Dangers in Property Acquisition

SECTION 1

DEALING WITH DEVELOPERS

An unholy alliance can exist when dealing with those selling product off the plan.

Alliances involving Agents, Financiers, Financial Advisors, Solicitors and the Developer may involve the suppression (cover up) of critical information which may influence the buyers’ decision to purchase.

Major areas of concern include:

a)      Non disclosure of large commissions paid to agents and or advisers involved in presenting the property to you.

Don’t assume they must tell you what they receive.

They may disclose some income but marketers can manipulate the way they receive their revenue using ‘smoke and mirrors’.

Recommended approach:

  • Have all parties sign disclosures stipulating all revenue and or benefits to be received now or at a later date.
  • Have all ‘Vested Interests’ disclosed in writing.
  • Check all advisors have Professional Indemnity Insurance to cover the advice to purchase the property in case of misrepresentation.
  • Ask for a copy of the financial agreements between the agent or advisors and developers.

b)     Developers, Agents, Solicitors and/or Financial Advisors offering finance services.

When borrowing money, the financial institution will not generally disclose the valuation of the property you are purchasing.

If you are offering you home, cash or other property to secure the purchase on top of the property you are purchasing and enough security exists without mortgage insurance, you may not find out that the valuation of the property you are purchasing is less than the price you are paying.

Recommended approach:

  • Get an independent valuer to value the property you are purchasing. Don’t count on recent sales figures provided by the sales person. Remember it doesn’t mean other buyers did the right thing!
  • Get a qualified independent lending officer to provide a comparison, doing an independent valuation for you (you should push for this free of charge).

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