being offered ‘cash back’ deals of tens of thousands of dollars to encourage them to buy inferior properties,” Koulizos says. “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 says property investment charlatans often make their money by accepting huge commissions from developers o promote substandard property investment stock to investors.
“These fake advisers will also 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,” Kingsley says. “It’s quite common for developers to offer commissions of $50,000 or more, as well as gold Rolexes for help to offload sub-par stock.”
Kingsley says while commissions are a common part of the property investment sector, a qualified adviser will also undertake significant research before recommending a property to clients.
“Unfortunately, huge commissions are the sole motivation for faux advisers,” Kingsley says. “They are only thinking about their own bank balances and not the long-term financial consequences on consumers of their under-handed actions.”
Koulizos says the lack of regulation in the provision of property investment advice means that consumers often can’t distinguish a con-artist from a professional. He says consumers should look for experts who have completed specialist education in property investment advice or are licenced buyer’s agents.