Alarm bells have been raised following a number of home buyers and novice investors being caught up in a new scam, which sees spruikers masquerading as qualified property investment professionals.
The Property Investment Professionals of Australia (PIPA) and the Property Investors Council of Australia (PICA) have issued a joint statement, warning investors to be vigilant about people posing as property investment professionals, saying that not doing so could potentially cost them the big bucks.
“PIPA has heard of buyers being offered ‘cash back’ deals of tens of thousands of dollars to encourage them to buy inferior properties,” said PIPA chairman Peter Koulizos.
“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 noted that property investment posers often make their money by accepting huge commissions “to 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,” Mr Kingsley explained.
“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.”
Mr Kingsley said that while commissions were a common part of the property investment sector, a qualified adviser “would also undertake significant research before recommending a property to clients”.
“Unfortunately, huge commissions are the sole motivation for faux advisers,” he said.
“They are only thinking about their own bank balances and not the long-term financial consequences on consumers of their under-handed actions.”
More regulation needed
Commenting further on the issue, PIPA’s Mr Koulizos said a lack of regulation in the provision of property investment advice often means that consumers don’t recognise a con artist from a professional.
In the meantime, he advised investors to look out for “experts” who have completed specialist education in property investment advice or are licensed buyer’s agents.
“Because of the paucity of legislation, PIPA developed the Qualified Property Investment Adviser (QPIA) course to address the need for professionals in the industry to be appropriately qualified to give advice,” he said.
“Consumers should only work with licensed buyer’s agents and advisers that have completed a QPIA, who are also members of PIPA, because of our strict code of conduct that includes full disclosure of commissions.”