Property investors are being encouraged in a tutorial video to exploit the ‘seven Ds’ – which include targeting ‘deceased estates’, ‘divorcees’ and ‘dummies’ who don’t know the real value of their home.
The advice has “appalled” the country’s largest bank which is now reviewing its sponsorship of the organisation that distributed the video, Auckland Property Investors Association (APIA), and its national body.
The video by Auckland property tycoon Ron Hoy Fong titled How to make massive profit in today’s property market says ‘desperate’ homeowners forced to sell cheaply before banks step in are also prime targets.
So are cash-strapped families who’ve lost their homes in mortgagee sales, developers on the brink of bankruptcy and motivated sellers under pressure from looming ‘deadlines’.
“Some places are already a bargain,” says Fong in the promotional video for his Ronovationz company, which is being distributed free to APIA members.
“That’s simply because the vendor’s a dummy. He doesn’t know what it’s worth.”
But the tactics, which include working in packs to secure bargains and giving vendors fake names when making repeat offers, are under fire.
“We are appalled by the tactics advocated in the video and we will be reviewing our sponsorship of the Auckland Property Investors Association,” ANZ’s retail and banking business managing director Antonia Watson said last night.
“The advice goes against our ANZ values and the importance of ensuring fair outcomes for vendors and buyers.”
After watching extracts, Labour’s housing spokesman Phil Twyford said in his opinion the video was “a con man’s charter and how-to guide on exploitation and deception”.
“Auckland Property Investors Association needs to front up and say whether they endorse this material, and if they don’t, then they need to explain why the video is being circulated to its members.”
Fong denied exploiting people and blamed real estate agents for advertising properties with “motivated sellers”.
He said he encouraged people to “look for opportunities”.
In the video, Fong tells viewers success is making big money on property investment, even at the expense of grieving families and marriage breakups.
Looking for the seven Ds would help investors secure bargain prices and maximise returns.
Deceased estates and mortgagee sales could often be picked up cheaply. Divorcees’ properties were also a savvy investment option, Fong said.
“I’ve had cases in the past where husbands and wives have separated and for whatever [reason] one partner doesn’t want the other partner to make any money out of it. So they’ll sell it at whatever price they can just to pay the mortgage.”
He advises people to put in low ball offers – 20 per cent below what they’re willing to pay. If their original offer is knocked back, make another offer under a new name.
“If the vendor recognises your name then sure, change your name. Use a different one. Put your name back to front.”
Fong also encourages property investment groups to work in packs to drive down prices and secure bargains.
“The beauty of having a group like us is you can get all your mates to go put in lower offers to make your one sound good.”
The tactic had proved successful in an earlier purchase, he said.
“In fact that vendor did comment that he thinks he was set up but he didn’t know how. But no one is set up if they accept a price.”
An APIA member who received the video said she was appalled by its content and the tactics being employed.
“They’re just sharks going around looking for the seven Ds. These [investors] are being trained to deliberately go out and look for old people. People are likely to get ripped off.”
APIA president Andrew Bruce had not watched the videobut said the tactics were not condoned by the non profit organisation.
He planned to review the material and would withdraw the DVD if its contents were deemed offensive.
Responding to the criticisms, Fong – an APIA sponsor – admitted the wording was inappropriate and said he would consider dropping reference to the seven Ds.
But he denied taking advantage of people and blamed real estate agents for advertising properties with “motivated sellers” or “divorcees looking to sell up urgent”.
“We’re looking for opportunities but we’re not preying on people as such. We look for the advertisements but it’s not like we’re going through the death pages or divorce courts.”
Dummies referred to overseas investors who were not aware of market changes.
“They’re anyone who doesn’t know the value of their own home.”
Fong defended his advice to place low group offers, but only when sellers had unrealistic price expectations.
“We only do that in the situation where the guy wants to sell but he’s living in fairy land.
“I’m a JP and I’d never promote taking advantage of little old ladies or people who are on their death bed. I think that’s disgusting.”
Consumer Affairs Minister Jacqui Dean said she would be concerned if people were actively trying to deceive consumers.
Anyone who felt they’d been misled should contact the Commerce Commission.
The revelations follow last Saturday’s Weekend Herald story about sick Mangere pensioner Sarah Ewe, who sold her home to a no-commission house trading company without receiving advice from her family or lawyer.
The widowed great-grandmother’s family reached a confidential settlement with investor Peter Lee this week, overturning the sales contract and allowing her to keep her home.
Lee – a life member of Fong’s Ronovationz group – denies acting unethically.
Ron’s Top Tips
Look for the seven Ds
– Deceased estate – dead people don’t need property
– De bank (mortgagee sales) – can often be picked up cheaply
– Deadline – ‘motivated seller’ facing looming deadline to sell house
– Divorcee – Ex-partner selling home cheap to prevent former spouse making money
– Dummies – doesn’t know the true market value of their home
– Developers – may sell for below cost if facing bankruptcy
– Desperate – anyone desperate to sell their house before the bank steps in.
-NewstalkZB
