The term 'buyers agent' is not defined in Australia. As a result, there are many operators with varying degrees of independence from sellers who are marketing their purchasing services to the public. This is a huge concern when a conflict of interest arises, and when the person you put faith in to provide you with the best outcome fails to act in your best interests. Furthermore, the term 'buyers agent' is used loosely by ill-qualified and inexperienced operators who lack any form of regulation. Don't end up on A Current Affair - look closely at the credentials of who is providing you with guidance.
We're not talking pocket change here either. Purchasing a home in Canberra isn't cheap, as I'm sure you're well aware. Getting a dud deal can alter your financial future and is expensive to remedy. Look beyond the purchase price, beyond the stamp duty and purchasing fees, it's the interest repayments that ultimately result in the final cost to your bank account being just under double the purchase price. The banking sector wasn't born yesterday.
A buyers agent's role is to act for the buyer, and only the buyer. They have a fiduciary duty of care, legislated in State law that mandates they cannot act for both the buyer and the seller of a property. There are agents who are paid by the seller, and they're required by law to act in the best interest of the seller. It's their job to secure the best sale price and terms to the seller's advantage. Any agent who purports to provide a free buyers agent service is not acting in your best interests, no matter how it is presented. I can shed some light on the term 'buyers agent' by outlining what a buyers agent is not.
Perception is reality. If someone is offering a free/low cost service to help you buy property, I would look closely at their motivation. How are they getting paid? If the seller is paying them, how on Earth are they going to provide you with the best result? It's crazy - there is a clear conflict of interest between the mouth that feeds them and who they are purporting to help. The sale price may be inflated to allow for them to be paid their fee and as the buyer, you don't see it. Builders often have agents who sell their property, and when this is advertised as 'direct to the buyer' if there's a middle man/woman involved you can bet they're not providing services pro bono. There really is no such thing as a free lunch. As a buyer, you don't want to be purchasing their dud stock, or pay more than you need to on the account of sales staff! Developers often keep the best properties for themselves, and then the others are sold to their immediate circle, with the rest to the public. They're developers for a reason, I have done this myself and there's no way I'd keep the worst property in my portfolio. This is not to say that off-the-plan isn't the way to go. Every individual and property is different, but if anyone tells you that off-the-plan is the only way to go, I'd suggest you carefully consider whether it's your best interests they have in mind. Follow the money trail.
There are agents who will offer to help you find a property. If they also sell property, I would ask how are they going to manage this? Are they going to review all stock on the market, or just their own? How will they deal with the unconscious bias towards their own agency's listings, together with the conflict of interest that prevents them from representing both sides? And if they are not charging you, what do they get from it? If you have a house to sell once you purchase, the picture becomes clearer. They'll build up a strong relationship with you, and can expect that you will appoint them as the selling agent for your current home. I do wonder though, if they are engaged by sellers to actively market and sell their home for top dollar, how they would have enough time to dedicate the necessary hours to finding you the best property without detracting from their primary duty of care to their clients.
Some people will tell you they can do it all. They can buy the property, manage it, do the legals, do the lending, do your SMSF and your asset planning while they're at it. Knock yourself out. A jack of all trades is a master of none. For this reason, I only buy property. I only buy property in Canberra and the surrounds too, I'm not going to pretend that I know Brisbane or Melbourne like a local agent there would. I don't assist with rentals, nor property management or any other aspect. I rely on other highly-regarded professionals who are local experts in their respective fields to provide you with their expertise. If someone is a 'one stop shop' I'd look closely at whether they have sufficient resources to really provide the best outcome for you. Focus is important.
So, what should you look for?
- A licenced buyers agent. Someone who has met the requirements to operate as a buyers agent, and maintains their status with ongoing development and appropriate professional insurance.
- Commitment to best practice. There is a national body (REBAA) for buyers agents in Australia and members must meet and maintain strict requirements to qualify.
- Depth of knowledge. Someone who knows the area inside-out, who intimately understands the demographics, the market movements and the many sub-markets that make up the broader picture.
- Proven track record. If they can't demonstrate they have helped others, why should you be the guinea pig?
- Independent. By this I mean they are free from any conflict of interest, real or perceived.
- Focused approach. I believe in doing what you do, and doing it well.
A true buyers agent is someone who acts for the buyer, who is engaged independently and is paid by the buyer to act on their behalf. True buyers agents are local specialists in searching, evaluating, negotiating and securing the purchase of property for buyers. They do not sell real estate. Anyone who is remunerated or otherwise rewarded by the seller is merely a wolf in sheep's clothing.