Buyer's agency
- Thread starter yadeh
- Start date
PROS
*Save you time contacting, arranging, looking, inspecting, driving around, phoning, reinspecting, researching, analysing and talking talking talking to REA's and PM's
*Save you stress if you don't enjoy dealing with REA's or private sellers or the general merry-go-round that accompanies the great property search
*Save you money as you are hiring people with negotiating experience and knowhow who can be more likely to negotiate a better price than you could
*You generally will find a property faster as BA's are working 5-6 days a week for you as a client
*Their ongoing contact with REA's and knowledge of local areas will benefit you as their network is wider and they can often access silent listings and fresh listings before the photos have even been taken
*They are prepared to doorknock specific streets for private sellers
*Access to agent-only databases such as RPData and Residex allow them to have the knowledge required to analyse and compare properties directly, as well as knowing how long a property has been on the market, at what price, with who and for how long
*You remain ultimately in control as you are the client issuing the instructions and making the final decisions
*As you are paying for a service, they should have your interests as their priority, especially as BA's have a much smaller pool of clients than REA's have sellers.
*BA's represent only one party-the buyer. Unlike REA's they have no conflict of interest and therefore can remain totally impartial.
*Effective BA's deflect the emotion that often accompanies property purchases. When emotion is involved, we can easily overlook or pretend not to notice faults. BA's will bring such features to your attention as part of their job and evaluate property dispassionately for you
*They can also organise building/pest inspections, and some recommend financiers, solicitors and other necessary professionals as part of the fee.
Some Sydney BA's even coordinate renovations and removals!
*You should be dealing with agents who are appropriately licensed and preferably property investors themselves. Also look for agents who pay attention to the importance of a detailed and comprehensive client wishlist when you are interviewing them
CONS
*They charge fees!
*You may strike someone who appears untrustworthy. Trust is a major issue when employing BA's and, if you don't feel as if the person you're hiring is trustworthy, then look for someone else
*You may feel a certain disappointment in that you're not personally inspecting all the properties, as going through all those houses can be fun after all (well for the initial period of 20-30 properties anyway until the novelty wears off!). However, if you enjoy this aspect of the search, then consider still employing a BA to evaluate and negotiate an individual property (that you have found) on your behalf. Fees are much cheaper (naturally) for this type of service but could be well worthwhile if you're not a confident negotiator or don't know how to assess the true worth of a property.
Naturally
I am a tad biased as I am about to launch my own Buyers Agency here in the Hills (look out for HouseSearchAustralia very soon!) so I do believe that they have their place in the RE industry. BA's are commonplace in the US and I believe that our increasingly time-poor society will eventually see these agents as another common outsourcing tool, in their quest for the next property acquisition.
Let us know how you go Yadeh and please don't hesitate to PM me if I can assist in any way
*Save you time contacting, arranging, looking, inspecting, driving around, phoning, reinspecting, researching, analysing and talking talking talking to REA's and PM's
*Save you stress if you don't enjoy dealing with REA's or private sellers or the general merry-go-round that accompanies the great property search
*Save you money as you are hiring people with negotiating experience and knowhow who can be more likely to negotiate a better price than you could
*You generally will find a property faster as BA's are working 5-6 days a week for you as a client
*Their ongoing contact with REA's and knowledge of local areas will benefit you as their network is wider and they can often access silent listings and fresh listings before the photos have even been taken
*They are prepared to doorknock specific streets for private sellers
*Access to agent-only databases such as RPData and Residex allow them to have the knowledge required to analyse and compare properties directly, as well as knowing how long a property has been on the market, at what price, with who and for how long
*You remain ultimately in control as you are the client issuing the instructions and making the final decisions
*As you are paying for a service, they should have your interests as their priority, especially as BA's have a much smaller pool of clients than REA's have sellers.
*BA's represent only one party-the buyer. Unlike REA's they have no conflict of interest and therefore can remain totally impartial.
*Effective BA's deflect the emotion that often accompanies property purchases. When emotion is involved, we can easily overlook or pretend not to notice faults. BA's will bring such features to your attention as part of their job and evaluate property dispassionately for you
*They can also organise building/pest inspections, and some recommend financiers, solicitors and other necessary professionals as part of the fee.
Some Sydney BA's even coordinate renovations and removals!
*You should be dealing with agents who are appropriately licensed and preferably property investors themselves. Also look for agents who pay attention to the importance of a detailed and comprehensive client wishlist when you are interviewing them
CONS
*They charge fees!
*You may strike someone who appears untrustworthy. Trust is a major issue when employing BA's and, if you don't feel as if the person you're hiring is trustworthy, then look for someone else
*You may feel a certain disappointment in that you're not personally inspecting all the properties, as going through all those houses can be fun after all (well for the initial period of 20-30 properties anyway until the novelty wears off!). However, if you enjoy this aspect of the search, then consider still employing a BA to evaluate and negotiate an individual property (that you have found) on your behalf. Fees are much cheaper (naturally) for this type of service but could be well worthwhile if you're not a confident negotiator or don't know how to assess the true worth of a property.
Naturally
I am a tad biased as I am about to launch my own Buyers Agency here in the Hills (look out for HouseSearchAustralia very soon!) so I do believe that they have their place in the RE industry. BA's are commonplace in the US and I believe that our increasingly time-poor society will eventually see these agents as another common outsourcing tool, in their quest for the next property acquisition.Let us know how you go Yadeh and please don't hesitate to PM me if I can assist in any way
I agree with Jaques last paragraph.
There is certainly more room for buyers agents here in Aust, it's certainly something that I would consider starting as a business also.
I don't think the line is currently clear for who the REA's are acting for these days. I'm always getting flyers in my home mailbox from agents saying they have 'buyers' on the books waiting to purchase, maybe it's all smoke and mirrors just to get listings and sales.
There is certainly more room for buyers agents here in Aust, it's certainly something that I would consider starting as a business also.
I don't think the line is currently clear for who the REA's are acting for these days. I'm always getting flyers in my home mailbox from agents saying they have 'buyers' on the books waiting to purchase, maybe it's all smoke and mirrors just to get listings and sales.
Thanks Geoff for the hint. Keying in the right word makes a lot of difference in search result.
Jacque
Thanks for the detailed and useful comments. That is what I needed. In the mean time I will have an eye on your web site, and may be will be your next client!
As I understand, the positive pionts are more than the negative ones. By the way, the specific agent which I have in mind is: Positive Real Estate which was also advertised in the API this month. Does any one have any experience with them or knows them?
Yadeh
Jacque
Thanks for the detailed and useful comments. That is what I needed. In the mean time I will have an eye on your web site, and may be will be your next client!
As I understand, the positive pionts are more than the negative ones. By the way, the specific agent which I have in mind is: Positive Real Estate which was also advertised in the API this month. Does any one have any experience with them or knows them?
Yadeh
yadeh said:
I've never dealt with them, but previous APIs and Google can be useful.
The principal (Sam Saggers) is/was with Richmastery / Entrepeneurs Success Centre. http://www.richmastery.com/au/default.aspx?goto=Property/documents/disclaimer.htm
Some previous forum discussion appears here:
http://www.somersoft.com/forums/showthread.php?p=130924
Let's look at the property they give as an example (p77 Sept 05 API). It's a $360k duplex getting $525pw rent, or a gross yield of 7.6%. Assuming 7% interest and assuming 3% for costs it's going to be negative cashflow before tax. After tax it might be slightly positive, depending on your tax rate and vacancy. I don't know where it is, but if it's in a regional or mining town, it doesn't look anything special.
The fine print in the ad says 'The property was still available at the time of adverts submission and may have been sold by the date of publication'.
That's funny, I've seen pictures of that place before.
And sure enough it's in previous API ads, at least as far back as May 05.
Either things have been quiet in Investorland, potential buyers agree it's not a particularly great deal, there's problems we don't know about or the ad content is old.
Assuming the featured property is indicative of what is routinely purchased for clients, the ad has not done its job in convincing me that they can find deals better than I can.
In your investigations it might be worth checking that any buyers agent you engage is genuninely independent, represents your interests and is not actually a selling agent or marketeer in disguise.
Rgds, Peter
Spiderman said:
Actually this is vitally important, as there are quite a few BA's who are claiming to be independent, yet really are fronts for marketeering or RE agencies or Investor Advisory services.
Ask if they are totally independent, what kickbacks (if any) they receive from third parties, and how they access their listings.
A genuine BA will be steadfastly independent and have no links with REA's or developer companies at all. They are supposed to be scouring everything that's available on the market on your behalf, just as if you were doing the looking yourself.
I believe that 'kickbacks' are not legal and are in fact a 'secret commission'.
Any commission, from both REA's and BA's need to be disclosed fully in Queensland, this point was hammered home time and time again on my course.
www.fairtrading.qld.gov.au/OFT/OFTW...B70114B4A256B9100808F97?OpenDocument&L1=Forms
I would say that other states have something similar.
Protect youself at every intersection !!
Any commission, from both REA's and BA's need to be disclosed fully in Queensland, this point was hammered home time and time again on my course.
www.fairtrading.qld.gov.au/OFT/OFTW...B70114B4A256B9100808F97?OpenDocument&L1=Forms
I would say that other states have something similar.
Protect youself at every intersection !!
Dear Peter
Thank you so mcuh for the insight. You should know that the insights of good guys like you as experienced investors are very helpful for those like me who are new in IP. That thread was very helpful. As it was said in there, the offers are so enticing that you can not resist at first. For example, one of them is this which seems very good for people like me who want to spend less than 200 k:
Front Purchase Price:
Rental Income Per Week:
Investment Yield:
Cash Flow After Tax:
Capital Growth (10 years):
Capital Growth (12 months):
Finder's Fee:
$175,000
$355pw
9.7%
$3,081
3.62%
9.91%
$5,995
This one had sold add on that just a few days after it appeared.
Anyway, I had a discussion with my solicitor, he had the same view as yours, and was not optimistic.
All of this thread was very helpful for me.
Thanks guys
Yadeh
Thank you so mcuh for the insight. You should know that the insights of good guys like you as experienced investors are very helpful for those like me who are new in IP. That thread was very helpful. As it was said in there, the offers are so enticing that you can not resist at first. For example, one of them is this which seems very good for people like me who want to spend less than 200 k:
Front Purchase Price:
Rental Income Per Week:
Investment Yield:
Cash Flow After Tax:
Capital Growth (10 years):
Capital Growth (12 months):
Finder's Fee:
$175,000
$355pw
9.7%
$3,081
3.62%
9.91%
$5,995
This one had sold add on that just a few days after it appeared.
Anyway, I had a discussion with my solicitor, he had the same view as yours, and was not optimistic.
All of this thread was very helpful for me.
Thanks guys
Yadeh
Yadeh,
The thread provided by geoffw was mine. Basically since that time I have done a lot of research on buyers agents.
As Jacque points out there are pro's and con's. Essentially you need to determine why you are wanting to use a buyers agent first of all. In my case I am looking for a low cost property so the fee eats into my cash flow significantly, however if I didn't enlist their help I may never have the time to buy a property at all! I don't physically have the time to travel to the locations that suit my budget. If I did, I may not consider using an agent. Your decision as to why to use them should set your criteria.
I think they're a great idea. To use a cliche out of many articles, we use agents to sell our properties so why not to buy. These guys have a lot of information about the areas that you are looking to invest. They spend every day researching and looking at property. They will be far more experienced at this stuff than a lot of us novices ever will be. They know the pitfalls and are willing to share them.
When interviewing an agent, here are some of the things that I have found useful:
1. Ask them how long they have been in business, what is their background, are they investing in property themselves?
2. What areas do they service - all of Australia or one state, or particular areas within a state?
3. What is their fee structure? Is it capped at a certain rate if you're are under a certain purchase price? What do they do for that fee? Get them to talk you through the process.
4. Can you use your own mortgage broker, quantity surveyor etc or can they provide local companies?
5. Do they have relationships with property managers and how do they manage that relationship?
6. Are they are a registered company? You can check the asic.gov.au website to check if they are, and also to see if they have been in business as long as they say they have.
7. Do they produce video and photographs of the property? How thorough is their inspection report? Can they help organise repairs if required?
8. Do they have a reasonable non-refundable fee and if so, is it refundable if they cannot find a property that matches your criteria?
9. How long will they take to complete their search?
10. Are they providing value for money? They may not be the cheapest but are they offering good value for their service compared to other buyers?
11. What differentiates them from the next buyers agent in their state? Ask them, they will tell you what they think...helps to compare them when you have the conversation with the next guy.
12. Do they include building and pest inspections in their fees or are they separate costs?
13. Will they liaise with all relevant parties - mortgage broker, solicitor, pest guy etc?
And the two most important in my mind:
14. Can they provide references? Really you won't know if they are truly genuine however I rang a reference for an agent once and he and I talked for an hour on investing in general and I got a lot of tips out of the call! He also gave a good reference and I judged it to be genuine.
15. Do you have a good rapport with them? I am big on relationships. If they tell you what to do, treat you like a fool or poke fun at your preferred purchase price, don't use them. You are going to be living in their pockets over phone/email during the purchase so you have to feel that you trust them and have a good relationship with them. Rapport goes a long way to a good relationship in my mind. They need to be your partner not a service provider. I try and keep them on the phone for a while to really get a feel for their values, their sense of fairness and honesty, and how they treat me as a potential client. I always ask them to call me too so they foot the bill and not me, especially if they are interstate. If they want my business....
There are some good agents on the realestate.com.au and domain.com.au sites. There is also Australian House Hunters that are national.
Hope this helps. If you need any feedback on particular agents, send me a PM and I'll share what I have discovered so far.
Happy hunting!
The thread provided by geoffw was mine. Basically since that time I have done a lot of research on buyers agents.
As Jacque points out there are pro's and con's. Essentially you need to determine why you are wanting to use a buyers agent first of all. In my case I am looking for a low cost property so the fee eats into my cash flow significantly, however if I didn't enlist their help I may never have the time to buy a property at all! I don't physically have the time to travel to the locations that suit my budget. If I did, I may not consider using an agent. Your decision as to why to use them should set your criteria.
I think they're a great idea. To use a cliche out of many articles, we use agents to sell our properties so why not to buy. These guys have a lot of information about the areas that you are looking to invest. They spend every day researching and looking at property. They will be far more experienced at this stuff than a lot of us novices ever will be. They know the pitfalls and are willing to share them.
When interviewing an agent, here are some of the things that I have found useful:
1. Ask them how long they have been in business, what is their background, are they investing in property themselves?
2. What areas do they service - all of Australia or one state, or particular areas within a state?
3. What is their fee structure? Is it capped at a certain rate if you're are under a certain purchase price? What do they do for that fee? Get them to talk you through the process.
4. Can you use your own mortgage broker, quantity surveyor etc or can they provide local companies?
5. Do they have relationships with property managers and how do they manage that relationship?
6. Are they are a registered company? You can check the asic.gov.au website to check if they are, and also to see if they have been in business as long as they say they have.
7. Do they produce video and photographs of the property? How thorough is their inspection report? Can they help organise repairs if required?
8. Do they have a reasonable non-refundable fee and if so, is it refundable if they cannot find a property that matches your criteria?
9. How long will they take to complete their search?
10. Are they providing value for money? They may not be the cheapest but are they offering good value for their service compared to other buyers?
11. What differentiates them from the next buyers agent in their state? Ask them, they will tell you what they think...helps to compare them when you have the conversation with the next guy.
12. Do they include building and pest inspections in their fees or are they separate costs?
13. Will they liaise with all relevant parties - mortgage broker, solicitor, pest guy etc?
And the two most important in my mind:
14. Can they provide references? Really you won't know if they are truly genuine however I rang a reference for an agent once and he and I talked for an hour on investing in general and I got a lot of tips out of the call! He also gave a good reference and I judged it to be genuine.
15. Do you have a good rapport with them? I am big on relationships. If they tell you what to do, treat you like a fool or poke fun at your preferred purchase price, don't use them. You are going to be living in their pockets over phone/email during the purchase so you have to feel that you trust them and have a good relationship with them. Rapport goes a long way to a good relationship in my mind. They need to be your partner not a service provider. I try and keep them on the phone for a while to really get a feel for their values, their sense of fairness and honesty, and how they treat me as a potential client. I always ask them to call me too so they foot the bill and not me, especially if they are interstate. If they want my business....
There are some good agents on the realestate.com.au and domain.com.au sites. There is also Australian House Hunters that are national.
Hope this helps. If you need any feedback on particular agents, send me a PM and I'll share what I have discovered so far.
Happy hunting!
