A property spruiker can be sometimes hard to identify but utilise savvy sales tactics to sell property to novice investors. But what is a property Spruiker? A property spruiker is an individual who acts as a so-called “expert” in property in order to manipulate other people. These use seminars or offer free services to sell their secret wealth creation tactics. In doing so they typically profit from products they recommend to investors. In most cases, the properties on offer are lemons and don’t serve as fruitful investment properties. So, it is extremely important to be able to identify and avoid these types of people.
Who are they?
Within any financial industry, there are so-called “experts” who utilise savvy sales tactics to engage uneducated investors. Within property, these people are commonly referred to as property spruikers. In most cases, these people come across as knowledgeable and use compelling pitches in order to have novice investor use their services. Spruikers can pray on the uneducated and aid in purchasing poor-performing assets. They pose as successful investors who always have some kind of hidden agenda. Unfortunately, many times investors don’t realise they have been taken advantage of until after they have already dealt with a spruiker.
Why should I avoid them?
When dealing with a spruiker their goal is to take advantage of you as an investor. Spruikers target individuals who aren’t equipped with the knowledge to detect their lies. Spruikers help sell high supply, poor-quality investments to investors. In doing so, they reap the reward of selling these products whilst the investor is left with an underlying poor-performing asset. This is detrimental to the investor’s goals which hinder their financial progression.
How do identify them?
In order to identify a spruiker, an investor needs to be aware of their selling tactics. If you come across an individual suggesting they have “secrets to wealth creation” or a limited supply of investment-grade properties they are probably lying. Anytime, someone already has property for you before you explain your goals and circumstances should be a red flag. A quality investment property can only be found before understanding your circumstances. If they offer properties without knowing your circumstances they are doing you a disservice.
In order to spot a spruiker, there are a few things to look out for. Generally, they offer “free” advice and reel investors in with this pitch. They then emphasis the numerous tax depreciation benefits to a property and how they have built a close-knit circle where they can only access these “premium” investment properties. This is a scam in order to sell new properties with low demand to uneducated investors. An investor should take all information with a grain of salt. Understanding the credibility of the education source will distinguish between recitable experts within property and property spruikers.
What do they typically sell?
Spruikers typically sell new and off-the-plan properties. Why? Because these spruikers are usually developers or have a business relationship with developers. This way they can sell their product to as many investors as possible and reap the rewards. But why are developments and new property bad? Check out my article comparing new vs old properties, though to summarise:
- New properties have excessive premiums on them (construction cost, builders profits).
- New property is inherently depreciating focused, the opposite of appreciating (what investors target) Why? Because the dwelling of a property is depreciating, the land is what appreciates.
Who should I trust?
An investor should be extremely cautious with who they trust in any financial industry. That is because investment advice can be extremely influential on your financial journey. If you are building a property team you want people that are credible and trustworthy. You will have to decipher who these people are but not what to look out for which indicate red flags. Avoid property spruikers who identify as experts and sell assets to easily deceived investors for their own financial incentives.
If you are looking to find someone to help you purchase property, consider using a credible buyer’s agent. These individuals should have a track record of purchasing investments for themselves and their clients.
Unfortunately within most industries, there are people who attempt to take advantage of others. Property Spruiker’s aim to do this through their sales tactics and deception to uneducated investors. Hopefully, by understanding their tactics you can avoid dealing with these individuals whilst making better-informed investment decisions.