LJHooker Buyers Agency - Thoughts please?

[Jacque]

As you all know, I am a buyers agent and have been since 2005. I am also currently President of REBAA - Australia's only national association body for independent buyers agents (with 52 firm members). Our industry is a growing one and especially in key capital cities such as Sydney, Melbourne, Brisbane and Perth.

This post is purely to seek opinions and comment from the public and, in particular, those most active in the real estate market and who better to ask than Somersoft members

I'd really like to know your thoughts on the latest buyers agency to open here in Sydney, and really do appreciate your time here in responding. I have included the link below. Please let me know:

1. Your initial thoughts/reactions when you read the name and site
2. Any other thoughts regarding this new buyers agency

FYI this exercise is simply an information-gathering one for my own curiosity and to genuinely gauge public opinion, much like market research. Naturally, I am far too close to the industry to be able to remain objective here.

With thanks in advance.

http://www.ljhookerbuyersagency.com.au/

 

[Kinnon Bell]

My initial thoughts are do they only source properties from the LJ Hooker network? I would be concerned about them being impartial with branding like that.

Website seems to focus on getting best price, which is kind of like when people want the best interest rate on their loans - it's important but not the only consideration.

 

[Peter_Tersteeg]

I think it's a clear conflict of interest. LJ Hooker is foremost in sales and somewhat in rentals. There is nothing in place to prevent a preference for their BAs to direct purchasers to their own sales stock.

They also have internal mortgage brokers which I think is another conflict. Eventually they'll be giving out legal advice for conveyancing as part of their one stop shop mentality. At what point will a purchaser actually get unbiased advice?

I generally dislike large scale buyers agencies. It means they constantly taking on clients en mass, rather than working with limited numbers of clients at any time. By dealing with hundreds of clients at once, they're going to end up competing with themselves when purchasing properties.

 

[EN710]

Most likely not going to be my first choice, mainly because their brand is known as selling agent. I will never know if they have conflict of interest.

 

[ZachAnSel]

Same with other.. Conflict of interest? Why they don't use different name?
They must be thinking "since the brand already established, let's use LJ hooker"

 

[Peter_Tersteeg]

Also makes you wonder...

The people who would get the best results out of their BAs are probably going to be those who sell their existing house and want to purchase another. These people are probably going to see the best deals and get the best services levels, simply because they're the most profitable.

 

[Redom]

Completely agree with Peter - not sure how a selling agent can claim to be a buyers agent too.

Doing loans is a more indirect conflict, but buying and selling and acting on both sides is a direct one.

 

[Tonibell]

Completely agree with Peter - not sure how a selling agent can claim to be a buyers agent too.

Doing loans is a more indirect conflict, but buying and selling and acting on both sides is a direct one.

Surely there are laws to prevent them operating on both sides of the one transaction.

They would need to be like a merchant bank and have separate organisations with "Chinese walls" in place.

In any case, killing off this perception would be their biggest challenge.

So, will Jacque accept them as REBAA members if they apply ?

 

[skater]

I'm not sure if we are the right audience. As investors, most of us, I think, would prefer the services of an independent Agent. However, maybe this is the way of the future for the general public. It's how they do it in the USA, isn't it?

Personally, I don't like it. Could you ever be sure that they will be unbiased in the properties they present to you, or the negotiated prices?

 

[Scott No Mates]

I too wave the COI flag. Having worked for one of Australia's largest corporate tenant reps I was taken aback when they bought a relatively unknown (in Oz) but also the world's largest agency.

Yes the newly acquired sales/leasing business worked from separate offices, was dwarfed by the established business and the subsets of clients was different but still left me out of sorts.

 

[Peterw]

Being a L J Hooker, I hope my comments are taken in the right context. Each office is independently owned. We enjoy our association with the Company, as we get more than sufficient comments from both customers and clients (read also tenants and landlords) that they get comfort from dealing with a large organisation. Now that "comfort" is expressed in many ways, and not needed to be canvassed here.

Choosing to operate a Buyers Agency under a "Brand" name, does not mean that they then have to source their products for their clients, from other "Brand Name" businesses. They would source them, no doubt in the same way that an "unbranded" business would.

Other businesses have also chosen to operate under a "Brand Name", eq finance as well as conveyancing or settlements. I am aware that these businesses often generate more business from clients outside the "Brand" referrals ones. A "Brand" may give you access to systems etc, which may not be otherwise available. To you, it may be these systems etc, that you think will assist you to provide either a better or higher lever of service..

At the end of the day, I believe that everyone who chooses to go into business does so with the intention of operating at the highest level of honesty, integrity and customer service. Businesses who do not get referral business do not last.

I also appreciate and respect those people who choose not to take on a "Brand".

Jacque, I have always believed you have been one of the best contributors on this forum, and from that I have assumed that you have as well as operate a great business.

This is just my 2 cents.

 

[RPI]

I think they should brand it differently but related

eg

LJH Buyer's Agents

Shows part of the group but separate.

 

[Peter_Tersteeg]

Peterw, great reply and I certainly appreciate what you're saying, especially regarding happy clients and referrals. Some of my own property is managed through LJH and I'm quite happy with the service I receive. I will admit though, I judge the service of my property manager on the individual and their immediate team, not the brand. I'll say the same for my property managed by Barry Plant, Hodges & Harcourts.

I do know that several large REAs have fairly sophisticated tools for referring buyers to their in house brokers and I know in some cases incentives are paid for that referral. I can't say this is the case with LJH, (I'm actually referring to an REA franchise with yellow and white branding) but it's not an unreasonable conclusion.

Hence my concern in this case. It wouldn't be a stretch to imagine some sort of back office network occurring at both ends of the transaction, possibly with financial incentives. On one had it's very useful for a BA to good relationships with an REA, but one that's too close could get out of hand. Unfortunately this type of thing could easily occur even with the explicit denial of the managing bodies.

 

[Hooray]

At the end of the day, I believe that everyone who chooses to go into business does so with the intention of operating at the highest level of honesty, integrity and customer service. Businesses who do not get referral business do not last.

Those bank financial planners seem to do ok, churning their own 'brand's products. That's the first thing that comes to my mind when I see a 'branded' buyers agent.

 

[rchad]

It is clearly a conflict of interest

Buyers Agents need independence to make the best decisions for their clients

 

[NPB]

I think it could work but can't see how they could ever buy a property that is being sold by an LJ Hooker agent, if they did they would not be able to charge both vendor and buyer. That would not be much of an issue in Melb as they have basically no market share in the main investment areas.

In Brisbane however they have much bigger piece off the market and in Sydney also their exposure is higher.

Not being able to buy from a particular agent would not be a ideal situation especially where the agent has many of the listing. It is an issue they will certainly need to work around.

I do believe they will find the referral between their broking division and the BA division harder than they think, what appears an easy and logical sell on a boardroom whiteboard does not always relate on the ground floor for many reasons.

It will be great for their property management division if they can get it established in the market as you tend to secure the rental listing on 90% approx of all investment purchases.

Will be interesting to watch.

 

[DaveM]

Every LJ Hooker I have dealt with (and its lots) have been utterly incompetent, so I would expect no less from a BA service

 

[NPB]

Every LJ Hooker I have dealt with (and its lots) have been utterly incompetent, so I would expect no less from a BA service

Maybe you could run a mentoring program for their BA division and all new recruits have to spend three months working with DaveM as a trainee KFC BA.

Learn how it should be done, focusing on location, quality, value for money, customer service.

 

[DaveM]

Maybe you could run a mentoring program for their BA division and all new recruits have to spend three months working with DaveM as a trainee KFC BA.

Learn how it should be done, focusing on location, quality, value for money, customer service.

I could. First stop KFC Elizabeth to show them where on the burger the lettuce goes

 

[CosmicTrevor]

Perception

There is an obvious potential for conflict of interest and no matter how well it is managed by LJH any savvy investor will perceive it that way and stay well clear regardless of whether the COI manifests.

LJH know this and also know that the savvy investor base is the minority, this will have been thought through.

It will be very interesting to see if the LJH BAs are drawn from the same talent pool as the REAs, how they are remunerated, how they manage the opportunity for collusion, how they will resist the temptation to pressure BAs to lean towards LJH listings and how they will frame their words so that a truly objective recommendation is provided.

Sorry for being sceptical
Trev