The $50,000 mistake many property investors don’t know they’re making

In today’s real estate market, Australian property investors have access to more data and insights than ever before.

From suburb reports to podcasts and online calculators, doing your own research has never been easier.

But even well-informed investors continue to fall into a trap that quietly undermines their returns: hidden commissions embedded in so-called “free” property investment advice.

These fees—often invisible to the buyer—can add tens of thousands to the cost of a house and land package, significantly eroding future capital growth.

Why “free” advice isn’t always free

Having worked in both property development and investment, I began to notice a recurring pattern: buyers being steered toward specific properties with inflated prices.

The reason? Large commissions—commonly between $30,000 and $50,000—paid by builders to third-party marketers or so-called advisors as part of the transaction.

What most investors don’t realise is that these commissions are rarely absorbed by the developer. Instead, they are added to the final contract price—effectively paid by the buyer.

A system few investors see

One of the most common catchphrases in the industry is: “You don’t pay us—the developer does.” It’s a line that sounds reassuring but often conceals a conflict of interest.

In some cases, advisors are paid on both sides—charging the client a fee up front while also receiving a builder’s commission behind the scenes. This dual-payment structure raises serious questions about whether a buyer’s best interests are truly being prioritised.

“It’s a structure that doesn’t just mislead investors—it quietly shapes the advice they’re given,” says Scott Fraser, founder of Real Estate Investors Network (REIN), a property advocacy firm focused on commission transparency.

The builders’ perspective

It’s important to note that many builders don’t set out to deceive buyers. Rather, they’re operating within a system that incentivises commissions to secure distribution.

But the outcome remains the same:

• buyers are rarely told these payments exist
• they’re not shown alternative options
• and, they’re not made aware they could negotiate a better deal, minus the markup.

The lack of transparency can leave everyday investors footing a bill they never agreed to.

What’s at stake

Overpaying by $30,000 to $50,000 doesn’t just affect the upfront cost. It can have compounding consequences, such as:

• reduced capital growth: starting from a higher base means slower equity gains
• lower borrowing capacity: less headroom for future investments
• misaligned advice: recommendations may be driven by sales incentives, not long-term strategy.

“Every dollar counts when you’re building a portfolio, and if those dollars are going to hidden fees, your future position is already compromised,” Mr Fraser said.

Questions every investor should ask

For those considering new-build or house-and-land packages, asking the right questions early can make a meaningful difference:

• Who is paying you?
• Are all commissions disclosed in writing?
• Can I buy this property without a third-party referral?
• Is this the only property being recommended, or are there alternatives?

According to Mr Fraser, investors who ask these questions often uncover significant embedded costs they wouldn’t have otherwise seen.

A shift toward transparency

As awareness grows, more investors are beginning to challenge the status quo. Some advocacy firms—like REIN—are offering flat-fee models with disclosed commissions and, where possible, rebates returned to the buyer.

While the approach is disruptive, Mr Fraser believes it’s a necessary evolution.

“We’re seeing investors become more sceptical of the ‘free advice’ pitch.

“They want clarity and they want fairness, and they want to know that their advisor is sitting on the same side of the table.”