Recently, with property on the move again, there has been more discussion than ever around the activities of property spruikers. This week on Australian Broker TV we speak to Ben Kingsley of PIPA who urges caution but maintains that investors should not be put off.
Video transcript below:
Anna Temple, Australian Broker TV
Anna Temple: Recently with property on the move again discussion around the activities of properties brokers is on the rise. Ben Kingsley of Property Investment Professionals of Australia just cautions, maintains the investors should not be put off engaging with a legitimate broker.
Ben Kingsley, Property Investment Professionals of Australia (PIPA)
Ben Kingsley: There is definitely, with lower interest rates, there is this real sense that property is on the move and when property is on the move, brokers start to turn out again and they start to ramp up their promotional activities and the classics broker is this broker who has an event that people turn up to. So it’s usually a free event and as part of the spruiking work that they do, effectively they are trying to get a sale. So it’s very much a sales driven event, there may a lot of hype, there may be some quotation around some expediential returns and people have made lots and lots of money and then there is an act now component to it.
Now the difference between that and a professional company who also should have the right to get out there and sell their wares is that they should be giving good educational content. They are not necessarily over quoting or overstating returns, the information should be balanced and there is not necessarily a real need to act now, you know to take advantage of those opportunities. And I think that’s the difference between professional advisors and people who are spruiking basically.
Anna Temple: So how can one spot a spruiker? Kingsley says a few simple checks will easily expose them.
Ben Kingsley: You know, do they hold a formal qualification in the advice that they are giving. So financial planners are licensed, mortgage brokers are licensed, accountants are licensed to give tax advice. Again this property space is open to unregulated practices, so when you are talking to someone, “are they formally educated in the advice they are giving?” So if they are giving property investment advice, do they have a qualification to do that, such as a qualified property investment advisor qualification. Just be mindful to ask them full disclosure, “how are you getting paid?” “Is there any other commissions or overruns or bonuses or soft dollar commissions that you are going to get?” And certainly members of PIPA, Property Investment Professionals of Australia, they must, they must disclose those commissions whether they are being promoting off a stock list or whether they are actually independent advice or a fee for service advice.
Anna Temple: Kingsley also believes that it is the role of agencies, such as PIPA to ensure a code of conduct is upheld by brokers in an otherwise unregulated space.
Ben Kingsley: With PIPA what we try and do is, we are an association that allows all the different specialist skills, such as mortgage broking, such as property investment advisors, buyer’s agents, property managers, all of those people to come into one association who really do specialise in helping people invest in property. So for consumers obviously there is real risk in terms of it’s an unregulated industry. Now being unregulated the likes of spruikers can operate and it’s a very very high net worth transaction. So we are basically saying really big transaction values, high dollar value transactions and that’s attracting people who think that they can make a quick dollar by being unregulated. Now we have seen what’s happened with the NCCP regulations for brokers. It’s really improved the professionalism of the industry and we are also saying to our members, if those people want to join PIPA, the brokers want to join PIPA, they work under a code of conduct.
Anna Temple: This is Anna Temple reporting for Australian Broker TV.