It's Time For A Change: Why More Property Buyers Are Choosing To Engage A Buyers Agent
I’ve always believed that the property market in Australia is heavily weighted against the buyer. In an industry where there are around 75 thousand registered real estate agents working on the sell side and only 400 buyer's agents representing buyers, it is no wonder that a substantial imbalance exists.
In North America, approximately 86% of buyers engage a professional buyer's agent, and it appears that in recent times, more Australian buyers are choosing to do so too. After all, it is arguably one of the most important financial decisions a person will make in their lifetime.
As a buyer, never trust the selling agent
When a property owner decides to place their property on the market, one of the first things they do is contract a real estate agent to represent them in the process. As such, the real estate agent is working for the vendor. What this means as an investor or homebuyer when you are dealing with a real estate agent, ultimately they are working against you, something many people forget.
As a buyer, when you are speaking with a selling agent, asking them questions, they are in actual fact, your opposition. Real estate agents are legally bound to achieve the highest possible price for the vendor; however, when communicating with a selling agent, most buyers also forget this. In doing so, they will often drop their guard and lay their cards on the table. They might express body language to show that they are interested, or reveal information about their situation or budget that will ultimately help the selling agent negotiate against them.
The majority of buyers simply don’t realise that the odds are against them when trying to buy the right property at the right price based upon correct and accurate information.
It’s time for a change
Smart property buyers, however, are beginning to see the benefit and value in engaging a buyer's agent. The sector is a growing because working with a buyer's agent is becoming more accessible for everyday property buyers. The idea that as a buyer you can have someone on your side; an independent, exclusive representative working for you is gaining appeal.
Solving key problems on the buy side
Property buyers who chose to engage a buyer's agent are finding they feel confident in making investment decisions. While most investors typically get stuck at one or two properties, a good buyer's agent will work with a prospective investor (subject to their goals), to formulate a plan that will best enable them to build a portfolio. By ensuring that the first property and the following properties are in line with this overall plan, the investor is then able to build a very dynamic and rewarding asset base. In this sense, the results achievable when working with the right buyer's agent are really long term.
When time is of the essence
For other investors, the concept of outsourcing such a significant investment decision to an expert is becoming increasingly attractive. In today’s fast-paced world, time poor ‘would be investors’ are opting to engage a buyer's agent to manage the whole buying process, on their behalf. For busy individuals, not having to spend their day to day time going to open homes, doing their due diligence and dealing with real estate agents is a huge relief.
Diversification is critical
Diversification is a critical factor when building a larger portfolio and is a key element a good buyer's agent will include when developing a plan for a prospective investor. Property owners open to spreading their investments across multiple states and locations can buy into the best growth markets at the time of purchase and also derisk their overall portfolio.
When an investor buys one or a few properties in one state, typically the market will change (as we are seeing now in Melbourne and Sydney), and it becomes necessary to look further afield to find solid investments.
For most investors looking to diversify, buying geographically is often fraught with difficulty. The questions are: if you are living in Sydney and you want to buy in Brisbane, where are the flood zones? What are the legal dos and the don’ts? Do you know the agents over there? Having a direct relationship with local real estate agents is critical when buying property.
Working with a good buyer's agent will allow property buyers to overcome these hurdles and set themselves up for the long term. As more prospective property buyers see the advantage of having a professional on their side of the court, I’m certain the sector will continue to grow in Australia.