NO GUARANTEE, NO SIGNATURE!

14th June 2005

NO GUARANTEE, NO SIGNATURE!
Protect yourself from property rogues.

Almost every consumer product or service these days comes with a guarantee. A guarantee is a show of good faith by a company. It says to a consumer, "You can trust us. We stand by our promises."

Not only is it good business to offer a guarantee, it is often a statutory requirement. From used cars to food products, from clothing to washing powder, guarantees are everywhere.

Except when it comes to the property industry.

If you are buying or selling a home, if you are investing in your future, the salespeople in the property industry can tell you the most outrageous lies and, in most cases, get away with it.

Why is this so?

Well, the answer is a combination of everything from powerful lobbying (such as developers and their large political donations) to the fact that many state regulators are so close to real estate interest groups they are virtual bed-fellows. The end result is that property rogues are often more protected than property consumers.

Take four recent cases. And see how these consumers could have protected themselves.

A Sydney man agrees to buy an off-the-plan beach-front apartment. The views are easily worth the million-plus price tag. A year later, when he goes to inspect the completed apartment, he is horrified to see that an electricity sub-station has been erected in front of his balcony.

When he complains, he is told that the substation does not affect the quality of the apartment. The message is clear - we are a big company, you are a little consumer, step out of line and you'll need deep pockets to fight us.

A Melbourne woman attends a seminar held by a firm that proudly proclaims it is a member of the Real Estate Institute of Victoria (REIV).

Enzo Raimondo, spokesperson for the REIV, has repeatedly urged consumers to deal with REIV agents while, at the same time, criticising property spruikers who flog over-priced properties.

Feeling safe, the woman buys an investment property from the REIV agent. Two years later, she sells it and loses almost $100,000. Imagine how she feels today when she reads Mr Raimondo's comments about the ethics of REIV agents.

A young Queensland mother, pregnant with her second child, sees an advertisement about how easy it is to own her own home. Why pay rent? says the advertisement, when you can use our easy-vendor-finance-terms.

Little more than a year later, this mother is evicted from her "dream home" and forced to live in a garage with her children. She loses her deposit and all her payments. What about the promises of easy payments? Too bad, that's the law.

A woman in her mid-fifties is going through the trauma of a divorce. Her beloved family home has to be sold. An agent tells her it's worth "around $700,000". There are no bidders at the auction.

She is pressured to accept an offer of $600,000. Although it seems that the home is worth at least $650,000, her ex-husband wants to accept the low offer. The agent, of course, is siding with the ex-husband.

Today, the woman, who earns a paltry $300-a-week in a part-time job, is being threatened with legal action. Take the low offer and get out - or else.

Never mind the promises any of these people were made before they signed-up with rogue salespeople who are little more than smiling financial assassins. These consumers are among thousands who suffer from lack of guarantees in real estate.

So, what can consumers do to protect themselves?

It's really quite simple. When a salesperson - any salesperson from any company - makes you a promise that influences you to buy, tell the salespeople that you want a guarantee. If not, don't sign.

Before you sign anything, write down the main reasons why you are signing - and then tell the salesperson or the company that you want a guarantee. Trade your signature for a guarantee. It's a simple as that.

If you are buying an apartment off-the-plan because you want to enjoy beach views, get a guarantee that you will get uninterrupted beach views. If the company says, "We can't make such a guarantee," don't sign anything.

If an agent tells you that your home can be sold for $700,000, insist on a guarantee. If the home is not sold for the promised price, you need a guarantee that you do not have to pay the agent.

If an investment company offers you a "good investment", then get a guarantee that if the property turns out to be a dud, the directors of the company will be personally liable.

If Enzo Raimondo from the REIV believes his member agents are not involved in selling over-priced investments, then before you buy at a property seminar held by an REIV agent, ask Mr Raimondo if he will give you his personal guarantee. If not, why not?

Remember the rule - No guarantee, no signature.

Better to stand up for yourself in the beginning, before you sign anything, than to try to stand up after you have been knocked down because you didn't get a guarantee.

The next time a salesperson makes any promise to you, tell your lawyer to prepare a guarantee for the salesperson to sign.

Honest business people in any industry will gladly honour their words. The opposite applies to the rogues - when you ask them for a guarantee, they'll make all sorts of excuses. Don't fall for it.

If it's so good, where's the guarantee?

Remember the rule - No guarantee, then no signature.

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This Consumer Alert article was written by Neil Jenman, Author & Consumer advocate.


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