In times of market change, we start to hear sad stories of dodgy property advice coming home to roost.
Unfortunately, when markets are booming, unscrupulous operators often set up shop, with the aim of making easy money.
The problem is that far too many consumers continue to be duped by the supposed bells and whistles offered by spruikers.
So, how can you tell the difference between a professional property investment adviser and a spruiker?
1. No pressure
One of the first ways that you can identify a professional from a spruiker is that there is no pressure from the former and plenty from the latter.
A professional will be happy to discuss property investment as a wealth creation vehicle with you but will never pressure you to sign any forms or pressure you to commit to an upfront consulting fee.
A spruiker, on the other hand, uses hard-sell marketing tactics – often framed about not missing out on making lots of money – that pressures buyers into paying thousands of dollars just to learn what that “opportunity” might be.
In fact, we have heard of an instance where a buyer was pressured to sign a contract and to provide credit card details in the first meeting in order to submit an expression of interest on a house and land.
2. No conflicts
Professional property investment advisers and buyer’s agents have no conflicts of interest.
That means that their duty is to create the best investment strategy for each individual client as well as only recommend properties that fit within that strategy.
They have 100 per cent independence and disclose how much and who they receive fees from.
Spruikers on the other hand, don’t really care whether the property they’re promoting to you makes you money, because it will make them plenty of it.
They generally have a one-size-fits all approach which means they offload whatever stock that they are being paid a handsome commission to market to you.
In reality, they are operating on both sides of a transaction, which is illegal for licensed real estate professionals, of course, but that doesn’t bother them because they don’t hold any licenses at all in most cases.
3. Education and licenses
That is another signal that you’re dealing with someone who doesn’t have your best interests at heart. Often, they don’t have any licenses, let alone educational qualifications.
Whereas professional property investment advisers have both, including membership of their relevant industry bodies such as the Property Investment Professionals of Australia.
Many of them will also have completed a Qualified Property Investment Adviser course as well.
This sign is probably one of the easiest to check because you just need to ask to see their licenses or educational qualifications. Professionals will be happy to show them to you.
Spruikers will squirm in their seats and try to convince you that they don’t really need them because property investing is easy right?
The fourth sign to look for is experience.
Professionals consider helping property investors achieve better financial futures a vocation and a career.
Most have been working in the sector for years and have more than one or two market cycles under their belts.
Not only that, they are also successful property investors themselves who adopt the strategies that they are recommending to you.
Fly-by-nighters, on the other hand, have likely set up shop in recent times and probably can’t show you any long-term results for clients that they’ve worked with. Likewise, if you ask them to prove that they are adopting the “strategy” they’re spruiking to you, most of them won’t be able to do that because they might not care about your money, but they care about their own.
Some of the stories we hear about buyers getting burned by dodgy operators are appalling.
A recent one was someone who thankfully sought a second opinion before signing a contract on a property, where the price had been inflated by up to $40,000 to potentially be paid as commission to the seller, after also paying thousands in “consulting fees” upfront also to the seller.
If they had proceeded with the purchase, they would have been in negative equity from the beginning or may have been stuck with a property that could not get finance, so they may have forfeited their deposit.
While we can only hope that one day we will have a spruiker-free property investment sector, in the meantime it’s vital that consumers undertake in-depth research into the people who are calling themselves “professionals”.
At the end of the day, property investment can produce positive financial results, but it also requires significant sums of money that shouldn’t be given to someone who is simply masquerading as a professional who cares about their client’s futures. Get the right advice from the right professional to assist with your property investment journey.