Warning flags on the beach people
You know how much I’ve made from sales commissions over the years?
Zero. Nip. Nada.
I haven’t made a cent. I don’t find deals for people and I don’t regurgitate deals for a fee either.
And let me tell you, it’s not for a lack of property developers wanting access to my database.
I made a choice early on that if I really wanted to empower people, then I needed to teach them how to find their own deals. They needed to know how to crunch the numbers themselves, and be their own advocate and hero.
I’ve done my time being a mother, and I’m not about to mother others
(… unless they need a good kick in the pants, in which case Mummy’s reaching for the wooden spoon.)
I also felt it was about trust. How could people trust the education I was offering if it came with a “hot tip” on a deal I just happened to have in my back pocket?
You really need to ask yourself the question. If your property educator is getting kickbacks from developers, then who are they really working for?
This has always been an issue in this game – people coming with murky intentions – but I’m afraid it’s about to get a whole lot worse.
Apartments. There’s a glut of high-rise apartments coming on line in certain areas, and developers are going to struggle to sell them.
That means they’ll be tapping every network they can find to help them move stock.
And that will mean property educators, financial planners… even mortgage brokers.
It’s bound to happen. And it looks like The ABC has got the first whiff of it…
Real estate sales companies are using big commissions to tempt mortgage brokers, financial planners and accountants to sell overpriced properties to unsuspecting clients.
Developers generally contract out sales to these companies when they are having difficulty shifting their stock, such as when there is an oversupply of new apartments or houses in the area.
Real estate agents say developers use these sales companies, which often market themselves as property investment firms, because they can achieve higher-than-market prices.
“I’ve said to them [developers], I’m quite happy to sell for you but, at the moment, we’re $100,000, $150,000 overpriced,” western Sydney real estate agent Edwin Almeida told The Business…
One reason the properties are so far above market prices is to cover the cost of the commissions going to the marketing firm.
“Our standard fee is 1.7 per cent commission for a sale across the board, but theirs, the marketing companies … are getting upwards of 8 per cent, 10 per cent, even 15 per cent in some cases,” Mr Almeida observed.
Those fees can add tens of thousands of dollars to the cost of a new apartment or house.
“They inflate the price in order to cover those costs, but the ones who are paying for it are the consumers,” Mr Almeida added…
The ABC has also seen email approaches to a financial planner offering commissions of between 5-12 per cent for referrals that result in sales…
Mr Almeida said developers often turn to these tactics when they are struggling to sell their properties.
“We’ve got people that have put a lot of trust in their accountant, mortgage broker, in their financial planner and they are steering them towards property that, quite frankly, a lot of the local agents wouldn’t even touch,” he said…
It makes my blood boil, let me tell you.
The real tragedy of course is that developers are preying on the inexperienced and the uneducated. What’s worse, their traps are so easily avoided.
Seriously, even just a little market research, just a little guidance from someone who knows what they’re doing, and you can see right through all this BS.
So be extra careful folks. The sharks have missed a few meals and are extra hungry.
And if you want some honest to goodness advice, or a good kick in the pants, come and see me.