Investors boss says buyer tactics commonplace among property investors

Property investor Ron Hoy Fong, outside one of his properties on Gillies Ave in Epsom. Photo / Jason Oxenham

A property investors boss and magazine publisher says controversial buyer tactics like targeting deceased estates or homeowners with money troubles who need urgent sales are not new and have been used by investors "forever".

"Often the best deals are around mortgagee sales, deceased estates, people who got into financial difficulty and have to sell, and that's standard," said NZ Property Magazine publisher Philip Macalister.

Macalister, who is also president of the Rotorua Property Investors Association, told the Herald Auckland property tycoon Ron Hoy Fong was dumped this week as an advertiser, expert contributor and source.

It followed revelations in the Weekend Herald that Fong had coached investors to look for the "seven Ds" - including divorcees, developers facing bankruptcy, cash-strapped homeowners facing foreclosure and "dummies" who don't know the value of their home.

In a video titled: How to make massive profit in today's property market, distributed by the Auckland Property Investors Association (APIA), Fong also suggested working in packs to place multiple low-ball offers to drive down prices, or giving vendors false names.

The advice has sparked condemnation, with major sponsors labelling Fong's messages appalling and severing ties with APIA.

The Commerce Commission is now involved, and APIA has apologised and withdrawn the video from circulation.

New Zealand Property Investors Federation boss Andrew King has said his organisation did not condone Fong's advice and its members would never take advantage of vulnerable people.

Macalister said he also did not condone Fong's advice and had not heard of investors operating in packs.

He would never advise people to use false names but doubted Fong had encouraged this and felt his comments had probably been exaggerated.

"Ron is very experienced and actually pretty respected out there. I know he's feeling pretty gutted about what's happened."

However, some of the other "Ds" tactics around targeting properties that were likely to sell cheaply were "pretty standard stuff - it's not news".

"Property investors have been doing that forever. They're trying to find the best price to buy and often the people who have the most urgency to sell are the ones who are likely to sell for the lowest price."

Asked if that included "dummies", he said that was probably the wrong word.

"How he said it and what he meant, I'm not defending him but it may have got lost a little bit just the way he presented it.

"Markets are made up of willing buyers and willing sellers. If you can buy a share from someone who is selling it and they don't necessarily put the right price on it, you'd buy that I suggest."

Macalister said he had personally bought property in mortgagee sales.

"If someone's got themselves into financial difficulty and are forced to sell they will accept whatever price they think is acceptable.

"Because [the banks] want their money back you can't put your finger on the purchaser and say they're exploiting that situation."

Labour's consumer affairs spokesman Michael Wood said it was concerning that industry bodies were disassociating themselves from Fong due to reputational damage, "but are unwilling to condemn the practices that have actually been unearthed".

"To be clear, the video shows us evidence of people being coached to use false names and fake bids, to hunt in packs, and to seek out the most vulnerable people to employ these practices on.

"Labour condemns these practices without reservation and has initiated a Commerce Commission investigation to determine if they are illegal. It is astonishing that neither the Government, or key industry players will step forward and also condemn these practices."

Approached yesterday about Macalister's comments, King said the Fong episode had been "devastating" and he preferred not to comment.