Who should you trust when you're buying property in Sydney?
There are a lot of people out there offering to help you buy property. Unfortunately, not everyone can be trusted.
NSW Fair Trading spends a lot of time warning people about property spruikers - people that offer products to investors or house hunters, but often with financial interests that lie out of sight. However, the state government organisation, as well as the Australian Securities and Investments Commission, do not have power to act against these spruikers.
So how do you identify them, and who should you trust when you're looking to buy property?
How to identify a property spruiker
Property spruikers will generally push quite hard for you to buy into a specific investment property or development. They may also offers seminars, home loan organisation, conveyancing and tax services all in one package.
If you feel like you're not being given the full picture, you could be dealing with a spruiker.
Research and evidence that comes directly from the person promoting a property investment is another red flag that you're dealing with a spruiker. Essentially, anyone that tries to corral you into one type of investment plan and doesn't allow room for change or questions. These can be high-pressure marketing techniques that, unfortunately, many people fall prey to.
NSW Fair Trading says SMSF investors are popular targets for spruikers, but it goes further than that. First time investors or cash-strapped people will often get sucked in by advertising of one specific tax deduction or feature, without considering the underlying capital value.
Think about it in the long term. If you feel like you're not being given the full picture, you could be dealing with a spruiker.
What can you do in these situations?
One of the most important things to do, no matter where in the Australian property search you are, is to work with people that work for you. Property spruikers shouldn't be trusted as their interests lie elsewhere. It might be commission from a property developer, or even a salary from a related party. If you are unsure about who is paying the promoter, independent research is a must.
Too often, people get sucked into dodgy building or development work with the promise of specific tax loopholes.
Are they being paid a commission from a developer based on sales? Then their interests lie in selling the real estate, rather than getting you a great deal. Check government registers for developers, promoters and builders - do people have the relevant licenses? Too often, people get sucked into dodgy building or development work with the promise of specific tax loopholes.
You should also turn to people that will absolutely work in your favour. Independent legal advice, financial planning and property research can be found with the click of a button through your local or state government. For an approach more specific to real estate in Sydney, a buyers' agent can also prove useful.
Buyers' agents always work in the best interests of the house hunter. This means research, negotiations and resolving disputes to get you a deal that is specific to what you need and want, rather than what a spruiker or developer wants.
Trusting people you don't know is difficult - especially when many property promoters have ulterior motives. That's why you have to do research on the people you can work with before you purchase real estate. Do they work under a code of ethics that ensures they will always work in your favour, like a buyers' agent will? Or are they simply working for a quick buck at your expense?