Don’t hire a buyer’s agent without reading this first
If you are only going to read one article about how to hire a buyers advocate, this is it! It covers THE most critical things you need to check before hiring a buyers advocate and will help you spot the fakes, avoid the fly-by-nighters and skip the “double agents” who will lose you money and cost you opportunities.
There is a significant issue facing the buyer agency sector at present and it impacts YOU!
Currently there are no restrictions regarding who can call themselves a buyer’s advocate or buyer’s agent. Let’s look at who could be calling themselves a buyer’s agent or buyer’s advocate and ripping you off of the true representation you deserve.
- Your dog groomer could offer to bid at auction for you and call themselves a buyer’s advocate
- Your accountant or mortgage broker may moonlight as a buyer’s agent on the weekend and offer “buyer advocacy services”
- Your friend who loves looking at property could offer you to pay her to do a spot of property shopping for you
Technically speaking, it is illegal to earn a commission/payment from anyone without holding a real estate license. In reality people who are not properly licensed or adequately experienced are working as buyer’s advocates without detection. If you work you with an unlicensed, inexperienced person you are taking a considerable risk with your hard earned money.
How to spot the fakes, double agents, moonlighters and overnighters
Step 1 – Look for Proper Accreditation & Correct License
In Victoria a buyer’s advocate needs to hold a full real estate license to act as a buyers advocate. If you employ an unlicensed and under-qualified advocate you are placing your money at risk. There will be no insurance to cover mistakes when they happen and a lack of experience and training will dramatically increase the chance of mistakes occurring. For example, handling the contract incorrectly, missing important defects that a trained eye would catch, recommending properties in inferior streets or getting their price estimate wrong and you being left with a valuation shortfall.
When you hire a buyer’s advocate in Melbourne, ensure they are a fully licensed real estate agent. If you are shopping for a buyer’s advocate in Sydney, your buyer’s agent will hold a specialist license in Buyer’s Advocacy.
Step 2 – Weed out the “Double Agents”
Watch out for selling agencies who offer “buyer advocate” or “buyer agency” services.
Selling agents who moonlight as a buyer’s agents (sometimes for free in order to win the listing to sell your existing property) are what we refer to as “double agents”.
A Double Agent is employed by the vendor. They are legally obligated to perform every task they do with the vendor’s best interest in mind. They cannot legally or ethically give you the same level of representation if they are also employed by vendors. Not only that, but they will not have the rapport or relationships with selling agents to get you access to properties because they are technically a competing agent. Selling agents see Buyer’s Advocates as an asset and an ally, but they are going to view a fellow selling agent as a competitor and as a result, a double agent will be compromised and not be able to get you the favours and access a buyers agent will.
If you are hunting for a property and a selling agent introduces you to their “inhouse buyers agent” don’t mistake them for a genuine, independent buyers advocate.
A genuine buyer’s agent is employed to represent your best interests, protect you in the transaction, negotiate the terms and conditions of your purchase so it is favourable to you, and buy your chosen property for the lowest possible price.
Selling agents are representing the seller’s best interest, attempting to get the highest possible price, playing you off against other buyers to achieve a higher sales price and using information they have about you to get their client (the seller) the most amount of money.
To get the protection you deserve, work only with a Genuine Buyer’s Advocate who is there to exclusively represent you.
Step 3 – Stay clear of the Developers & Marketers masquerading as Buyer’s Agents
Ever hear a horror story where a buyer purchases a property off-the-plan, a house and land package, or townhouse development off-the-plan (or near completion) through a company who “really helped us out, gave us an education, came to our house, explained everything to us and showed us how to buy this great property….and it was all for free” ………and then the property did not grow in value and was worth less 4 years later than what the person originally paid for it?
Well chances are the purchaser got stitched up by a sales consultant or marketer posing as an independent “coach”, “property investment advisor” or worse, a Buyer’s Advocate.
The reason why so many property investors lose money on these deals is because hefty commissions of $20,000 – $80,000 are paid. These commissions are built into the price of the property, meaning that buyers actually overpay for the property leaving you ‘behind the eight-ball’ from the very beginning. This is the true cost of cheap or free professional advice.
To make the task of sniffing out these fakes harder, some of these fake buyer advocates are even charging a little fee upfront (e.g. $5,000) or rebating their fee at the end after they have received a commission from the builder or developer.
This becomes confusing for consumers because it looks like you are paying for independent advice, but you’re not. If you are not paying a professional fee (usually >$10k) upfront and signing an “Exclusive Authority” with the buyer’s advocate, chances are you are not working with a genuine buyer’s agent.
Step 4 – Look for longevity, dedication and excellence
Today, the barrier of entry into the real estate industry is extremely low. When I gained my full real estate licence 15 years ago, I had to work incredibly hard to gain a full real estate license (6 months of study, 50 assignments and 30 odd exams). Today’s rules allow people to skip this education. For a few grand and a few days, studying from home, almost anyone can achieve a qualification in real estate, even with very little experience. That’s great to allow new passionate professionals into the industry, but it can make it hard for you to identify who is experienced and who has just set up shop.
The NSW Real Estate Institute are lobbying the government to make significant changes to the minimum requirement for entry into real estate. This is a great win for consumers because it deters fly by nighters with no experience from jumping into the industry when things are easy (i.e. during boom markets) offering inferior service.
Melbourne is full of independent start-ups with little experience behind them and while we all have to start somewhere, you want to be sure that you are investing your time and money with an experienced professional who’s built the equity of relationships with agents, experience buying all across Melbourne and a long-term investment of time and passion in their business. Let’s face it, it’s easier to give up and pack-up shop overnight when you’ve only just started something, but an established, long-term business will have the commitment and experience to follow-through.
Look for an agency with a strong, long career dedicated 100% to buyer advocacy work.
Buyer’s advocacy work requires a specifically defined set of skills, unique processes and a different mindset to selling agents. Just because someone has worked their whole career as a selling agent or spent many years in the real estate industry, doesn’t mean that they have the right ingredients to be a great advocate.
Experienced advocate agencies have staff, support, specialist software and data subscriptions, processes and procedures that ensure you are protected and nothing is missed. Having run my business for >14 years now, some of those years without assistance and staff to support me, I know first hand that it is impossible to be effective, run a business, handle a lot of purchases AND be 100% onto every single detail I need to be aware of when looking at properties for clients.
The more support systems we have, the more effective we are as a team and the better we can do the job for you; getting through more properties, cultivating more relationships with agents to get access to off-market properties, and knowing each suburb in detail.
The other thing that comes with time in the business is experience. Nothing in the world beats experience. You can’t shortcut it and you can’t outsmart it. Saving a few grand on a cheaper, less-experienced advocate without proven systems and processes may end up costing you tens of thousands, missed opportunities or a poor performing asset (or all of these at once!)
Questions you MUST ask your buyer’s advocate before signing on the dotted line
Ask the following questions to ensure you are getting a genuine buyer’s agent/advocate;
- Do you receive a commission or referral fee from anyone else aside from the fee I pay you? The answer should be no.
- Do you sell property as well as buy property? The answer should be no.
- How many years have you been working exclusively as a buyer’s advocate? Malcolm Gladwell in his book Outliers, said that mastery is achieved after 10,000 hours of dedication to a subject matter, approximately 5 years of dedicated practical experience. Parker Buyers Advocates have been exclusively engaged as Buyers Avocates for 14 consecutive years.
- Are you a fully licensed real estate agent? How long have you had your licence for? Remember, people can obtain their real estate license in a matter of days depending on which organisation they get their accreditation through. If the buyer’s advocate you are interviewing is newly licensed, chances are they do not have adequate experience running an agency and may unintentionally expose you to risk.
- Do you work full-time as a buyer’s advocate? Not a question you would think you need to ask, but yes, there are many people out there trying their hand casually, after hours or on the weekend as a buyer’s advocate. My team and I work 6 days a week, 7/8am until 7pm most nights, trust me – you can not be a part time buyer’s advocate and do even a moderate job. Buyer’s advocacy is a full time job. And since buying a home or an investment is the single biggest expense you will ever pay in your entire life, it really ought to be the single focus of any professional helping you with such an important task.
Buyer’s Advocacy is a very fast growing industry which is attracting a lot of people flocking to the industry from a wide range of backgrounds. Given you are going to be paying for a professional service you may as well make sure you are getting the right knowledge, experience, systems and support for your money. When you hire a true professional who is dedicating their every working moment to their craft and has the experience and contacts behind them, the benefits you will receive as a client will be tenfold.
Time to talk to the experts
Engaging a quality Buyers Agent will ensure your property purchase runs smoothly and easily. You’ll be glad you took the time to ask the important questions at the start. Talk to us about your upcoming investment or home purchase, book a Get Acquainted Call below.