Momentum building for buyer's agents
Momentum building for buyer's agents
Regardless of where a property purchase is sourced, whether through auction, private treaty, a distressed sale, or an off-market sale, price remains the fundamental determinant of a good investment.
In the United States, buyer's agents have long been an accepted part of the real estate industry. It’s a trend that is catching on in Australia.
In the eternal battle waged between seller and buyer, more and more Australian buyer's are turning to the expertise of a skilled professional, a buyer's agent, in the hope they can save them money and source the property of their dreams.
Australian Property Investor Magazine spoke to the principal and name behind Michelle May Buyer's Agents to ascertain the role played by buyer's agents, the advantages they aim to bring clients and her own compelling, multi-continental story on getting a start in the industry.
For private sales where negotiation is involved, an agent’s ability to ask the right questions coupled with their knowledge of the property’s market value is what’s likely to help the agent secure a better deal than a consumer might achieve.
A buyer's agent experienced in negotiations and armed with the right valuation data should be able to challenge the vendor’s price expectations.
Working in Sydney’s inner west and eastern suburbs, Ms May said many of her clients were professionals who appreciated that their own skills had made them a success in their careers and they turned to property professionals to apply their real estate knowledge when making such a major investment.
No official data exists on the percentage of properties bought and sold through buyer agents and a licence and insurance is all that’s needed to become a buyer’s agent.
“When I started out in Australia in 2008, nobody had any idea about buyer’s agents and it’s still an area people are only beginning to familiarise themselves about,” Ms May said.
“It’s a competitive industry with a lot of inexperienced people trying to capitalise on what was a booming property market, so experience and a proven track record is they key when choosing your buyer’s agent,” Ms May said.
Sourcing the right property
Off-market properties – those that aren't going to be advertised online – can be an attractive option for a buyer. The theory is that vendors would only choose to sell off-market if they needed a swift sale.
Buyer's agents with strong industry networks should be able to tap into this market on behalf of their clients.
“The off-the-market property segment is as seasonal as other parts of the market,” Ms May said.
“The pandemic is similar to other downturns in that listings will dry up but we have access to qualified buyer's and real estate agents contact us when they know they have a seller and property that fits what we’re looking for, for our client.”
“We are getting a lot of expats contacting us at the moment as they look to return home and no longer know the market or the area in which they’re looking to buy and they also need a person on the ground.”
With an 80 per cent success rate at auctions, Ms May said she often attracts new clients that have lost against her in the bidding process.
“Like any profession, practice makes perfect,” Ms May said.
“There is a chronic shortage in house stock in the inner west and eastern suburbs, so we offer advice on how to buy off market, we know the psychology of bidding at auctions and how to read the play, and how to get the property that suits your lifestyle and budget.”
Prices and fee structure will vary somewhat from agent to agent but according to consumer advocacy group Choice, the service will generally cost around two percent of the property price plus GST (for example, around $14,000 for a $700,000 home).
Ms May said she charges a fixed fee to avoid any conflict of interest. Commission-based prices raise the prospect of the buyer's agent actually earning less for themselves as they drive their client’s purchase price down.
Her own client base is fairly evenly split between investors and home buyers, with a possible leaning towards more of the latter.
From London bedsit to Sydney expert
After spending a worldly childhood as an expatriate in north Africa, her travels continued as a flight attendant based in the UK. It was here she used her downtime to purchase a decrepit small apartment for £32,000 ($58,440).
Her parents had been keen renovators and built their family home from scratch, and she immediately saw the potential in her new acquisition. With some interior design ingenuity, hard work and a simmering property market she was able to sell the property for double her purchase price.
Buoyed by her success, Ms May bought a property annually for some years, renovated and sold for a sizeable profit.
When she moved to Brisbane with her new young family, she was determined to help people buy better property and fulfil their financial goals.
After another move, to Sydney, she attracted her first two clients after they sought her out when she had beaten them at an auction. Her brand was born in 2017 and she hasn’t looked back since.
“The key to being successful in this industry is the art of negotiation and understanding bank valuations,” she said.
“I’ll often buy homes for clients under the bank valuation price through a mix of negotiation and price valuation tactics, but the details of that are a secret I can’t reveal.
“People used to think this kind of service was for the extremely wealthy but they now understand they need a professional, experienced person to help them navigate the property industry.
“A lot of people will get their parents to help them buy property, however, you wouldn't get them to fix your teeth, instead of a dentist.
“The sentiment is much the same for the buyer's agent industry; you need an expert for that service.”