Australia may not realise the full scope of issues caused by property spruikers until close to generation of people are unable to support themselves in retirement.
According to one member of the real estate advice industry, circumstances of people facing financial ruin after acting on unqualified or non-independent advice is much more prevalent than the industry or government realises.
Now the principal of property advice firm Surbanite, Anna Porter’s previous career saw her work as a property valuer managing the mortgaging and possession portfolio for some of Australia’s major banks, an experience that left her with a desire to shine the light on the impact spruikers can have on everyday investors.
“I’ve seen the financial devastation first hand and it’s something that I’m passionate about trying to prevent,” Porter said.
“As a value you would hear the stories of why somebody’s was being repossessed and what had gone wrong and often it came down to bad decisions like over-leveraging themselves on investments thanks to bad advice and it was devastating to see that first hand again and again,” she said.
Such is Porter’s desire to illustrate the impact property spruikers are having, she has recently written a book, Whistle Blower
, which she hopes will equip people with the knowledge to avoid falling for the too good to be true opportunities offered by spruikers and also shine a light on how widespread the issue of people facing trouble due to bad property advice really is.
Like many in the property advice space, Porter is pushing for the Australian Securities & Investment Commission (ASIC) to better regulate the industry, however she believes that will only occur when the full scope of the issue comes to the fore.
“I don’t think ASIC believes or can see how prevalent it is. Even coming from the valuation side of things to the investment side I was personally shocked as to how much of a problem it is. I would hear on a weekly basis of stories of people who have lost their life savings,” Porter said.
“People are embarrassed to talk about it. If they’ve lost money through a bad decision or bad advice then they feel silly so they don’t bring to it the forefront and they don’t want people to know.
“I would really like to see it [become regulated], but I know the wheels of legislative change are slow. There’s going to need to be some political force behind it.”
While regulation of the industry may very well prevent people in the future from losing out thanks to bad advice, Porter said it may very well be too late for significant portion of the population who have directed superannuation money towards property.
“I think the biggest fallout is going to come when the 30 and 40-somethings are hitting retirement age and their retirement plans have been wiped out because of this and the government’s going to feel it as people are in need of more help in retirement at a time when the government is going to be taking [retirement assistance] off the table.
“We know of one small firm that was pushing investors into off-the-plan purchases where they were getting kickbacks from the developer, we spoke to somebody who left there after seeing what was happening and in 18 months they had convinced 200 people to buy into the developments they were pushing.
“That was just one small, suburban firm and 200 people have had their super fund money wiped out because they haven’t been able to settle, money’s gone missing or developments just haven’t been built.”
Until regulation of the industry does occur, Porter is calling on potential investors to look past the glossy brochures and big numbers used by spruikers and question whose interest they are working for.
“I’ve been to a few seminars where they’re promising dreams, promising lifestyles, promising so many things that people feel are unattainable and they make it sound so easy and make the numbers look really good.
“I’ve walked out of seminars thinking I was going to buy an off-the plan unit in Brisbane before I had to stop and check myself and realise that I know better. The salesmanship really is incredible.
“It’s a matter of qualifying the motives behind the advice. Asking the questions about where they’re getting their fee from, is it coming from the investor who they’re meant to be acting for or is it coming from the developer?
“If it’s coming from the developer, then the question is who is the adviser working for? I have real problem with somebody coming to an investor supposedly as a trusted advisor for them but they’re being incentivised by somebody else.”
Do you have more than $120k in your super fund? You could use your super to buy property - Find out how