There is plenty of money changing hands in the property markets of some of the stronger capital cities right now.
But when it comes to scammers trying to get in on the action, it doesn’t matter what the environment. Because the fact is that in Australia, there are always buyers, sellers, investors and others around.
Residential real estate accounts for the lion’s share of where Aussies park their money and the amount is into the trillions. That, along with the fact that there are endless possibilities, is what attracts scamming types.
So let’s take a look at the types of dodgy operators out there and how to avoid them.
The first comes in the form of an operation marketing itself as a ‘group’ or a ‘club’ to give the impression that it’s a collection of investors on equal terms, helping each other out and providing support and guidance.
These so called collectives ‘help’ first time investors find a property to pour their hard earned savings into.
The problem is, the properties they source and pass on are way overpriced and it turns out the group is actually a marketing company aligned with a developer, who is looking for quick sales without going through a real estate agent.
The marketing company charges big commission from the developer, who in turn adds extra to the sales price to cover it. That way it’s a win/win situation, except for the poor buyer, who foots all those bills themselves.
You can usually spot these groups through the way they approach you. Some of these techniques include cold calling on the telephone, letterbox drops of pamphlets and other marketing materials, plus newspaper ads, promising amazing deals and property secrets.
You might be invited to attend a seminar on property investments. These are often free of charge or very cheap, so that once they have you in the room they can guilt you into going ahead with a purchase.
Once you’re there, you will discover that they are offering you a one-stop shop chance at a property investment, with in house solicitors, accountants and financial advisers all under the one roof.
That is because they are all in it together and want you to sign on the dotted line and make a commitment before you have a chance to go home, sleep on it and seek independent advice.
When it comes to actually investing in property, it is important to make sure the lawyers, accountants, financial advisers and buyers’ agents are all independent of each other, so they can give you objective advice.
If you are in contact with buyer’s agents or investor’s ‘groups’ and want to make sure they are legitimate, you can start by checking their website.
They should be completely transparent with company details, including staff, directors, ABN and establishment dates. If these details are hard to find, or the company has been around for a very short period, it’s best to avoid them.
Testimonials from ‘happy customers’ with only a first name or initial are also a dead giveaway.
If there are testimonials on the website, you should be able to see pictures of the happy customers, addresses and details of their investments and even be able to contact them and talk to them about their experience. Otherwise, they are not a very useful case study!
The best thing to do is always buy a property from a real estate agent, in an area you have researched yourself, after seeking independent advice.
Tim McIntyre is the senior real estate reporter for the Daily Telegraph and News.com.au.
Over the past decade, he has attained widespread knowledge of Australia’s many unique property markets and is an authority on all things buying, selling and investing.
His commentary appears every Saturday in the Daily Telegraph Real Estate lift out, as well as online at news.com.au