Big incentives for property advisers
Massive commissions, special cash incentives, volume-linked bonuses and other lucrative perks are being offered by developers to unauthorised and unqualified financial and property advisers for recommending their projects, according to a report in the Sydney Morning Herald.
Cash payments of $40,000 are routinely made to advisers for recommending apartments, typically to self-managed super fund investors seeking to bolster their retirement income.
Investors are being offered astonishing double-digit returns, guaranteed tenancies, regular rental income and perks, such as “free” furniture, in a bid to invest in off-the-plan developments.
“Property experts” and “financial advisers”, which anyone can call themselves without qualification or registration, are typically offered between 6 per cent and 10 per cent of the sales price as commission. There are additional perks and payments, such as extra bonus commissions, for additional sales, the Sydney Morning Herald report says.
Those seeking financial advice should deal with a certified financial planner, which means they are authorised, qualified and have professional indemnity insurance. The companies and advisers are able to sidestep traditional investor protections because property is not considered a financial product, which means it can often be marketed without any worries about commission disclosure or best-interest duties.
Developers of a high rise in Brisbane are reportedly offering advisers 6 per cent commission plus free furniture valued at $15,000 for the first five sales. Another Brisbane apartment complex is offering 6 per cent commission to the seller and provides a sales tutorial on how to convince potential buyers they will return more than 20 per cent a year.
The Real Estate Institute of Queensland’s recommended commission payment is 2.5 per cent.
There is no suggestion the offers are unlawful, or that there is an intention to mislead investors, the Sydney Morning Herald report says.
