does anybody know what sort of license you need to work as a property investment adviser, just to show people the advantages of property investment and get your kickback from the developer or real estate agent??
Property Investment Adviser
- Thread starter john.nakhala
- Start date
What your asking is how can you legally trick people into using a developer or real estate agent who you get kickbacks from?
At present there is no legislation to enforce. this is a submission in front of the federal government to legislate but as with other schemes is likely to take time to pass.
If it is a career path for you then you can still declare your interest in a property to potential buyers if you choose to..
If you are on the end of the deal then ask the person selling the property directly, what their interest is.
The Property Investment Professionals of Australia (PIPA) are lobbying to have this industry regulated.
The use of the term "kickback" says a lot
ta
rolf
ta
rolf
Why are some people always negative and think that others would just trick or cheat people???
I sense that you're legitimate, John, but I think perhaps the use of the word "kickback" probably set off some alarms.
In future, you may want to use "referral fee" or "commission", instead. The industry's reputation has been badly tarnished by the two-tier marketing schemes that proliferated on the Gold Coast in the late 90s/early noughties.
I think that you should either be:
1) Representing the purchaser - in which case, you are paid by the purchaser on a "fee for service" basis, making recommendations to them about the type of property that might be suited to their particular goals, how they should structure it, what kind of loan product might be most appropriate, etc.
OR
2) Receiving commissions from developers with whom you have links, for referring custom.
I have an ethical problem with advisers who do both. The receipt of a differing commission for the sale of property A vs property B, compromises the integrity of the advice. Somebody who only makes commissions from developers is not likely to recommend that somebody buy an established home, even if that home is more suited to the investor's circumstances.
Obviously buyers' agents can receive commissions from a broad range of properties and so shouldn't suffer from this conflict of interest, so I'm not putting all buyers' agents into this category.
The conflict of "providing advice in investors' best interests" and "receiving larger than usual commissions from selected developers" is my fundamental ethical problem with organisations such as The Investors Club.
its all about:
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
a common theme in the r/e industry.
I've got to agree with ozprop. Most groups who educate their clients then help them purchase properties are only educating them in the direction they want to go, then pushing them to make purchases with little consideration to what's in the best interest of the client.
I don't think I've ever met one of these groups who I'd be comfortable referring clients to.
I have no problem with buyers agents, assuming they are focusing on their clients needs.
I don't think I've ever met one of these groups who I'd be comfortable referring clients to.
I have no problem with buyers agents, assuming they are focusing on their clients needs.
let's not mince professions here..
A buyers agent represents the buyer and WOULD NEVER GET A COMMISSION / REBATE / KICKBACK from a developer or vendor.
What you are talking about is an ugly spawn of the selling / developing side of real estate.
Another good reason why BA's are so important.
A buyers agent represents the buyer and WOULD NEVER GET A COMMISSION / REBATE / KICKBACK from a developer or vendor.
What you are talking about is an ugly spawn of the selling / developing side of real estate.
Another good reason why BA's are so important.
Stu, forgive me if I've made an error... as I've only dealt with buyers' agents in the USA. In the USA, they generally split the commission that the vendor pays, with the vendor's agent. So if the seller pays $15K commission to sell your house, the vendor's agent gets $7.5K, and the buyer's agent gets $7.5K. If the buyer doesn't have a buyer's agent, the vendor's agent gets the whole $15K. This is a widespread practise, so having a buyer's agent has no impact on the pool of properties that the buyer's agent will consider, nor are they differentially renumerated depending on which property they recommend. I actually think this is a good thing!
But obviously, based on your reaction and my subsequent research, you operate on a fee-for-service basis and want to make it crystal clear that you do not receive any commission. So perhaps I've created an opportunity for you to educate us. Do you know if other buyers' agents in Australia also operate on a fee-for-service basis? Or do some accept a commission split, as is done in the USA?
I'm wondering if the problem with working on a commission split basis in Australia (in your view) is that perhaps not all Australian vendors' agents would accept this arrangement, and thus working on a commission split basis necessarily narrows the pool of properties that you can recommend. If that's the case, I agree that fee-for-service is certainly preferable, apologise for any misconception created, and I'm glad we've had the opportunity to clarify.
Oz,
I'm pretty sure that BA's in Australia work on a fee-for-service - at least that is the way it is in NSW where I operate. That fee can be either a flat fee (preferrable IMO) or a % of purchase price (the problem I have with this one is that there is a financial disincentive to negotiate the price downwards for your buyer client).
Cheers,
Ozperp, yes BA's in US negotiate their commission with the selling agent.
Here in Australia no way.
a) you wouldn't find a selling agent that would agree to it
b) it presents a grey area in terms of conflict of interest
While I think the U.S system has merits to it, the purchasers don't have to pay for the service (i.e mortgage broker) I think our system is a more clean cut way of doing things honestly
Here in Australia no way.
a) you wouldn't find a selling agent that would agree to it
b) it presents a grey area in terms of conflict of interest
While I think the U.S system has merits to it, the purchasers don't have to pay for the service (i.e mortgage broker) I think our system is a more clean cut way of doing things honestly
Stu, forgive me if I've made an error... But obviously, based on your reaction .... apologise for any misconception created..... and I'm glad we've had the opportunity to clarify.
Sorry Trace didn't mean to seem like I went Wacko Jacko on you
Just want to make sure everyone is clear
Yes, as a buyer I think the US system is marvellous, but as a vendor/vendor's agent, it doesn't seem so hot... How strange for the marketing agent to have to split their commission with somebody from "the other team", whose goals are exactly the opposite to yours. But there are many things about the US system that strike me as odd...
Nah, not at all, it's all good.Sorry Trace didn't mean to seem like I went Wacko Jacko on you
I sense that you're legitimate, John, but I think perhaps the use of the word "kickback" probably set off some alarms.
The industry's reputation has been badly tarnished by the two-tier marketing schemes that proliferated on the Gold Coast in the late 90s/early noughties.
I think that you should either be:
1) Representing the purchaser - in which case, you are paid by the purchaser on a "fee for service" basis, making recommendations to them about the type of property that might be suited to their particular goals, how they should structure it, what kind of loan product might be most appropriate, etc.
OR
2) Receiving commissions from developers with whom you have links, for referring custom.
I have an ethical problem with advisers who do both. The receipt of a differing commission for the sale of property A vs property B, compromises the integrity of the advice. Somebody who only makes commissions from developers is not likely to recommend that somebody buy an established home, even if that home is more suited to the investor's circumstances.
Obviously buyers' agents can receive commissions from a broad range of properties and so shouldn't suffer from this conflict of interest, so I'm not putting all buyers' agents into this category.
The conflict of "providing advice in investors' best interests" and "receiving larger than usual commissions from selected developers" is my fundamental ethical problem with organisations such as The Investors Club.
Thank you ozperp. I did not know that the word kickback is so bad. I meant legitimate commission or referral fee.
Hi Alan, Tracey, John et al
When I first set up my buyers agency I did a lot of research into how the US system operates and Tracey is right, in that there exists a body of BA's in the US who work on split commissions with vendor agents. However, they are obviously limited to those vendor agents who do split (and their listings), and not all do, hence the "other side" of the industry ie: truly independent BA's who charge buyers a fee and cover the entire market.
The Australian system is made up of the latter, and to date, though I've been "offered" enticements by various REA's (who shall remain nameless) to "direct" my buyers towards their stock, I haven't come across one selling agency where they practise the US system of commission splits here.
The trouble with this method here in Oz is fairly obvious: as a selling agent, if you had two identical buyers offering the same amount, what incentive is there to sell to the buyer using a BA when the commission is going to be half?
Like Alan, we operate on a fee for service system. After all, there's as much work involved searching for a cheap property as there is for an expensive one. Obviously some properties require more time and work than others, as do areas, hence the need to quote individually on a case by case basis. The large majority of my clients, however, end up paying my base fee or just over, as advertised on my site.
As for referral fees and commissions received from other parties these have to be disclosed to the purchaser in writing on the BA agency agreement, as per PSBAA requirements here in NSW. Failure to do so can result in loss of licence, fines and other penalties.
When I first set up my buyers agency I did a lot of research into how the US system operates and Tracey is right, in that there exists a body of BA's in the US who work on split commissions with vendor agents. However, they are obviously limited to those vendor agents who do split (and their listings), and not all do, hence the "other side" of the industry ie: truly independent BA's who charge buyers a fee and cover the entire market.
The Australian system is made up of the latter, and to date, though I've been "offered" enticements by various REA's (who shall remain nameless) to "direct" my buyers towards their stock, I haven't come across one selling agency where they practise the US system of commission splits here.
The trouble with this method here in Oz is fairly obvious: as a selling agent, if you had two identical buyers offering the same amount, what incentive is there to sell to the buyer using a BA when the commission is going to be half?
Like Alan, we operate on a fee for service system. After all, there's as much work involved searching for a cheap property as there is for an expensive one. Obviously some properties require more time and work than others, as do areas, hence the need to quote individually on a case by case basis. The large majority of my clients, however, end up paying my base fee or just over, as advertised on my site.
As for referral fees and commissions received from other parties these have to be disclosed to the purchaser in writing on the BA agency agreement, as per PSBAA requirements here in NSW. Failure to do so can result in loss of licence, fines and other penalties.
