Article on MacAnthony in today's (13-Jan-08) Irish Times

Discussion in 'Overseas property investment' started by Brendan Burgess, Jan 12, 2008.

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  1. Brendan Burgess

    Brendan Burgess Founder

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    From today's Irish Times:
    Overseas buyers' dreams turn sour

    Some investors are complaining of their experiences with property company MRI, writes Paul Cullen , Consumer Affairs Correspondent

    Clients of one of the world's largest overseas property companies have accused it of resorting to pressurised selling, over-optimistic claims about the prospects of property locations and a lack of customer support once they agreed to buy.

    The Irish Times has spoken to a number of dissatisfied customers and former staff of MacAnthony Realty International (MRI), which is owned by Dublin-born, Marbella-based Darragh MacAnthony (31). Some of their stories, which include claims they paid over the odds for their property, and faced unforeseen additional costs, are told below.

    Some customers claim they were promised guaranteed rental streams for their investments which have not materialised. Others have suffered financial problems after using their money to put deposits down on multiple apartments in the - false - expectation that rising property values would allow them sell on some of the properties at a profit, before completion of sale.

    There is no suggestion of anything illegal involved in these transactions and the usual principle of caveat emptor - buyer beware - applies. Most of those who spoke to this newspaper admitted they lacked previous experience of buying overseas and some said they were naive in their approach or were, for personal reasons, unable to devote time to sorting out difficulties when they arose.

    However, a common thread is the difficulty they experienced in getting MRI staff to act on their behalf once they paid a deposit on a property, a factor which was made worse by constant changes in staff. Customers found themselves bombarded with calls from other MRI staff selling further properties or other services, even when difficulties arose with their original purchase.

    MRI HAS SOLD thousands of properties to middle-class Irish customers, mostly through property roadshows around the country. Consumers are not always aware that the exhibitors at these shows are usually either owned by or linked to MRI.

    In 2006, the Advertising Standards Authority upheld a complaint from a rival who claimed MRI was misleading people by giving the impression its Bulgarian Property Expos involved many different agents when, in fact, all belonged to the MRI family.

    At the expos, interested customers sign up for one of the company's inspection trips to an overseas property destination. Sales are usually made during the pressure-cooker atmosphere of these short trips. "In their own right, the customers are often very smart people, but they're out of their comfort zone when they find themselves abroad and are presented with such a professional operation," says a former MRI agent.
    "During the trip, the sales guys stuck to us 24/7 until we bought," one customer said. "Then we never saw them again."

    Some customers end up buying more than one apartment off the plans after understanding they will be able to "flip" (sell on for a higher price) one of the properties later on in order to pay off their outstanding debt. This might be fine in a booming market, but is potentially ruinous for financially stretched investors when prices stall or drop. Some MRI customers found themselves spending more on legal services and furnishings than they expected, because the options recommended were more expensive than alternatives. Another complaint relates to the over-optimistic assessment by some MRI staff of the investment potential of properties. One buyer was told her ski apartment would increase in value once Bulgaria was awarded the winter Olympics; another was told a new airport was mooted near her apartment in a summer holiday resort on the Black Sea. Neither has happened as yet.

    MRI says it is the world's number one family-owned property company, and claims it sells a property every 42 minutes. The company says it has many satisfied customers, and its website carries testimonials from a number of Irish clients.

    HOWEVER, THE COMPANY has been the subject of sustained criticism on property and finance websites, a number of which have banned discussion of MRI after receiving legal warnings from the company's lawyers.

    MacAnthony is a multimillionaire who moved with his family from Dublin to Spain at age 15 and set up MRI with a staff of two in 2000. Today, it sells property in 16 countries.
    It is one of many firms operating in a largely unregulated business sector. "If you put a fiver into an Irish bank account, you're regulated," says Irish overseas property consultant Diarmuid Condon. "Yet you can send off a cheque for €500,000 to buy property abroad and you're not protected."

    MRI's response
    The Irish Times put a series of questions to MRI arising from the interviews with customers. In response, the company stated through its lawyers that the allegations made by customers were entirely unfounded, and that it was not in a position to respond fully unless it received more specific information on the individuals imvolved.
    "MRI has over 20,000 clients spanning the last seven years, which simply would not have been possible unless it was providing an extraordinarily high level of customer satisfaction to its very large and burgeoning customer base," according to the statement. MRI is committed to providing a comprehensive, honest and professional service to all its customers, and has built a reputation on trust and reliability; indeed, it regards these as the cornerstones of its success. Customers come back to MRI time after time, which can only be because they have learned from their own experience that MRI acts with integrity and sets very high levels of customer service."

    © 2008 The Irish Times

    The following posts are case studies attached to the article
     
  2. Brendan Burgess

    Brendan Burgess Founder

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    Re: Article on MacAnthony in today's Irish Times

    'They washed their hands of us once they got the money'

    Up to 20 Irish people who bought apartments in an MRI development in Nice, southern France, claim they are owed over €150,000 in unpaid rents from their rental agent.


    They say MRI staff have done little to help them until recently and claim that it recommended an agent who is not licensed in France to rent properties. Some also believe they paid inflated prices for the apartments, which were purchased off the plans.


    Paul Morrissey visited Nice on an MRI inspection trip two years ago and put a €37,000 deposit down on a one-bedroom studio apartment selling for €150,000.


    "Everything seemed to be okay at first. It was only when the building was completed that things started to go wrong." By then, Morrissey, with the help of a French mortgage, had paid the full price.


    On the recommendation of MRI staff, a local rental agent, French Rental Xpress, was employed to find a long-term let. His nightmare started here. A tenant was found but Morrissey received no rental income. The rental agent initially claimed the tenant had not paid up but when Morrissey eventually got to Nice, the tenant was able to produce rent receipts.
    Unable to gain access to the apartment, which is in a gated development, and unable to progress the case through the solicitor recommended by MRI, Morrissey has been unable to recoup the €5,000 he is owed. He and two other owners tracked down the principal of French Rental Xpress, who admitted the company had no licence but said he was unable to repay the money.


    Throughout this time, there were constant changes of personnel in the MRI office in Nice. "They washed their hands of us once they got their money," Morrissey remarks.


    He now believes he paid over the odds for the apartment. Contact with other Irish investors in the development shows that those who bought through other companies paid 20 per cent less for identical properties, he says. While he paid €150,000 and got no car space, his upstairs neighbour paid €149,000 for the same sized apartment and got a parking space, while the equivalent flat downstairs cost €137,000 with a parking space.
    Neither is the neighbourhood looking up as much as had been claimed before he purchased. "We were told the metro would be built here in six months; two years on - no metro."


    Instead of having his mortgage covered by rental income, Mr Morrissey has had to stump up for various charges, legal and travel costs and the mortgage.


    Attempts to contact a representative of French Rental Xpress, which was dissolved in November, were unsuccessful.
    © 2008 The Irish Times
     
  3. Brendan Burgess

    Brendan Burgess Founder

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    Re: Article on MacAnthony in today's Irish Times

    'Staff promised we would be looked after'

    Bob Izard and his partner Anne settled on Bulgaria as their retirement destination and booked to travel to the ski resort of Bansko on an MRI property inspection trip.


    The couple expected to be put up in a comfortable hotel but instead they were housed in what Izard calls "a half-finished building site".


    Walking back to their apartment through an unlit building site Anne fell into an ice-covered pothole: "She hit her chest and I hurt myself trying to save her". They went to the local hospital the following day where Anne's bruised ribs were treated.


    Izard complained at the local MRI office and said they would not remain in the apartment. At this point, a hotel room materialised for the couple but Izard says they had no further contact with staff for the rest of the trip and saw none of the properties they had hoped to purchase.


    They went home with an understandably negative view, but the dream of buying a retirement property overseas hadn't died and they went to another overseas property exhibition some time later. "It was only when we got there that we realised it was organised by MRI," says Izard. "We thought of leaving but staff promised us, after hearing what had happened in Bulgaria, we would be looked after." The couple went on an inspection trip to Morocco and opted to buy off the plans in the seaside resort of Marina Smir. They put a €3,000 booking deposit down on a three-bed ground floor apartment costing €128,600. Their receipt detailed the money paid and the site address but did not specify the size of apartment or what floor it was on. Izard noted that the price list said €160,000 but believed staff were "trying to make things right for us".


    On returning home, the couple paid the remaining €36,000 of the deposit. Then they got an e-mail to say they were being sold a different property nearby. "The agent said he was standing on the balcony of the property and it was lovely.


    "However, it was on the first floor and we didn't want it because we were going to be retiring there." Izard and his partner travelled over to Morocco and found the property hadn't been built. "How he was standing on the balcony, I don't know."


    He pestered staff for a ground-floor apartment and was told by email that he had been assigned a new site number. Then this number was changed again. Fed up with the constant changes, the couple travelled over for a third time. They were given the option of a two-bed apartment - which they didn't want because with nine children between them, they were expecting regular visitors - or a three-bed apartment costing €30,000 extra.


    Izard and his partner decided they wanted their money back. MRI staff told them this wouldn't be a problem but it could take seven or eight months because of local bureaucracy. Currency fluctuations in the two years since they paid their deposit and lawyers' fees mean the amount they eventually recover will be €3,000 less than they invested.
    © 2008 The Irish Times
     
  4. Brendan Burgess

    Brendan Burgess Founder

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    Re: Article on MacAnthony in today's Irish Times

    'Sometimes agents became abusive'

    'Rachel" (not her real name) signed up as a property partner of the company after making contact on the MRI website.


    Her job was to sign up Irish people to take part on inspection trips to visit MRI projects in Bulgaria and the Mediterranean. For apartment sales under €100,000, she got a cut of €1,000; over this figure, her commission rose to €1,750. She claims she often had to wait over a year to receive her percentage, while MRI's cut was a minimum 6 per cent.


    She believes her clients were subjected to aggressive selling on their inspection trips: "If they said they wanted to think about things, communications were cut off. Sometimes agents used bully-boy tactics and became abusive. Customers were accused of looking at rival developments or they weren't shown an area because they wouldn't commit".


    Like others with an insight into the company, she talks of frequent changes of staff and a pressure-cooker atmosphere among commission-driven sales staff. She grew concerned on finding that so many of her clients who went over to Bulgaria with the deposit on one apartment ended up purchasing two, three or even four. "Someone with €40,000 cash would be told to put deposits down on two apartments rather than buy one." Customers believed they would be able to sell one at a higher price and put this money against the price of the other apartments, she says.


    © 2008 The Irish Times
     
  5. Persius

    Persius Frequent Poster

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    Re: Article on MacAnthony in today's Irish Times

    Interesting mix of stories. The couple who bought to retire in Morocco were particularly poorly treated IMHO. But the couple who bought two appartments in Bulgaria with a view to flipping both before completion can't really complain. In fact you could even say that MRI were generous in letting them out of one of the contracts - even if the decision was only made as the best way to secure the money for the other appartment.

    The undertone to the entire article is "buyer beware"/
     
  6. ClubMan

    ClubMan Frequent Poster

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    Re: Article on MacAnthony in today's Irish Times

    Surely this point alone nullifies some if not all of the shock horror coverage of MRI here and elsewhere/in the past?
     
  7. Brendan Burgess

    Brendan Burgess Founder

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    Re: Article on MacAnthony in today's Irish Times

    I think it depends on when these practices took place whether they are illegal or not. The Consumer Act came into force in May 2007 which bans Unfair Commercial Practices

    It may also depend on where the practices took place. I don't know how the Unfair Commercial Practices Directive of the EU is enforced in other countries.

    Brendan
     
  8. z109

    z109 Guest

    Re: Article on MacAnthony in today's Irish Times

    I suggest this thread be made a sticky under the "Discussion of MRI is banned" thread.
     
  9. Brendan Burgess

    Brendan Burgess Founder

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    Re: Article on MacAnthony in today's Irish Times

    I have put in a link to this thread in that thread.

    We are trying to minimise the number of stickies.

    Brendan
     
  10. xman

    xman Guest

    Re: Article on MacAnthony in today's Irish Times

    Oh, of course. God forbid they would have the temerity to ask you to actually hold up your end of the contracts you signed.

    :confused:
     
  11. ClubMan

    ClubMan Frequent Poster

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    Re: Article on MacAnthony in today's Irish Times

    Having read the sample case studies I fail to see what grounds most of them have for complaint. Some of them admit to extreme naivety and inexperience and failure to obtain independent advice (possibly even independent legal advice as far as I can see) so at the very least there is surely a significant level of contributory negligence here. The references to hard sell and potentially dodgy (if technically legal?) sales tactics are all anecdotal as far as I can see. Personally I could consider the jury still out on this one to be honest.
     
  12. Rosinsky

    Rosinsky Frequent Poster

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    Re: Article on MacAnthony in today's Irish Times

    I agree with you on the first comment - people are just idiots for believing everything. The contract is with the developer and not the agent and also the fact that people are so naive and dont do their own research nor get independent advice.

    The hard selling - certainly not illegal, but if sold on the basis of untrue information then MRI should take some responsibility.

    I have attended some of the Property Expos in Leopardstown to gather some info only on a boring Sunday and the sales guy was trying to sell me a viewing trip more than anything else - got no real advice anyway. I got over 10 calls from the Dublin office on a Friday and Saturday when I showed interest in travelling out to Romania. It was very annoying - however not illegal.

    Anyway at the end of the day they cant force you to sign on the dotted line!!! I am not saying that I believe that everything that MRI is doing is correct ( personally I have not bought from then and I cant stand sales people in general) but the fact is that there are so many naive people purchase without proper advice or doing any research / due diligence.
     
  13. declanja

    declanja Frequent Poster

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    Re: Article on MacAnthony in today's Irish Times

    We bought an apartment in Nice last year. We emailed many websites that were advertising property for sale. We were trying to avoid companies like MRI as we wished to buy independently. However, MRI must have been involved in one site as they got my phone number. What followed was months of phonecalls trying to get us to book inspection trips. Initially we politely refused, but eventually we just had to keep ending the calls as we could not get the callers to accept that we weren't interested. Eventually when we started saying we had already bought the calls trickled out. Generally the callers were different on each occasion, and were highly skilled at marketing but quiet pressured in their approach. I got the feeling that if I booked an inspection trip that their work was done and their commission earned. Many were pushing buying multiple units.
     
  14. ClubMan

    ClubMan Frequent Poster

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    Re: Article on MacAnthony in today's Irish Times

    I know that one complaint that people had was that they believe that the Property Expos are arguably marketed to look like some sort of multi-vendor shows whereas, in fact, they are actually MRI only shows. However I wonder how serious this is really?
    I wouldn't really expect "advice" from a sales person. Even the information that they give out would need to be treated with some skepticism and independently checked. This applies to any sales person in any situation to a greater or lesser extent. Somebody with a vested interest in selling you something may not tell you the whole truth.
    Precisely. I presume it's not like that episode of South Park where the parents were kidnapped and given the hard sell on ski resort condos in Aspen? :D

    By the way - anybody else notice the MRI Property Expo ads on UTV lately? The ones that ask "are you one of the thousands of Brits looking to invest in foreign property ...?". Odd choice of term if they want to pitch the shows at the widest possible NI audience!
     
  15. ubiquitous

    ubiquitous Frequent Poster

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    Re: Article on MacAnthony in today's Irish Times

    Bit like the little teddy bears with "Ireland" across the front that Starbucks were selling in their Dublin stores last Autumn. Was up North before Christmas and saw the same teddy for sale up there - with "United Kingdom" across the front :rolleyes:
     
  16. Irishchappie

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    Re: Article on MacAnthony in today's Irish Times

    My father was thinking about buying a property abroad about 2 years ago and went to one of these property fairs held by MRI.. he saw a few that he would be interested in and got the information..

    Came home with a pack containing all this information, artist impressions of what the property would look like, future plans for motorways, supermarkets, airports etc in the area..

    Looked at the DVD and it was very professional..

    Then the phone calls started.. almost every week for months.. constantly asking about was he still interested, that the properties were selling fast,
    they couldnt guarantee he would get them at the price he saw etc.. Pressure was a major factor.. even when walked into the show, he felt he was being watched and they tried and tried to get him to book a viewing trip almost immediately.. it was all pressure



    I.C
     
  17. Brendan Burgess

    Brendan Burgess Founder

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    Re: Article on MacAnthony in today's Irish Times

    It depends on how and when and where this hard selling was done.

    The Consumer Act recognizes the existence of "unfair commercial practices". If you tell a company that you don't want to hear from them and they persist in calling you, I think it would be found to be an "unfair commercial practice" as some people will make a decision just to get them off the phone.

    Brendan
     
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