Disrupting the spruiker market

Discussion in 'Innovative Property Investment Techniques' started by newbie2018, 18th Jan, 2019.

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  1. newbie2018

    newbie2018 New Member

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    Hi All,

    I'm after a bit of feedback on a platform i'm currently building.

    Last year I was about to purchase a property through a spruiker. I found out there was a $40,000 commission in it and i pulled out completely. I mean, why should i pay someone 40k for when i buy a $420,000 home?

    As a software developer with a bit of free time. I decided to build a platform that brings some transparency to this industry and to disrupt this $4.85b residential construction commissions market. Where commissions can be more than 10% of the property value.

    Essentially the goal is to return the commission back to the buyer, making the home 10% more affordable. In my case, the property would then be priced at $380,000.

    Would love to connect and have a conversation with people more experienced than me so i can build the tech around your thoughts or suggestions. Good and bad welcome!

    Cheers, Jake
     
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  2. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Who would want to buy property where values are affected by Comms ? A platform that gives desktop values would make it more transparent. Maybe. The way spruikers work is to get your signature and stop you learning what its true value is. There are many ways they do this. Deposits using existing equity is one way (no valuation needed !!) Then only a loan at 80% v's the property so the lowball val still gets past.

    Trying to get a cut means its still overpriced. Who says it was $40K and not $58K ? And the bigger the development the bigger the problem. A map in red would be best.

    Its like buying in the Opal building at Homebush. A quick Google search will confirm its value is compromised and no lender will even touch it. Only sellers, no buyers. If an engineer cant determine the fix yet - the valuation is too high. .
     
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  3. Trainee

    Trainee Well-Known Member

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    Dont see how this works. The reason developers are willing to pay that much to a spuiker is that the price is inflated and vals get masked by cross coll.

    What would your platform offer developers to do the same deal with you? Where are your buyers coming from? You dont have the traffic. Without all the incentives, the developer might as well list on the major websites or agents.

    Your mistake is thinking the commission is the only thing happening. Everyone is in on it.
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    legal issues too as this is essentially a rebate.
    lenders will be effected too, they will only lend on purchase price less the rebate.
    stamp duty will be higher.

    easier to just reduce the price by the commission amount.
     
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  5. BuyersAgent

    BuyersAgent Well-Known Member Business Member

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  6. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Spruiker ads
     
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  7. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    Have you found out why developers pay such a fat commission to agents as against directly advertising it on realestate/domain sites?

    What would your app do which established site do not?
     
  8. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    A click through ad wont have much if any result to a sale or have influence. However developers tend to cultivate others who can lead generate. eg Accountants, brokers, lawyers, BAs, and even REAs etc. They can assist to sell the proposal to the client. And they often have their own loyal client database so it expands their reach exponentially by tapping into a broader pool of qualified leads. If any of then are conflicted then its even harder to get the buyer to stop and think. People, trust them. Its why spruikers fill the room with "experts"

    A REA will charge for a full blown building marketing campaign incl OTP presales and then final sales. So the developer is just choosing different paths. Some will even employ staff to handle direct sales. Its when the path becomes conflicted that the problems occur. There are many people who will happily market a dud in return for the fee. And the present state of the market means it probably going to get worse.

    Many places market investor opportunities and specifically seek newbs with existing equity in their home. They prey off the vulnerable as they are generally naive and sell them over valued property and often mis-educate them about positives like neg gearing etc and dont dwell on the acts like cashflows or LVRs by disguising what they sell. And its always a rush to get the sale so they are excluded from seeking a second opinion. The reason they chase those with equity is because - They have cashflow, more likely have higher disposable income AND can bypass a 80% val issue by borrowing against other property for the maximum tax benefit. Every positive has a weakness.

    One of the best tools a potential buyer can get is an independent valuation and second opinion before they sign. This is often an independent mortgage broker or others total independent of the process eg tax advice.

    You cant put brains into a statue