Remember the children’s story about the wolf in sheep’s clothing? Just like the wolf in that story, you’ll find that real estate agents and property investment advisers are often not what they seem. If you’re the buyer, beware!

The agent’s loyalties lie with their employer
When dealing with real estate, if you’re working with an agent you didn’t employ then don’t expect any loyalty. The harsh truth is that a real estate sales person will do everything they can to wring every cent from you. Or worse, they will play you off against another competing buyer in an attempt to increase the result for their employer – the vendor.

Is your property investment advisor working for you?
The property investment adviser may claim to be acting in your best interest. They may even seem similar to a buyer’s advocate. Yet they are a far cry from acting to protect your best interests.

Look for the income and find the loyalty
The easiest way to tell if your adviser is going to look after your best interest is to establish where they get their income. As with any service provider, you’re safe as long as they have their morals intact. However you can still engage the services of a professional and be duped. If the adviser is being paid by a developer to convince you to buy their stock you should fake a heart attack, call 000 and get out of there immediately.

The role of buyer’s advocate
The role of a buyer’s advocate is to help you make a property purchase according to your brief and budget. The buyer’s advocate should be objective, well researched and acting to protect your best interests at all times. They won’t try to convince you to pay more when they run out of funds in a negotiation. They should advise you when to walk away from a transaction.

wolf-in-sheeps-clothing

Scenarios to help you sort the wolf from the shepherd
Scenario 1: The irresistible deal
A property investment adviser – depending how they’re paid and by whom – may actually be a real estate sales person in disguise. Another kind of wolf in sheep’s clothing.
Imagine you’re being advised to buy a thoroughly researched off the plan property. It has been hand selected through their research house and you are in a privileged position to be able to purchase. Throw in some urgency with ‘there are only a few left so you need to act fast’.
This kind of sell often means that your adviser is actually a real estate sales person who is part of a marketing company or estate agency, working for a developer. They will be well incentivised with a hefty commission built in to the price of the property.
Seems too good to be true? It probably is
An insight I’m happy to share with you here is that any newer property introduced to you by a property investment adviser is highly unlikely to live up to the predicted statistics on growth and return used to convince you to purchase. You’ll find the purchase price is often heavily inflated by developer margins, making for low returns – in short, a bad investment for you!
What would a buyer’s advocate do?
Most knowledgeable buyer’s advocates won’t ask you to buy an off the plan property. A buyer’s advocate is working in your interests and will only recommend you invest in property they would be happy to invest in themselves.

 
Scenario 2: The seminar
If your adviser invites you to a seminar to promote the pros of buying a turnkey house and land package in an outer suburb of Melbourne where there is no public transport, they are probably not a buyer’s advocate! Usually one of the seminar attendees has been vulnerable enough to buy from them and will stand up and provide a testimonial for the adviser. This often happens soon after they buy but well before they realise two to three years down the track the property has not grown in value.

 
Scenario 3: the trusted referral partners who have something to gain
There is absolutely nothing wrong with a good reference – but beware the referral from a financial planner, mortgage broker or an accountant who advises you to buy an investment property then refers you to a property investment adviser.
Be particularly wary if the property investment adviser then promotes off the plan property or house and land packages. In this scenario, you can be sure you are not working with an adviser who has your best interests at heart. Before taking this kind of referral advice, make sure your referrers are not receiving kickbacks from the property investment adviser.

 
Scenario 4: no research, no hassle, easy finance
It’s easy to be convinced to purchase a property through a property investment adviser particularly when they make it so easy and convenient to buy.
It will all sound so easy. You don’t have to give up your weekends for six to twelve months working out what and where to buy and how much to pay. All the research has been done for you by your trusted property adviser. You don’t even have to think. ‘Just press hard on the pen and we will give you a copy’.
Special finance arrangements remove the hassles of applying through the bank for finance. Finance through the banks for this kind of property is harder simply because banks know off the plan property is a risky debt to hold in the case of a foreclosure.
These deals often only require a 5% deposit until the property is completed in two years’ time. You’re told that by then it should have had compound growth of at least 7% per annum. This never happens.
Investors who buy these properties are seduced by the ease and convenience of the purchase. They want to buy something and they know once they sign they don’t have to do a thing for two years until settlement when that promised pot of gold at the end of the rainbow lands in their lap.

 
What would a buyer’s advocate do?
If property buyers actually knew how poorly these properties were going to perform for them as investments, they would not go near them. A buyer’s advocate would be able to give this advice quickly, so no time was wasted with the silver tongued promises of advisers who simply don’t care about their buyers’ needs.

 
A buyer’s advocate is in this for the long haul
It is through meeting so many buyers over the past eleven years that we understand how damaging an off-the-plan purchase can be. The lost opportunity can be devastating to the purchaser’s long term financial plans and wealth.
One thing we can guarantee is the property investment adviser will not be around in five years’ time to call and advise how much the property you bought through them is worth. They just don’t care. At IBP, we will be there to have that conversation.

 
Advice tailored for you
The principle difference between a true buyer’s advocate and a property investment adviser is the buyers advocate will tell you if there is a better opportunity out there for you.
A buyer’s advocate independently completes all the searching and research for you according to your brief and budget. We continue to advise you of other suitable buying opportunities according your brief and budget even if we are currently engaged in a negotiation or waiting to attend another auction. The more property we show you, the more choices we recommend and the more information we provide, the more informed and empowered you are as our client to be in the best position to make a wise investment property decision based on sound advice and principles. A buyer’s advocate will compete for you for property while you are doing what you like to do on weekends. A buyer’s advocate will use their network of resources and contacts to find property worthy of competing for, away from the competition of the auction scene.

 
We’ll shepherd you through the purchase of a property that’s right for you
IPB has been buying property for clients as a trusted buyer’s advocate for more than 11 years. We offer clients a free no obligation meeting to discuss the pros and cons of buying various types of properties for investment. Call us to discuss your next home or investment property purchase.

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If you would like to engage us to buy a home, an investment or to manage a property,
or learn more about our services, we’re ready to hear from you.

1300 472 289

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