Buyer's Agent

[WebBoard]

From: Mike .


Part 5 of the 9 biggest benefits of getting a buyer agent
From: Ross
Date: 12 Feb 2001
Time: 16:34:47

Hi All,

Well... i thought i'd continue the buyer agent string. Since, "The Wife" has issued a challenge. She asked, "No I'm serious, how does it help?" So here's Part 5 of 9...


# 5 You’ll save money with a buyer agent. Why? Because you’ll get a negotiator on your side ...


Do you really want the lowest possible price?

Remember, only a Buyer Agent can negotiate on your behalf and negotiate to protect your financial best interests. A huge amount of money can be saved, with a little preparation and a basic knowledge of property negotiations. Most importantly, your buyer agent is your property negotiator and they use proven strategies that get results.

Don’t forget... your buyer agent’s job is to get you the lowest possible price, on the best terms possible. Your buyer agent will therefore use all their bargaining talents, to negotiate for you. (A skilled buyer agent knows how to apply the three core negotiating variables. These are power, information and time.) And this gives you a real advantage when you buy by “private treaty” or at “auction.”

In addition, your buyer agent provides an emotional barrier. This allows you to make a better buying decision because everything you do will be based on fact and prior planning. Not emotions. Your buyer agent is also your negotiating buffer and this screens you from all selling techniques, until you’re ready to conclude your negotiations.


Negotiating is an art and price is not the only negotiable item

Your buyer agent also knows how to get you a little bit more. You can also benefit with some additional inclusions, some creative financing, assorted concessions, flexible settlement arrangements, seller repairs and other negotiable points. Your buyer agent will build the strongest negotiating position and will structure the transaction to benefit you.


How to save $12,000 when you buy your next home *

Buyer Agent v. Seller Agent

Buyer Agent works for you or Seller’s Agents work for the seller

Asking Price $ 200,000 Asking Price $ 200,000

Negotiated Saving 9 % Price Reduction 3 % Bought for $ 182,000 Sold for $ 194,000

“That’s a $12,000 saving on a $200,000 property... if you had a Buyer Agent !!!”

* Save Money !!! Evidence suggests that a Buyer Agent can negotiate a lower sales price and better contract terms. For example, an informal study of 232 employees by US Sprint found that the transferring employees who engaged their own buyer agent saved an average 9% off the asking price, verse 3% for all other home buyers.

(Source: Business Week, 11.9.95, p130)

Ross Sondergeld ~ Buyerside Real Estate

LREA, QC.RE, Dip.Bus, B.Bus, PGDip.Property

 

[WebBoard]

The Wife

Reply: 1
From: Mike .


Re: Part 5 of the 9 biggest benefits of getting a buyer agent
From: The Wife
Date: 12 Feb 2001
Time: 17:51:40

Hi All,

Well... i thought i'd continue the buyer agent string. Since, "The Wife" has issued a challenge. She asked, "No I'm serious, how does it help?" So here's Part 5 of 9...

**Wasnt so much a challenge as it was trying to understand what it is you can do for people**.

# 5 You’ll save money with a buyer agent. Why? Because you’ll get a negotiator on your side ...

** Thats if you cant do it yourself, right?**

Do you really want the lowest possible price?

** Gee Ross, thats a hard one**

Remember, only a Buyer Agent can negotiate on your behalf and negotiate to protect your financial best interests.

** I dont wanna be picky here, but do you get paid a percentage of the end result? so if it is a percentage of the end price, if the price goes down, so does your commision? is that right?**

A huge amount of money can be saved, with a little preparation and a basic knowledge of property negotiations. Most importantly, your buyer agent is your property negotiator and they use proven strategies that get results.

** Yep you already said that**

Don’t forget... your buyer agent’s job is to get you the lowest possible price, on the best terms possible.

** Yep you already said that**

Your buyer agent will therefore use all their bargaining talents, to negotiate for you.

** Yep you already said that**

(A skilled buyer agent knows how to apply the three core negotiating variables. These are power, information and time.)

**Hey Ross,

Power.

Time.

Information,

Classic Herb Cohen stuff there, love it.

For the forums information that is : "You can Negotiate anything" by Herb Cohen , Angus and Robertson, I think its about $19.95rrp, dunno if it includes GST.

Excellent book ,you simply MUST read it, even if it is a little outdated, I believe it can be easily adapted to todays enviroment.

And this gives you a real advantage when you buy by “private treaty” or at “auction.”

** I would dare say if you applied those principals it would give you an adavantage no matter what the situation is, can you please explain to the forum what private treaty means**

In addition, your buyer agent provides an emotional barrier. This allows you to make a better buying decision because everything you do will be based on fact and prior planning. Not emotions.

** What? you're not going to tell the buyer about that cute lil sandpit, and all the frilly wall decals that make the 2nd room a "girls" room, and the 3rd room a "boys" room, and the fact that its extremly low maintenance cause its brick, or how quaint it looks because its a little timber home, is this what you are protecting people from? If so, are you then dispensing advice on what kind of property they should be buying? just curious ...***

Your buyer agent is also your negotiating buffer and this screens you from all selling techniques, until you’re ready to conclude your negotiations.

** As the buyer is ready to conclude the negotiations, do you let them get hit with those nasty selling techniques?**

Negotiating is an art and price is not the only negotiable item

** Negotiating is a learned skill, not everyones cup of tea i admit, and yes EVERYTHING is negotiable, everyone should learn this lesson, its very important.**

Your buyer agent also knows how to get you a little bit more.

**Could that be because your the one who has viewed the property, and you know what can be got?**

You can also benefit with some additional inclusions, some creative financing,

** You have someone who can do creative financing for you?, Do you receive a kickback?**

assorted concessions, flexible settlement arrangements,

** This can be done by anyone, but some people just dont ask for it, right?**

seller repairs and other negotiable points.

** This can be done by anyone, but some people just dont ask for it, right?**

Your buyer agent will build the strongest negotiating position and will structure the transaction to benefit you.

** Thats what we all want**

How to save $12,000 when you buy your next home * Buyer Agent v. Seller Agent Buyer Agent works for you or Seller’s Agents work for the seller

** I think we got that part now, I'm not going to go count up the number of times you have said it on this forum**

Asking Price $ 200,000 Asking Price $ 200,000 Negotiated Saving 9 % Price Reduction 3 % Bought for $ 182,000 Sold for $ 194,000

*** This part confuses me? Sold for $194K? I dont understand**

“That’s a $12,000 saving on a $200,000 property... if you had a Buyer Agent !!!”

** Dont forget your entry and exit costs, and you can get that price yourself , but if you dont know how, are just not into learning how to negotiate, maybe a buyers agent is the way for you**

Save Money !!! Evidence suggests

** Suggests?, do you suggest Ross, or are you getting better prices?**

that a Buyer Agent can negotiate a lower sales price and better contract terms. For example, an informal study

** Ya gotta love informal, that formal stuff makes me weep**

of 232 employees by US Sprint

** What is US Sprint? What do they make? are they factory line people ? IT People? Farmers? What?**

found that the transferring employees who engaged their own buyer agent saved an average 9% off the asking price, verse 3% for all other home buyers. (Source: Business Week, 11.9.95, p130)

** I dont think I have a copy from 1995 lying around?**

Ross Sondergeld ~ Buyerside Real Estate

** CHeers Ross, thanks for answering some questions, as you can see I have more questions for you, I appreciate your time, I think there are some people who could really use your help, and the rest of us average hacks will want to do it our way, which is still a great way**


LREA, QC.RE, Dip.Bus, B.Bus, PGDip.Property

The Wife

**MuMMY EXTOd AIRE. Property BYER, Bus. OWNER, VIC NSW Qld ACt.**

 

[WebBoard]

G in Indo

Reply: 1.1
From: Mike .


Re: Part 5 of the 9 biggest benefits of getting a buyer agent
From: G in Indo
Date: 16 Feb 2001
Time: 16:30:28

Are you attacking Ross or Business week? I assumed the (Source: Business Week, 11.9.95, p130) at the bottom meant it was a direct quote from Business Week. Am I wrong?

 

[WebBoard]

Owen

Reply: 1.1.1
From: Mike .


"MuMMY EXTOd AIRE. Property BYER, Bus. OWNER, VIC NSW Qld ACt" - HAAAHAAAHAA!!!!
From: Owen (nt)
Date: 13 Feb 2001
Time: 14:11:25

 

[WebBoard]

John (Brisbane)

Reply: 1.1.1.1
From: Mike .


Re: Part 5 of the 9 biggest benefits of getting a buyer agent
From: John (Brisbane) - TW
Date: 14 Feb 2001
Time: 14:57:20

Hi TW,

MuMMY EXTOd AIRE. Property BYER, Bus. OWNER, VIC NSW Qld ACt... Absolutely love it!! Only wish I could have a post script like that!!

I hope to hear a response from Ross, I hope he is not down for the count after that one.

1.........2..........3.........

 

[WebBoard]

Gee Cee

Reply: 1.1.1.1.1
From: Mike .


Re: Part 5 of the 9 biggest benefits of getting a buyer agent
From: Gee Cee
Date: 12 Feb 2001
Time: 20:22:16

I agree that some people certainly have a need for a Buyers Agent. But if I had used one years ago and kept doing the same I would never have come up to speed on anything.

How do you learn about finding an area, a place that you want, what else is available, other options, financing, negotiating, etc etc.

These skills are learnt in the field. As you learn more and network with other people you have the confidence to go into other ventures that may be just out of your comfort zone.

If you never get into the pool you will never improve on the distance you can swim.

It is not just dealing Real Estate. Negotiating for anything. New car, fridge, block of land, block of flats, etc.

I find half the FUN is the hunt , and not so much the kill.

Happy hunting

Gee Cee

 

[WebBoard]

Michael Croft

Reply: 1.1.1.1.1.1
From: Mike .


Re: Part 5 of the 9 biggest benefits of getting a buyer agent
From: Michael Croft
Date: 13 Feb 2001
Time: 15:03:30

Hi Gee Cee,

I agree the fun is in the hunt, to be honest I don't enjoy the kill much (too soft I guess), but the real 'fun' is in the meals afterwards. Just how sumptious the meals are, depends on your skill as a hunter. Michael

 

[WebBoard]

Mike

Reply: 1.1.1.1.1.1.1
From: Mike .


Re: Part 5 of the 9 biggest benefits of getting a buyer agent
From: Mike
Date: 13 Feb 2001
Time: 14:50:07

Hi Gee Cee,

Always enjoy your posts, so don't take this the wrong way...how about you experienced guys tell us about some of the mistakes you made along the way.

These newbies can't afford to make a mistake with their first one so rather than focussing on the learning experience factor of DIY, how about some suggestions for getting it right first time?

Regards, Mike

 

[WebBoard]

Ken

Reply: 1.1.1.1.1.1.1.1
From: Mike .


Re: Part 5 of the 9 biggest benefits of getting a buyer agent
From: Ken
Date: 12 Feb 2001
Time: 21:25:52

To The wife - love your qualifications, all are hard earned, some impossible for mere males to achieve

Ross - If you were contacted from interstate and told 'I want to buy an IP on the gold coast for under $150000, with a rent return of +10% and expected cap growth of 8%pa'. What would your response be?

 

[WebBoard]

JohnE

Reply: 1.1.1.1.1.1.1.1.1
From: Mike .


Re: Part 5 of the 9 biggest benefits of getting a buyer agent
From: JohnE
Date: 12 Feb 2001
Time: 17:18:19

Hi Ross, This is a new service industry and there is no regulation of buyer agents. Perhaps there should be to assist the reliable, honest consultants in the market place. If some prospective purchasers are wary, it is probably because it is not immediately obvious what guarantees independence and objectivity.

Also what evidence can the buyer agent provide to demonstrate his/her expertise and effectiveness? How does the purchaser ensure value for money? What are the terms of agreement? What redress if it is not obtained? What guarantees? To an extent there are similar credibility challenges throughout the investment advisory industry. Caveat emptor - let the buyer beware.

 

[WebBoard]

Kristine

Reply: 1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: Part 5 of the 9 biggest benefits of getting a buyer agent
From: Kristine re JohnE comment licensing buyers agents
Date: 14 Feb 2001
Time: 21:46:50

John:

Section 4 of the Estate Agents Act (Victoria) 1980 clearly states that "estate agent or agent means any person who exercises or carries on or advertises or notifies or states that s/he exercises or carries on or that s/he is willing to exercise or carry on or in any way holds himself out to the public as ready to undertake the business of

(a) selling buying exchanging letting or taking on lease of or otherwise dealing with or disposing of;

(b) negotiating for the sale purchase exchange letting or taking on lease of or any other dealing with or disposition of;

(c) collecting rents for; or

(d) compiling information or preparing reports on the sale purchase exchange letting taking on lease of or otherwise dealing with or disposing of - any real estate or business on behalf of any other person:

"estate agent's licence means a valid and unexpired estate agent's licence under this Act

and Section 38 "Unlicensed person pretending to be licensed as agent" shall be guilty of an offence.


I am not familiar with legislation in other states, but the law in Victoria says you can act on your own behalf in buying selling etc, but if you act on behalf of another person - and note, the Act does not even mention charging a fee - then you must be a licensed estate agent.


So if you ever think of moving to or investing in Melbourne, I know where there's a terrific - and legal - buyer's agent!

Cheers, Kristine

[email protected]

 

[WebBoard]

Mike

Reply: 1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: Part 5 of the 9 biggest benefits of getting a buyer agent
From: Mike
Date: 13 Feb 2001
Time: 14:35:47

Hi JohnE,

Good questions.

You asked: "How does the purchaser ensure value for money? What are the terms of agreement? What redress if it is not obtained? What guarantees?

From a copy of a buyer's agent agreement before me, it says you are to pay, "a retainer of $750.00 (which will be offset against the total fee payable)."

"A success fee of 3% of 85% of the price of the property at the time my/our first offer is presented or the actual purchase price at auction and payable at the same time as the deposit."

Me again: When signing the agreement you agree that you have been advised to obtain "independent professional legal, accounting and investment advice, prior to executing a contract for sale."

The agreement also says, "In the unlikely event that the special condition(s) are not fulfilled and the contract does not become unconditional, (the buyer's agent) will refund all fees received LESS the retainer."

I hope this helps. I noticed a problem with, "A success fee of 3% of 85% of the price of the property at the time my/our first offer..." My question is, "Why is a success fee payable BEFORE the negotiations are concluded? What if the deal falls over, do you get the success fee back? Why is it called a success fee when successful negotiations aren't assured?

I'll seek clarification on this point and get back.

Regards, Mike

 

[WebBoard]

Mike

Reply: 1.1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Clarification
From: Mike
Date: 14 Feb 2001
Time: 21:54:25

To clarify my concern in previous post, TBA says:

"In answer to you question on our success fee:

It's true that our duties to our buyer client do not end until all the special conditions have been fulfilled and the contract has become unconditional."

"However we do not have the luxury of having our fees contained within the deposit cheque which is 99.99% banked in the selling agent's trust A/c. We do not want to be chasing for our fees some time later and potentially being frustrated with only the recourse of suing for unpaid fees."

"You will read in the front of our agreement that we will refund the fee should the contract fall over, just like the selling agent is required to refund the deposit in that eventuality."

"This has not been a problem for any of our buyers todate, however for the over cautious buyer we would agree for our fee to bee paid into their solicitor's T/a with clear written instructions that they release those funds to us at the stipulated time."

"Hope that explains our reason for doing it that way."

 

[WebBoard]

LB

Reply: 1.1.1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: Part 5 of the 9 biggest benefits of getting a buyer agent
From: LB
Date: 12 Feb 2001
Time: 17:38:44

Hi Ross, don't meen to rain on your parade or anything but you say Buyers agent works for the buyer, I agree. I have in the past used real estate agents for that. He looks on my behalf and when WE find a good property that suits my needs I present an offer through him. He then puts it to the real estate agent who has the property listed. This means he is working on MY behalf and takes a portion of the commission from the sellers REP (means I don't pay), but is still looking out for my interests. The only thing he may not do as much due diligence for you but there is nobody better than yourself (if you have time) and knowledge of the area which your agent should have as well.

So the idea has been around for quiet a while probably not in such a focussed manner. I then use a mortgage broker for the finance. And as far as negotiating goes, work out what the property is worth to you - make an offer and if it is not accepted due to not being in the same ball park = move on to the next offer. I do beleive that there is a lot of good reasons to use a creditable buyers agent but half the fun is doing it yourself is it not? Cheers LB