How do you choose the right buyers’ agent?
The property market in Australia has become increasingly competitive, which has lead to more people seeking that winning edge. Statistics from CoreLogic RP Data show the effects of this rivalry, as between December 2008 and June 2015, property prices in Sydney and Melbourne surged 68.8 per cent and 54.1 per cent respectively.
This growth can also be reflected in the number of buyers’ agents currently in operation. According to the Real Estate Buyers’ Agents Association of Australia (REBAA), back in 2000 there were just 15 buyers’ agencies in business, predominantly serving luxury patrons. The industry is now burgeoning, with everyday homeowners, first home owners and family buyers, mum and dad investors and indulgent purchasers alike seeing the value in a property agent focused on purchasing real estate.
“There is a heightened risk of entrusting your property ambitions in the hands of someone with little experience or knowledge”
Regardless of whether you’re a home buyer or investor, making the decision to use a buyer’s agent can help you gain numerous benefits over the broader market – provided you choose the right one of course! The plethora of new agencies in the market means there is a heightened risk of entrusting your property ambitions in the hands of someone with little experience or knowledge.
Essentially, your buyer’s agent will act in the same capacity as a stockbroker does for the sharemarket. If you were considering buying shares, for example, you’d call your stockbroker for insights on how the market is performing, advice on the best strategy going forward, help with securing the deal and even management of your portfolio. You wouldn’t trust a stockbroker with insufficient experience or knowledge, therefore you certainly shouldn’t do the same when it comes to your first home purchase or your investment property.
Here are a few tips to help you choose the right buyer’s agent.
What are their qualifications and credentials?
The first thing you should be finding out, is whether or not your buyer’s agent is equipped with the necessary licensing requirements. According to the Real Estate Institute of NSW, all buyers’ agents must hold a real estate agent’s license, however, they can request this to be limited so that they can only carry out buying functions.
It can be cause for concern if your property agent has a full license that isn’t annotated with these conditions, as it could mean they have a conflict of interest between sellers and buyers.
Buyers’ agents must adhere to a list of rules and regulations. According to NSW Fair Trading, among other things, a licensed agent must:
- Act in their client’s best interests
- Avoid activities that could result in a conflict of affairs
- Always aim for the best price possible
- At all times be honest, fair and professional
When you’re confident with their qualifications and integrity, you can move on to evaluating other characteristics.
Avoid any potential conflicts of interest
When looking for a buyers’ agent, you need to ensure that there is no conflict of interest. A proper real estate agency will only focus on one main field (buying or selling) in order to avoid any favouritism towards either side. So do make sure that the agent you hire is only working on one side of the deal – their firm should be representing the seller, or it should be representing the buyer – it’s impossible for the company to be working with both, buyers and sellers – without compromising the interests of one side.
For example, if you are using a property buyers’ agent that works for a company that also sells property, it’s possible they will forego looking for the best and most profitable deal for you, and instead attempt to pair you with some of the property that they already have available.
How many years have they got under their belt?
Experience, in any industry, is extremely important. It gives you the opportunity to understand a market’s nuances and subtleties, equipping you with strategies to deal with any unforeseen circumstances.
The same is true for property. As The Residential Property Cycle in Australia report from BIS Shrapnel asserts, property growth in fact typically follows a 7 – 10 year cycle of ups and downs. To make it even harder to decipher, our capital cities are all in different various stages of their individual price cycle.
Having a good idea of exactly where a location is in the property cycle is a crucial consideration for a successful property investment. This accentuates why it’s important that rather than committing to a buyers’ agent fresh to the job, you only deal with those who have been in the industry long enough to experience both the good times and the bad.
Are you worried that your buyer’s agent wont be able to fulfill your specific brief? Take a look at their testimonials (inexperienced agents won’t have them) and see if their previous clients have had a positive experience. Also taking a look at the number of transactions and their buying history gives you a very good idea of their likely ability to fulfill on your brief.
What’s their team and network like?
The term ‘buyers’ agent’ is singular, but provided you choose well, you will have an entire team within the agency working to satisfy your requirements. For obvious reasons, a larger agency will often be able to allocate more resources to your brief. For example, if a two member team is sourcing in Parramatta as well as Clovelly, then it’s going to be hard for them to deliver the best value for you.
It could almost be argued that the old saying “it’s not what you know, but who you know” was first uttered in relation to real estate. This is especially true when homes are being snapped up so quickly. Research from CoreLogic RP Data shows that at the end of July 2015, the typical Sydney home was spending just 25 days on the market before being sold on. With property selling like wildfire, you need someone who can help you get your foot in the door quickly.
Fortunately, there is a solution to your growing frustration of missing out on a property. Again. A quality buyers’ agent will be immersed in the property market, with strong industry connections and be in regular communication with real estate agents in the area.
If your buyers’ agent has a comprehensive network, this can often unlock access to property listings ahead of the mainstream public. This essentially puts you in the box seat when it comes to negotiations and a potential private house sale.
An effective network is not something that is built in a day, and as such it is often intertwined with how many years the property agent has been in the game, which is another incentive to look for experience.
How well do they know the target suburbs and city?
You should always look for a professional that has a deep and intimate knowledge of the local market – there’s no point hiring a Sydney buyers’ agent that doesn’t know their Abbotsbury from their Abbotsford. This is especially true with the increased competition from other, often seasoned, investors.
According to the Australian Bureau of Statistics, between July 2011 and the same time four years later, the monthly value of financial commitments to investment housing skyrocketed from around $6 billion to over $13.5 billion.
This only highlights the importance of having a property agent that has expert knowledge of the local market, as they will know what streets to jump at, what ones to avoid and where upgrades are poised to happen, often before anyone else.
Not to mention, they will have knowledge of private house sales in the area, allowing you to take advantage of properties that aren’t even on the market.
Is it value for money?
According to Consumer Affairs Victoria, a typical buyers’ agent will cost you between 1.5 per cent and 3 per cent of the purchase price. To put that in perspective, were you to buy a $600,000 property, that would be $9,000 to $18,000. While it can be easy to be swayed by a lower price, it’s vital that you consider where your money is going.
The REBAA affirms that while it may cost you a bit more upfront, an accomplished buyers’ agent can save you thousands of dollars in the long run. This is because in order to gain the best price possible and a satisfied client, among other things, a competent property buyers’ agent will:
- Help determine your specific needs, desires and price bracket to locate properties that tick the boxes
- Accompany you to property viewings or on your behalf, while offering expert opinions
- Assist you in making an informed decision by researching specific properties to identify any potential problems
- Advise an appropriate offer, in addition to presenting and negotiating on your behalf
- Provide access to a network of real estate agents for private house sales and other service providers like movers, solicitors and accountants
If you ever feel uncomfortable with a buyers’ agent because they’re forcing a property upon you or for whatever other reason, feel free to walk away. Ultimately this is a professional service and there are various options in the market – evaluating all the characteristics means that you are most likely to get the best value for your money.