A $16.5m Dashdot collapse has left 695 customers chasing $10.6m in upfront fees and refund claims.
A $16.5m property advisory collapse has left 695 everyday Australians chasing $10.6m in fees and refund claims.
The Dashdot liquidation has triggered warnings over buyer’s agent regulations, social media property gurus and five-figure fees being charged to aspiring investors before any real estate is secured.
A preliminary liquidator’s report shows Dashdot allegedly owed more than $16.5m when it collapsed, including $10.6m to 695 customers, equal to an average of $15,250 each.
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One anonymous customer told NewsCorp Australia they paid almost $20,000 before Dashdot had found them a property, leaving them with no asset, a smashed savings buffer and a creditor claim.
The customer, who asked not to be named, said they first came across Dashdot through podcasts, social media clips, webinars and past client testimonials about financial freedom and building a portfolio.
“I paid nearly $20,000 because I thought I was buying expert protection,” the customer said.
“Instead, I feel like I paid to learn the hardest financial lesson of my life.”
The customer said they had wanted help to buy their first investment property without making a costly mistake.
Property buyers are being warned to check contracts, refund clauses and fee structures before paying thousands for advice.
“I did not think I was handing over nearly $20,000 just to become another name on a creditor list,” they said.
“We thought we were paying for a path into property, but now we’re just another creditor.
“We paid Dashdot to help us invest in property, and somehow we are the ones left carrying the loss.”
The customer said the payment hit their deposit, savings buffer and confidence.
“That was real money to us,” they said.
“We were not wealthy people throwing spare cash around. We had saved for that.
They said they did not clearly understand whether their money would be held in a trust account, separate account or general business funds.
“You hear ‘professional service’ and you assume the money is handled properly,” they said.
“Now I am asking myself why I did not push harder.”
The customer said the biggest red flag in hindsight was the size of the upfront fee.
“I wish I had stopped and asked: why am I paying almost $20,000 before there is a property?” they said.
“Right now, it feels like the ordinary customer carries all the risk.”
ALBA Prop director Thomas Mifsud said $10,000-$25,000 upfront fees before a property was secured had become the exception, not the norm.
The Dashdot liquidation has triggered warnings over buyer’s agent regulations and the risks of polished online property advice.
ALBA Prop director Tom Mifsud said it was not normal for buyer’s agents to demand $10,000-$25,000 upfront before a property had been found or purchased.
“No. Flat-out no,” Mr Mifsud said.
“An engagement fee makes sense. It shows commitment from the client and it helps the buyer’s advocate do the work properly.
“But $10,000 to $25,000 upfront before a property has even been secured has become the exception rather than the norm.”
He said large upfront fees could create the wrong incentive if too much money was collected before a buyer’s agent had delivered the service.
“Anything beyond that can start to create the wrong incentive,” he said.
“It can incentivise the buyer’s advocate to compromise on quality or make decisions that are more in their own interests than the client’s.”
Mr Mifsud said consumers should also be wary of online property personalities whose marketing skills outpaced their professional experience.
“A lot of the bigger property personalities you see on social media are really marketing experts first,” he said.
“They have learned how to manipulate the algorithm, capture people’s attention, make money, and then figure out the property part later.
“I think people will start to think twice about that type of profile.”
Loan Market senior mortgage broker Toby Edmunds said buyers should confirm their borrowing position before signing a buyer’s agent contract or paying large upfront fees.
Loan Market senior mortgage broker Toby Edmunds said buyers should speak to a broker before signing a buyer’s agent contract or paying a large upfront fee.
“The main reason is pretty simple: they need to know they can actually afford the property they are trying to buy,” Mr Edmunds said.
“It would be madness to go to a buyer’s agent and start looking for property without knowing whether you can actually afford to complete the purchase.”
The broker said some aspiring investors were vulnerable to property companies promising wealth creation, particularly where they had a vested interest in selling particular stock.
“You see seminars and events advertised online, and not all of them are the best path for clients to go down,” he said.
“Some of it is a bit footloose and fancy-free, and it is not overly regulated.”
Mr Edmunds added that there would be sense in a review of how the industry was allowed to operate.
“Anything that raises the standard of the buyer’s agent industry would be a big win,” he said.
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