Paid too much: due to Buyers Agent

[Ginger]

I have been researching BA's to buy a PPOR, and have heard this sad tale from a friend.

He has recently purchased his PPOR using a BA and has found to his utter horror that he has paid to much.


A similar property an arm's length away sold for $90,000 less.

What recourse has he got and what proof would he require to establish this?

 

[Ausprop]

perhaps ask the BA to explain it first of all?

 

[The Y-man]

Ginger,

Not enough info - there could be many things happening.

Was the cheaper on sale at the same time? (if it came on after, it could just be a distressed sale)

Was the brief to the BA to find "the cheapest no matter what" or "best price but MUSTfulfill conditions xyz"?

The Y-man

 

[jrc77]

Ginger,

Did you friend purchase via private treaty or auction?

Regards,

Jason

 

[Propertunity]

What recourse has he got and what proof would he require to establish this?

A Buyers Agent is required by law to justify the estimated purchase price of a property that he is recommending to his/her client.

This is typically done by finding at least 6 other comparable sales - comparable for size & type and must be recent in terms of date - i.e. less than 6 months. There are many other factors, that by law, a BA must take into consideration. Broardly speaking they are:
1. Market conditions
a. Economic Outlook
b. Local market issues - such as supply and demand.
c. Other
2. Comparable Sales
3. Optimum / alternative uses
4. Restrictions
5. Property features
6. Special conditions
7. Other relevant facts and specific instructions

Legally, the BA must do all this as well as all the finer details under each heading that I have not detailed here, for the sake of brevity.

However, this merely discharges the BA's legal responsibility.....you cannot legislate for competency. (i.e. the BA could be hopeless, but you can't do anything about that if he has fullfilled his legal responsibilities as above.

A similar property an arm's length away sold for $90,000 less.

This sale in and of itself is not enough to say the BA did the wrong thing.
There could be other factors - desperate seller, sewer line under the property, illegal building works, etc etc - all/some of the things listed above.

I'm not saying the BA was wrong (he may be incompetent or he could have simply have made a mistake) BUT there may be other reasons not obvious to you at this point in time.

Hopefully the BA has PI insurance (it is not a legal requirement) but we certainly do here!
If there was a valuer involved, in the case of getting a mortgage for the property, what was the val?

 

[AlmostBob]

He dahnt ave ta do narthin wrong, sue sumbardy. let the bastids prove theyr innusense

 

[willair]

I have been researching BA's to buy a PPOR, and have heard this sad tale from a friend.

He has recently purchased his PPOR using a BA and has found to his utter horror that he has paid to much.


A similar property an arm's length away sold for $90,000 less.

What recourse has he got and what proof would he require to establish this?

It will only ever come back too one simple item,Value and what people preceive it too be,when you say arms length are you talking about the same land area-zoning because in several of the areas we invest in there is a massive differencein $$$$ and how high you can take the building up above 5 levels too 40, in one street too the next within a 500 mts centre radius where you live,tell you mate that,s what experience is and move on.or as the bank people that drink at the front bar i drink at tell
if you think values are on the slide this year wait till next year then you may well have something too complain about...

 

[jim1964]

I think this could work both ways.If the property was bought 90k under value would it be on here?? No,it wouldnt.as this is a common event.
I believe even though you pay someone to advise you,the decision is yours,and yours only,based on facts.A certain amount of due dilligence is still required,even though you are getting advise,in this world............dont believe everything you are told.Hard lesson learnt.Too many people are using the lazy way,and if it goes pear shaped,expect to blame someone.

 

[Rolf Latham]

I have been researching BA's to buy a PPOR, and have heard this sad tale from a friend.

He has recently purchased his PPOR using a BA and has found to his utter horror that he has paid to much.


A similar property an arm's length away sold for $90,000 less.

What recourse has he got and what proof would he require to establish this?

Similar aint the same I suppose...........a one bed unit overlooking Rushcutters Bay vs unit in the same block overlooking the rubbish area .........

As has already been said, much more detail needed, the most obvious recourse is that a BA will have PI cover.............., and if there is an issue, the BA will pass the chase to them

Id assume the BA is a member of an association of BAs, so you could also ask them


ta
rolf

 

[Rolf Latham]

.....you cannot legislate for competency.

Gold.

Never a truer word written in my industry for sure.

ta
rolf

 

[knightm]

Hopefully the BA has PI insurance (it is not a legal requirement) but we certainly do here!

Prop is that Public Liability Insurance or some other kind? Would public liability cover you if you were deemed negligent?

 

[Jacque]

Hi Knight

No, Prop's referring to Professional Indemnity insurance. If the BA is a member of REBAA it is mandatory that they carry this insurance. You'd be foolish to engage a BA who doesn't carry PI these days. REINSW is also making it compulsory for all its members as well.

As said above, more details required. It may be a case of buyers remorse as well, even if the val came back good.... Let's hear the whole story so we're in a better more informed position here.

 

[scha9799]

Can you please kindly tell us who the BA you friend engaged?
So that we all can avoid he/her.

 

[Rolf Latham]

Can you please kindly tell us who the BA you friend engaged?
So that we all can avoid he/her.

Hiya

While the idea seems sensible, there is no way such a post would remain up for more than 30 seconds.

Unsubstantiated claims against persons or companies etc, from advice of anon folks on a forum relying on advice on a third party...........

ta
rolf

 

[Bigtone]

Can you please kindly tell us who the BA you friend engaged?
So that we all can avoid he/her.

lets get some more details first.

the original post says arms length, so maybe it was an investment adviser/marketeer rather than an actual BA they paid for, the details will be interesting.

would be good to get the actually property and the comparison property so we can do some analysis

 

[Ace in the Hole]

Depends on the value too.
90k might only be a few % difference in price for some properties.

 

[Brady]

Why would you solely rely on BA.

I have buyers agents who contact me with properties, they only provide intially sale price and few other details like rental return size etc... If i want the address then I sign an agreement that I will pay BA fee if i purchase that property...

then obviously I do my own DD to ensure its a good property.

Usually its at least 10% discount on the advertised prices and usually involves some more info that they have obtained from the vendors selling agent.

 

[Jake Milne]

Whilst I think it's important to share these experiences so others can learn I feel that generic slander undoes the hard work that respectable Buyer's Agents strive for day in, day out...

I'm sorry your friend feels like they paid too much. It unfortunately isn't uncommon. I saw a unit in Armadale recently sell for 18% over the reserve price at Auction just because two opposing BA's were competing against each other, most likely motivated as they get paid as a % of the sale price.

Any sensible BA will know how much to pay and when to walk away. People should work with BA's that charge a flat fee or a quoted fee so they have piece of mind that there is no conflict of interest when it comes to purchase price.

Sorry to hear that news...

 

[scha9799]

at the end of the day, BA is to assist their client to achieve better result than their client can achieve it themselves.

otherwise what's the point to engage professional BA ??

anyone can pay a premium and get the deal cross the line.

The point to engage a BA and pay a fee is to leverage their skill to get a discounted price on property or at very least get a fair market value..... not to pay premuim.

Is there anyone here willing to pay a BA fee and also pay a premium ($90k) on a property, otherwise can get it at fair market price themselves ?

with all respect, I think BA should have a very basic understand when they should walk away the deal. Integrity is the key.

just a thought

 

[Lil Skater]

Is there anyone here willing to pay a BA fee and also pay a premium ($90k) on a property, otherwise can get it at fair market price themselves ?

with all respect, I think BA should have a very basic understand when they should walk away the deal. Integrity is the key.

Well of course no one wants to pay for anything above fair, and yes the BA should have a basic understanding. However, thus far the OP hasn't given any reason or explanation into the reason they feel the BA hasn't fulfilled their obligations to their client.

Before conclusions are jumped to, it's best to have the full story.