Property investor bodies are hearing nightmare stories about cowboy agents swindling novice investors out of their cash.
This has sparked two professional bodies to join forces to extend their efforts to protect home buyers from industry cowboys.
The Property Investment Professionals of Australia (PIPA) and the Property Investors Council of Australia (PICA) are warning novice investors that unethical agents are targeting their savings.
The rebound in property prices has encouraged fly-by-night spruikers to come out of the woodwork to target the unwary, PIPA chairman Peter Koulizos said.
“PIPA has heard of buyers being offered ‘cash back’ deals of tens of thousands of dollars to encourage them to buy inferior properties,” Mr Koulizos said.
“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.”
Immoral agents tend to accept massive commissions to promote substandard property investment stock to investors, PICA chairman Ben Kingsley said.
“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,” 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.”
Although commissions are standard in property investment, Mr Kingsley said a qualified adviser would undertake meaningful research before recommending a property.
“Unfortunately, huge commissions are the sole motivation for faux advisers,” Mr Kingsley said.
“They are only thinking about their own bank balances and not the long-term financial consequences on consumers of their underhanded actions.”
The lack of regulations around property investment advice makes it hard for investors to draw apart authentic professions from one with only dollar signs in their eyes, Mr Koulizos said.
He recommends people look for property experts who have completed specialised education in property investment advice or are licensed buyer’s agents.