Types of Property Spruikers

Previously, I talked about the definition of a property spruiker and why we must avoid them entirely.

A quick recap is property spruikers usually use excessive manipulation on the audience during a seminar or face-to-face meeting in order to advertise or sell a particular property.

They typically share inspirational success stories or paint a negative picture to illustrate what will happen if you do not take immediate action.

In most situations, their approach to increasing their sales volume works exceptionally well as they play with our emotions and offer incentives and discounts to entice us to take action on the spot.

Most of the workshops or property seminars I tend to visit often have the same sales pitch and sadly, many fall into their trap.

Today, I would like to drill down the different types of property spruikers available in the market and talk more about their techniques.

The Wealthy Presenter

It always starts with the wealthy presenter who claims he made his money from the industry. However, most of them made their fortune by selling properties, organising expensive educations program, or by establishing property development companies to increase their profits. Most did not make their fortune or accelerate their portfolio by buying high equity risk off the plan apartments.

All of these companies have a particular system that works for them. Some focus on tax and negative gearing as the best way to become wealthy while others, in 2014, focus on the NRAS incentive to create a positive cash property.

If you check closely, not even one of these experts or multi-millionaires created 20 to 60 million dollars in equity by purchasing new properties from a developer or properties that are losing money, with the low valuation or with extreme oversupply as their first investments. This fact should be a red flag and you should wonder why is the person promoting this strategy if he made his millions with a different one.

The Marketer

The marketers or the research experts also have a unique story of how they made their millions, but we tend to give them more credit as their approach often comes with some facts.

Unlike the wealthy presenter, the marketers usually have a sales pitch that is more about how to navigate you to buy a property from their allocated stock.

Most of the events I went to spend more than 30 to 45 minutes on first home buyers and people that have zero knowledge about the industry. The presenter then takes them through the process of building a successful portfolio and wealth creation with little facts. After their inspirational talks, they navigate the audience to invest in affordable locations.

A typical scenario is we usually see some general slides comparing the median price in capital cities, with Sydney being too high and Ipswich being the most affordable. The marketers then talk about the infrastructure spending in that location, the enormous GDP and the high rental yield.

Seasoned investors would know that 5% is only gross rental yield. With operation costs and net returns, the actual yield will only be about 2%, which is very low.

After presenting all their facts, they would claim that despite Sydney being extremely expensive to invest in, they have properties to offer to go for $400,000. The properties are brand new, with sound design, tax advantage, and located close to amenities and the CBD.

If the idea of owning a property in Sydney with all the works do not get the audience excited, they continue by sharing more facts such as population growth, more jobs, airport runway duplication and future train network. The facts are true, however, the way they are presented do not fully paint the entire picture and can be misleading at times.

Once the excitement has reached its peak, they would say now is the best time to invest. Out of the 30 to 40 projects that developers presented to them, they chose to narrow down to this particular 4-bed brand new home due to its sophisticated design, superior quality, reliable developer, and remarkably low price of only $360,000. On top of the price being below the median price, they even offer a rental guarantee for six months if you consider to buy it within this month as they only have 11 lots left.

Driven by emotions and such facts, when an inexperienced audience hears this pitch, they would be very keen and ready to make their worse investment mistake.

Sales Consultant

Sales consultants merely copy the same facts and information from the marketers and convince the client to buy immediately. These are the typical property spruikers you would come across with at property events and functions.

In a regular company, these three types of property spruikers could be the CEO or the managing director, the marketer or the research manager, and the sales consultant or property consultant.

From the CEO, you are given a perfect image of the credibility and success of the company. Your confidence in the company and potential investments are then further enhanced with facts presented by the marketer. The sales consultant then establishes a strong relationship with you so you may be driven to invest with him.

Whether you realise it or not, by the end of the day, their common goal is mainly to sell their properties.

Now there are good developments, good investments and reliable sales consultants, but it is hard to distinguish the good from the bad.

To make sure you are able to safeguard your investments and make wise investment decisions, I strongly recommended taking up independent advice and risk management.