"A lot of developers are really struggling to sell apartments that have been built," Antic says. "That means they are honing in on local buyers," she says.

Spring campaign

These deals come as the property market counts down the final two weeks to the most critical spring sales campaign since the property boom started about seven years ago.

Clearance rates and price rises in recent weeks have drawn strength from the latest interest rate cuts to return to boom-time levels in Melbourne and Sydney, albeit off much lower sales volumes.

Some buyer's agents claim sales inquiries have slipped by about 40 per cent since lenders cracked down on overseas' borrowers by increasing deposits, restricting currencies used for payment, boosting scrutiny of overseas income and tightening checks on employment.

What advisers are being offered to sell you property.

Lenders have also tightened – or stopped – offering loans to borrowers for high-rise apartments, particularly in and around east coast capital central business districts and dozens of inner suburban postcodes.

This is causing jitters among off-the-plan buyers seeking to finalise their purchases.


In addition, an estimated 45,000 apartments are due for completion and settlement over the next nine months in Melbourne, Sydney and Brisbane, an increase of nearly 25 per cent compared with last year, according to planning consultancy MacroPlan Dimasi.

Buyer incentives

Another 53,000 could be coming to market in the same postcodes next year, the consultancy estimates.

Tips for checking agents' commissions.

To attract buyers some developers are discounting, extending settlement terms and offering headline-grabbing incentives such as luxury flights and accommodation packages to Europe and Asia.

DealCorp managing director David Kobritz, whose company has residential apartment projects in Melbourne and Sydney, says strong sales will continue to be buoyed by population growth and changing demographics such as Baby Boomers' downsizing from suburban houses to apartments.

But others are sceptical about the continued strength of demand if overseas' buyer numbers continue to fall, price rises outpace income growth and apartment completions result in a big supply surge.

"They must be on crack cocaine," says David Morrell, founder and director of Morrell Koren, about claims that advisers can make hundreds of thousands a year in referral fees.


Adviser offers

This is how the deals work.

Real estate agents, mortgage brokers and financial advisers are offered 1 per cent of the sale price for recommendation of a developers' property to a buyer that results in a deal.

This is $5000 commission on a typical property of $500,000, or $60,000 ($5000 x 12) a year, for an adviser who recommends one a month that results in a sale.

Advisers are being encouraged to recommend just over one a week to earn $25,000 commission a month ($5000 x 5), which is $300,000 a year ($25,000 x 12). Again, there needs to be a sale to earn commission.

Under the arrangement, the adviser can keep all additional fees and commissions earned on the deal.

For example, a mortgage broker – or financial adviser or real estate agent with a credit licence – who arranges a $500,000 mortgage over 25 years for a house buyer will receive an upfront commission of 0.66 per cent, 0.15 per cent for the next three years and 0.25 per cent a year for the remainder of the term.

The estimated present value of the broker commission is about $14,400 for a loan of this size, assuming the loan is able to run its course with no additional repayments, according to actuarial firm Rice Warner.


Mortgage commission too

It means a mortgage broker organising finance for one property a month can earn more than $2750 in upfront commissions, or $33,000 a year ($2750 x 12).

If they are successfully referring properties as well, it takes yearly revenues to more than $90,000, which is $60,000 yearly revenue from referrals and the balance from upfront mortgage commission.

The same broker selling just over one a week could make total revenue of $465,000, which is $300,000 revenue from successful property referrals and $165,000 from mortgage commissions.

The accompanying table sets out the payments, which are also dubbed "passive revenue".

In addition, real estate agents typically earn another 1 to 3 per cent commission for selling the property – but regularly earn closer to 4 per cent.

Financial advisers – who regularly recommend investment properties, typically as assets for self managed superannuation funds – are being offered one-off commission payments of $10,000 by some developers.

Property experts warn buyers need to ensure that the property suits them and not the annual revenues of their adviser.


Buyers should ensure that any commission is disclosed before signing any agreement and that they understand all terms and conditions.

Hazy buyer protection

The rules intended to protect property buyers are a complex mish-mash of federal, state and territorial codes and laws enforced by different industry bodies controlling mortgage brokers, financial advisers and real estate agents.

For example, there is a ban on a financial adviser, or authorised representative, receiving any form of remuneration that might conflict their judgment by offering high commissions or other benefits.

Regulators are believed to routinely contact property developers to find out whether commissions are being paid to financial advisers and which are being paid.

But the ban on financial product providers offering conflicted remuneration does not apply to property developers, who routinely offer cash, commissions and other incentives.

Real estate agents are obliged to disclose payments but at what stage of the deal – at the beginning or settlement – and in what form – whether in dollars or as a percentage of the sale price – varies between states and territories.

Mortgage brokers advising on a loan need to disclose any commission received in their credit guide.


Authorised advisers claim big cash incentives for recommending properties highlights the importance of seeking expert, independent advice that sets out options, details costs and specifies any potentially conflicting relationships.

Above board

"A good finance broker returns power to the consumer by offering choice between lenders," says Christopher Foster-Ramsay, principal of Foster Ramsay Finance.

"They also offer expertise about products, debt structuring advice, quicker service and after-settlement assistance."

It is becoming increasingly difficult for buyers dealing with companies that integrate development, advisory, financial and brokerage services to work out who is getting paid for what.

Consumer watchdogs claim commissions are not in the public's best interest and contribute to high mortgage turnover, with the average mortgage lasting about six years, or less than a quarter of a typical loan.

The Australian Securities and Investments Commission, the nation's securities regulator, is reviewing the role of commissions and other incentives offered by lenders.

The review will not be considering the role of property advisers who generally offer bigger commissions, volume-linked bonuses for delivering multiple buyers for dwellings in a complex, cash incentives and other lucrative perks.

Buyer checklist