A lot of investors have lost a lot of money or been stuck/ unable to escape from 'those waves'. In order to avoid the tricks that can make you lose all the capital saved in many years, it is necessary to stay alert as well as analyze the situation thoroughly before making decisions on investment. Here below are some remarkable fake real estate “waves” to push up the prices that you need to notice!
1. Establish fake price benchmark
2. Create fake demand
3. Create fake scarcity
4. Herd campaign
5. Fake information
6. Fake official
7. Joint investment
8. Commitment to sublease at high profit rate
I / Set up a fake price benchmark
The rising price of an Iphone X or a Toyota Fortuner car in one store does not lead to the increase in price for all Iphone X or Toyota Fortuner; but unlike many other industry, the increasing price in a land lot or a house / an apartment in an area may lead to a new price benchmark for the whole area. Due to this characteristic of the real estate market, many brokers or sellers have launched games creating transactions to evaluate a few houses/ real estates and establish the price benchmark for the whole area. Then use the follow-up moves to get buyer on the 'ring'.
II / Create fake demand
Once the price benchmark has been established, broker or seller uses their network to create unreal demands. From the time you do not notice to the time you decide to spend time surveying the real estate, you are always netted in the mess of information about the demands and purchase transactions. It is super difficult to verify these kinds of information.
III / Create fake scarcity
When buyer tends to believe the information about price and demand told by the seller, seller will create scarcity information, for example: “there are only 2 lots or 2 houses left, but there are many people who want to make deposits. I just keep it for you because I like you, it will be sold tomorrow if you don’t decide now!”
Many big real estate companies in Vietnam frequently use this trick: offering sales multiple times, limiting the quantity of supply each time to create scarcity and competition among investors. After that, the images of this launch’s success are used for other launches.
IV / Herd campaign
Sellers often organize survey tours with both real and fake buyers to create crowds manipulating the real buyers. It is very difficult to escape from the crowd psychology when sitting next to many people talking about attractive profits and their forecasts when investing in the real estate. Beside this technique, another trick is publicly leaking fake information on price, demand, and scarcity ....
V / Fake information
Including fake information about product and planning. In order for a real estate product to be legally traded, that real estate must meet the strict legal requirements of the Government. However, seller takes advantage of the lack of understanding and temptation for "huge profit" of buyer and provides inaccurate and incomplete information about the product. Plannings are also exaggerated to be a dreamy outlook of the project area. In reality, there are so many unrelated elements to make an area become busy and crowded. Many areas were motivated by this way decades ago but still as quiet as ghost city, and many investors have been trapped there.
VI / Fake official
If buyer is still hesitant to make their decision, seller can recommend them to meet the 'state agency representative' for further confirmation to build their trust. This fake official will tell all good things about this real estate.
VII / Joint investment
“I have a friend who wants to buy this lot, too. He is able to spend 2 billions on this lot. If you don't take the entire lot, do you want to contribute 2 billions and buy it together?” Seeing someone willing to buy the lot at that price and share the risk with you, what do you think at that time?
(Investors on demonstration against a developer)
VIII / Commitment to sublease at high profit rate
Most of Vietnamese individual investors think this way: instead of saving money in the bank, investing in real estate for future value increase is always the 1st priority. If that investment brings a stable income each month to their life and help to build up their accumulation, the case will be more attractive. The project developers understand this demand so they create all the supporting information to sell their real estate products at very high price together with a commitment to sublease at a very high profit rate too (sometimes up to more than 15% per year, while the highest average income from renting an apartment in Ho Chi Minh City or in Hanoi is in the range of 3-5% of the value of the apartment - not deducting/ including bank interest and operation expenses).
And so far, people have witnessed many cases where the project developers / sellers failed to pay committed profits or failed to hand over the house or ownership papers.
Ho Thanh Bon
(Translated by Xuan Thanh)
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