Whether it's a neighbour, a relative, a friend or a work colleague, we all know someone who has been burnt by a property scam. What can you do to protect yourself?
Whether it’s a neighbour, a relative, a friend or a work colleague, we all know someone who has been burnt by a property scam. What can you do to protect yourself?
We’ve all heard horror stories about intelligent, every day Australians who have somehow been sucked into a real estate scam that stripped them of every last penny.
“It’ll never happen to me,” we think optimistically. But the truth is, it can be difficult to distinguish the persuasive conmen from the qualified experts in the real estate industry – and even the most experienced investor can become a victim.
“Almost every day there is a story in the press or on the news about the property market, and our email inboxes are flooded with newsletters offering positively geared properties, never-to-be-repeated investment opportunities and gratuitous advice from experts who offer to take on a journey to wealth from property,” explains property researcher John Lindeman, author of Mastering the Australian Housing Market.
That’s why it’s important to be able to “recognise the doom and gloom merchants and the boom-time spruikers”, he says.
But precisely how do you do this?
“In property transactions, thousands of people – especially novice investors – make a simple and deadly mistake. They fail to do two simple things that could have saved them being ripped off,” explains property expert and consumer advocate, Neil Jenman.
“This is because they are eager to buy, because they believe, often rightly, that property is a good investment – but they are daunted by the buying process. To a novice, everything seems complicated. And so, when someone comes along and offers to ‘take care of everything’ the novices feel a huge sense of relief.”
Jenman’s first golden rule is easy: obtain an independent valuation.
“Get an independent valuation from a valuer who is not connected to the company selling the property,” he says.
“It astounds me that people who are spending hundreds of thousands of dollars can make the terrible mistake of not spending a few hundred dollars, getting what amounts to a veritable safety check of the property.”
A qualified valuer will be able to provide you with a valuation for less than $500. Not only will the valuation give you peace of mind, but if the property purchase is an investment, the expense is tax deductible.
Jenman’s second piece of advice is to seek the advice of an independent lawyer who also has no connection to the company selling the property.
“The good news is this,” he adds. “I have never seen anybody ripped off in a real estate investment if they have followed what I believe are these two golden rules.”