Sorry, the bad news is that mis-selling happens all the time.

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by Chris Mansfield · 2 comments

And surprisingly, that mis-selling isn’t only from the
less-than-honest salesmen….

Actually, many otherwise fairly good sales people mis-sell,
and they do it mostly through naivety and plausible

How can that be? Find out in this post.

The Commission only hazard

Hilary Devey on Dragon’s Den said something great
in an episode where a commission only, American
style, estate agency was being pitched.

She had expressed concerns over the perils of
working with a commission only sales force.

“But with regulation and training those problems
can be easily overcome” the eager pitchers counter

An entirely unconvinced Hilary uttered
“having known the ‘beast’ for over 20 years,
despite regulations and training, that ‘beast’
doesn’t change. When that beast is hungry and
it wants feeding that ‘beast’ finds a way.”

Now consider this, the vast majority of people
who sell overseas property work on commission
only in an unregulated sector. These two elements
can and do combine together to create the perfect storn.

No wonder then that overseas property investment sales
staff and companies have such an awful
reputation, often rightly deserved.

What’s more is that, in most cases, the training is only
provided by the developer/property vendor, and not through
any kind of an independent organisation.

Now I’m not suggesting that all salesforces are made up of
ruthless “unscruples” who will do anything to earn a
commission, but I find that people’s perceptions are that
there are lots of conmen out there just trying to con you,
well that’s not quite the case.

What I’m saying is that…

Often the salesmen don’t know any better
themselves and are naturally commission hungry.

The biggest problem by a long way is mis-selling
instigated and driven directly by the developers/vendors

This was even a problem with regulated financial

The great endowment problems that
were created by a lot of in-experienced
salesmen who were working for totally reputable

I would suggest the vast majority largely believed in what
they were selling,and I don’t believe there was a
large number of financial advisors setting out with the
intent of misleading their customers.

They believed that the endowments were going
to work, and they were trained in a way of selling
the endowments by pointing out all the positives.

They perhaps were naive, they didn’t consider
the rates that were being projected and question
whether or not those rates were sustainable.
Because of that they weren’t in a position to
warn the potential investor of the consequences nor
advise them of the options available should the
worst happen.

That is effectively what happened, when endowments
were being sold by the bucket load in 1988 with
projected rates in the region of 13% or 14%
return per annum which was just blatantly unsustainable.

Of course if the investors had been warned that they
would have to put more money into it in the event
that these rates fell, then they may have elected
not to do it or at least they would have been
completely aware of the risks going forward.

At least there was regulation, so when the
endowments started to go wrong the investor was
protected by the Financial Ombudsman, should it have been
deemed that the endowment had been mis-sold.

With the overseas property investment market
being unregulated there is no automatic
back up to help a client if they are missold to nor
can there be any kind of meaningful self appointed

Therefore with large numbers of unethical people
selling non-regulated products, and some taking
full advantage of the fact that its unregulated,
there have been some cases where the consequences
have been catastrophic!

Very often they say what they’re told to say, and
they believe what they want to believe and
because of that they come across as
authoritative and convincing.

So we need to ask questions of the salesmen:

What are your background, experience and

Because the person selling to you is only
selling in a non regulated world, they don’t
need to have any qualifications or experience.
As such they can go out to potential investors to
talk about properties using only the information
that the provider has given them and use the methods
by which they’ve been trained.

If you question them as to their
background and knowledge of the world of
finance and property development it is only
then that you’ll discover if it’s little or nothing
prior to this development, or developer, the
training course was only a few weeks ago and they have no
kind of financial experience whatsoever.

Are you constantly being put under pressure?

This could be a good indication of the desperation
of the salesman and or the high levels of commission
at stake.

Is the investment continually dressed up to look
like it’s the perfect investment for you?

No matter what your objection, the salesman always
has the perfect answer.

Has the salesman established your risk profile and
does the product he’s recommending match it?

Be very wary of guarantees, often repeated and in
bold print. As Benjamin Franklin famously said,
“….but in the world nothing can be said to be
certain except death and taxes”

In summary then, not all salesmen are pushy, unethical,
misleading and commission hungry, fortunately there
are a number of honest forthright salespeople who
are knowledgeable, experienced and truly offer great
investments overseas. The trick is to know which is
which and I hope this article has gone some way towards
helping you understand how to identify them, the
questions to ask, what to look for in the answers
and to closely scrutinise the product being recommended
for yourself.

I’d now like to open a forum on the subject so please
let me know what your personal experiences have been,
both good and bad, and let me have any questions you
may have resulting from the article above.

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{ 2 comments… read them below or add one }

Paul January 27, 2012 at 9:40 am

A good article certainly ‘on the money’ regarding the concerns towards sales people and their pitches. I look forward to future postings..


Chris Mansfield January 27, 2012 at 10:23 am

Hi Paul,

I’m really pleased to hear your feedback.

I certainly have a lot of content on the way which I hope you will like as well.

If you have any specific areas you would like more information on or feel would be useful to others than please do let me know.

Kind Regards,



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