Ep 16. What Can A Buyers Agent Do For You?
You are ready to choose a buyer’s agent but are confused by who you should pick? Michelle explains exactly what to look for in a buyer’s agent so that you will have the best buying experience possible.
Here’s what you’ll learn from today’s episode:
Checking a buyer’s agent’s reputability
What kind of experience a buyer’s agent should have
Seeing past the marketing of a buyer’s agent
What a good buyer’s agent can do for you
Questions to ask a buyer’s agent before you sign the dotted line
Speakers in today’s episode:
Michelle May - Michelle May Buyers Agents
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Please note that any views or opinions presented in this podcast are solely those of the speakers, and do not necessarily represent those of any business. These views and opinions are general in nature, and do not take account of your personal objectives, financial situation and needs. Please consider whether it applies in your circumstances and seek professional advice wherever appropriate.
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VIEW TRANSCRIPT
Hi and welcome to another episode of the Buy Your Side podcast. My name is Michelle May and I am a buyer's agent based in Sydney. So as we are now in 2022, I'm going to be your voice of positivity and hopefully lots of sage advice. And I thought today we would talk about what a buyer's agent can actually do for you.
Buyers agents, of course, are a fairly new phenomenon in Australia. I've been a buyer's agent since 2008, and I was probably one of the earliest ones to start in the industry. But particularly in the last five years or so, there's been an explosion of new buyer's agents. I'd like to say they've been popping up like mushrooms, and I thought I'd run you through the benefits of using a buyer's agent and how they can help you navigate the property market and what kind of services they offer. So here we go.
Typically, a buyer's agent or a buyer's agency will offer one of three services, and depending on your budget, you may choose one or the other, or depending on the level or amount of help you think you need, one type of service may benefit you more than another. So there are usually the auction bidding, the single property evaluation and negotiation, and then there is the fully comprehensive property search.
So an auction bidding, let's start with that. That's usually, of course, it does what it says on the tin, so to speak. A buyer's agent will become your hired gun on the day. Usually, it's a fixed fee or sometimes a percentage of the purchase price, but that is more uncommon. There may sometimes be a success component as well, so if you purchase the property that you have hired them for, they will get an extra fee on top of the original, sort of 'showing up' fee. But the limitation with this service is that, of course, they will bring all their experience and expertise to be as successful as possible on the day, i.e., they've been to hundreds of auctions, hopefully. And so with that experience comes being able to read the room, watching registrations to help understand who your competition is on the day. Having that relationship with the agents as well, because quite often agents will tell me the reserve or some history on other buyers. Maybe the expectations of the vendor, even. But the one thing that the buyers agents will not do is to give you any advice around the suitability of the property, nor what your bid limit should be because they wouldn't have done any research in terms of comparable sales and the like. So be very mindful of that, that it is very much a hired gun on the day and they will do their utmost to help you purchase.
The one thing I always find quite baffling is when buyers choose a selling agent as their person to bid for them on the day, particularly when they're not paid. Because you've got to think to yourself, nothing in this world is free. If someone offers to bid for you or on your behalf for free, what's in it for them? And typically, the story behind that is usually that, those buyers have something to sell, and obviously if they're successful on the day, you might be put under pressure by a selling agent to increase your limit because they want your listing. So think very carefully about enlisting someone who is not actually going to be paid by you.
The second service that buyers agents offer typically is a single property evaluation and negotiation. So again, that could be a percentage of the purchase price or a fixed fee. As you probably know from my previous episode, I always charge a fixed fee because obviously there are a number of things that we do, and standard due diligence that is the same independent of the property value. But this service is specific to one property that you have found through your own searching online or talking with agents or whatever the case may be, and then you engage the buyer's agent to take it over from then. So they then project manage the research and the coordination with your broker, with your solicitor, and anything all the way through to either negotiation or auction bidding. So the auction bidding should be included in that.
So here it is very important to pick a buyer's agent who A. has experience in the area of where the property sits, has experience with the type of property that you are looking at buying and also to understand what is it that they are actually going to provide in terms of service. So for example, if you were to come to us as your buyer's agents of choice, the first part of the service is the evaluation of the property. So a good buyer's agent should not be selling the property to you. They should be highly critical and trying to understand the good, the bad and the ugly and present you with that information accordingly. That first should start with an independent pricing research, understanding the comparable sales in the area, in the street, in the building. And then also looking at the market conditions at that point in time. Is it a seller's market? Is it a buyer's market? How much competition is this property likely to have, as well as any median price changes that have occurred since the comparable sales occurred. Because it's very important in a fast moving market that the buyer's agent gives you accurate and up to date price guidance on this, because we all know that, price guides can be wildly inaccurate. So a buyer's agent should do their own research and present you with those numbers.
Besides that, they should be looking at a whole heap of other things to ensure that this is actually the right purchase for you. That is not limited to looking at things like school catchment areas, or DA checks of the surrounding properties. But even if the property has been renovated, for example, has that renovation been approved by council? What are your neighbours up to? Are you thinking of doing a renovation in the future? If there's precedence in the street or in the surrounding area, that would make your future renovation a lot easier to get through council, for example. But we as buyer’s agents here in Sydney in a city that's constantly changing and evolving in terms of infrastructure projects, we also look at those kinds of things. We look at tunneling, for example, we recommend people stay away from properties that are too close or even on top of tunnels, because that may cause future damage and cracking to the property. So we believe that there's no such thing as a perfect property. There never is. It doesn't matter what budget bracket you're in. However, it's about understanding the risks, because then you can make a fully educated decision on whether to go for it and at what level you want to go for it. So we always ensure that the buyer commissions an independent building and pest inspection, for example, because the ones that are commissioned by the vendor are usually quite scant on detail let's put it that way. And we go through the report with the client and ensure that they understand all the issues. We talk to the building and pest inspector if it needs further clarification. We also review the Strata report, for example, for the client, because we want to understand the health and wealth of the building and the complex that you're buying into. So we are the experts to help you make an informed decision.
So if part one of that negotiation or single property evaluation goes to plan and everything is OK, and with that time, the solicitor or the lawyer will also be reviewing the contract. If everything is OK, then we move on to the next part of the evaluation negotiation service, which would be trying to secure the property. So that's when the experience and relationships that the buyer's agent has become crucial. Because the buyer's agent needs to know the selling agents, they need to understand how they work. They need to understand the local market. Is now the time to buy prior to auction? Or is it better to wait? Is this actually an agent who loves to do a deal and is all about volume? Because then when you present an agent like that with a good offer, you'll get the deal done. However, there's other agents who can't do a deal to save themselves so they run everything to auction, independent of the market, independent if it's right for the property, independent even if it's right for the vendor. So having a buyer's agent who knows all this, who understands all this is crucial. Again, they should have an enormous amount of auction experience as well.
So obviously, using a buyer's agent in this capacity will help you understand the complete ins and outs of the property. It will put you in pole position, particularly if you engage them very early on once the property hits the market early on. Because then the agent will be able to follow the process and will jump on things if they can or otherwise bide their time if it's the best thing to do. It's best to do that sort of in the first week when the listing comes on the market. Having a professional on your side will give you a much higher chance of success than doing it on your own because obviously a buyer's agent, this is what they do on a daily basis.
Again, depending on who you engage, there may be a success fee at the end or they may not. But this is a service for one property only, which then brings me to the full property search.
So the full property search is where the potential client will go to a buyer's agent with their wish list. Now, here in New South Wales, it is a legal requirement for a client to complete a buyer's brief so that there is, in writing, your needs and your wants and your ideal wish list of the property that you're looking to buy. Including, of course, the areas where you want to buy, as well as the budget.
Now, of course, this is life so things can change along the way and in fact it is very normal for the clients whom we work with to fine tune things, budgets may go up or down, and depending also on getting more knowledge in the market, some clients go, "OK, yeah, actually I do have a little bit of extra money. I can find a little bit of extra money. I may go back to my bank or I may head up the bank of mum and dad to get the property that I want". And a good buyer's agent should be able to tell you this before you sign on the dotted line. I mean, this is our preference. We don't want to manage our client's expectations after you've signed on with us, I don't think that's ethical. I think you should have that conversation well before you actually sign an agency agreement. But once you sign on for the fully comprehensive service, the buyer's agent then runs with it so you can be as involved or hands off as you choose to be, but the idea is that they do all the legwork for you. So depending on how they work, you may have an online portal where you can check which properties they're going to be looking at for you. But what we do, for example, is that we shortlist the properties that we have the intention of viewing, our clients have the opportunity to give us feedback, and we then report back to say we think this is a great property. Here are the photos, here are the videos, these are the positives and negatives, and we recommend or do not recommend you come and have a look with us. But initially, the buyer's agent should do that for you. The idea is that you get your weekends back. It reduces stress, so that you are not traipsing through unsuitable properties with the buyer's agent. You may want to hang out with your friends and your family, or your kids' sports and what have you, but this is what a good buyer's agent should do.
So once they have shortlisted a property and inspected a property that they think is going to work for you, that's when you should be able to come along and have a look either through a private inspection or through an open inspection, depending on what's possible. This also includes, of course, access to all those elusive off-markets. And again, this is why it's really important to use a buyer's agent who has been in the market long enough because, particularly now, we've had two years of a very strong seller's market. Agents are inundated with enquiries and they are not going to be talking or reaching out to inexperienced buyers agents because they know they will always have buyers for whatever properties they have. So they will only make the effort with the reputable buyers agents who have been repeat customers, if you like, for a long time. We also reach out to agents on a daily basis, whether that's through our email system where we have hundreds, thousands of agents and we specifically target agents depending on the client's brief. But we also talk to agents every day, we even leaflet if this is a specific area, we target specific areas for clients, but it's all about those relationships, about finding those off market properties. Having said that, just because they're off market doesn't mean they're better properties, but it just means that you know exactly what is actually for sale.
And then really, we go into very much a repetitive system of the evaluation and negotiation, which I discussed with you before. Now the process can be long, depending on the stock levels, the time of year, how specific your brief is. But it can also be very short. We've bought within a week for some clients, but that's very much dependent on what's available and whether the client is actually ready to purchase. Some clients really want to find out what a buyer's agent brings to the table, and understandably so because it is an investment paying for a buyer's agent to help you find the best property. The focus should always be, and this is one of the questions you should ask when you're looking for a buyer's agent, what properties have you bought and why were they a good purchase? The focus should always be buying better because, quite frankly, you can buy shitty property all by yourself. You don't need to pay someone a significant amount of money to buy subpar property.
So the buyer's agent should really be giving you that advice and give you the confidence to walk away from the wrong property and the knowledge why. So with us, our focus is very much on helping you buy better to helping you buy a property that will outperform any medium price growth of a suburb, so any capital growth that there is to be had, we want to ensure that you buy that property that will do better than everyone else's, and there's a real, systematic way of helping clients understand which properties make the cut and which don't. I can dedicate a whole other episode on this because that is quite in-depth, and there's a lot of minute detail that I'd like to explain to you what makes one property better than another. But again, go for experience with this and ask the question so that you have the confidence that they are actually going to make a difference in your property search. If you use someone who's still got their training wheels on, you could potentially lose your dream home because the buyer's agent didn't handle it properly.
So to recap, using a buyer's agent is an investment. It may not be something that you have thought about before. But if you're looking, for example, in the market that we've been in recently and that is set to continue for some time to come, a buyer's agent can reduce your time away from family and friends while you're searching for your right property, can significantly reduce the time it takes to buy a property. On average, it takes us two to three months to find a property. I hear that unassisted buyers can, on average, take eight months or longer. A buyer's agent should have complete knowledge about what is likely to happen around the property with regards to DA approvals, infrastructure plans of the local government, zoning approvals, things like that. They should show you any issues with the property itself that they've all been uncovered, the good, the bad and the ugly, and that you've had a chance to consider them and the impact financially, mostly for the future, what that will have. If you purchase this property, they should be able to give you the best strategy forward to secure the property, and they should project manage all that for you. So you should never have to talk or deal with the selling agent on your own.
Again, they should give you the confidence to walk away from the wrong property. They should be an expert negotiator and an auction strategist, and they should obviously work exclusively only for you. So using a selling agent as a buyer's agent does not work. If you're not paying for it now, you will be paying for it down the line. They should have access to 100 percent of the property market, including all those off market properties that are available. And they should also be brutally honest in giving you advice. In my case, maybe it helps a bit that I'm Dutch. The Dutch are known for being very direct, but I think there's no point beating around the bush. You know, the whole point is that we are your experts and we should be able to say, "Listen, this is a big mistake, please walk away". But ultimately, it is your choice. So if the buyer's agent has uncovered all these things and you still want to buy this property, then it is their job to buy it for you for the best possible price.
Now, a couple of things you could be asking before you sign on with a buyer's agent. I've got seven points here. Obviously, what is your cost? What is the cost of the services you provide? But more importantly, what does this cost actually cover? When I mentioned the due diligence, some buyers agents do no due diligence at all, it's all left up to you. Some can't be bothered to look into infrastructure projects, so make sure that you understand what it is you're actually paying for, and it comes to expertise. What areas do you specialise in? I do not believe that a buyer's agent can be an expert in multiple, multiple areas. So, for example, we only cover three areas of Sydney at the moment. The Lower North Shore, the Inner West and the Eastern Suburbs, and that's a team of five. Of course, I've got buyers agents who specialise in one area over the other and vice versa. But when an agent says to you, "Oh yes, I can do Brisbane and I can do all of Sydney and I can help you in Melbourne as well", please walk away. Those are not the buyer's agents for you.
Then it comes to experience. It is very easy to set yourself up as a buyer's agent in the industry. The powers that be are working very hard at raising the entry level into the industry, the barrier, but it's very, very low. And of course, it's super easy to set yourself up with a schmick looking website and social media. Everyone's an expert nowadays. But really drill down into how long have you actually been in the industry? Are those genuine Google reviews? Show me the properties that you have bought and why have you bought them? Then you need to ask them about their relationship with seller's agents because there are actually buyer's agents out there that I know have quite contentious relationships with selling agents, and that is not a good thing. It may look cool and it may come off great towards potential clients saying, "Oh yeah, you know, and then I said this and oh, and their face was like that". But actually, that's not a good thing. You want a buyer's agent who has a healthy, productive relationship with selling agents. Of course, I come across selling agents who I'm not particularly fond of, let's say that. But I know that it's not about me, it's about my clients. And I just smile and wave, smile and wave and get the deal done for my client. So it's very important that the buyer's agent has a good reputation amongst selling agents. And by the buy, and that's not because they take referral fees either, make sure that they're completely independent.
Then you should ask them about off markets. What percentage of the properties that you have purchased have been off markets? What's your ratio of buying at auction? What's your ratio for buying pre auction? And when is it a good time to buy pre auction or not? They should be able to answer those questions. And then finally, you need to check their insurance, make sure that they have the proper indemnity insurance, of course, that their license is up to date and also talk to their old clients. How did they find the experience? How long did it take them to buy? Did they feel pressured at any point in time? I mentioned before, check their reviews, and it's quite easy to see if they are genuine reviews or not.
So before you pick a buyer's agent, don't just look at their social media and listen to their sales pitch, really drill down and understand what it is that you're paying for. And I think it's always a great thing that you should talk to multiple buyers agents because we're all very different. We all offer very different things. So you want to make sure that the buyer's agent that you choose you're comfortable with, you trust, because they're going to be in your life quite intensely for a short, or potentially couple of months of your life. And I quite often have clients and say to me, "I'm going to miss you now that I've bought a property and I talk to you more than I do to my Mum". My response is always, "My door is always open". I love staying in touch with my clients, and many, many do. They ask me for renovation advice. They ask me for current prices of their property that we bought years ago. And what's even more lovely is that they referred family and friends to us to work with them because they've just loved the experience, and that is the biggest compliment of all for us.
But yes, do your homework. If you have any questions about choosing a buyer's agent and how to go about it, feel free to reach out through the website or through email. The email is hello@buyyourside.com.au. I would love to help you find the right buyer's agent for you. Until next time, thank you for listening.