The most frequent questions a Buyer’s Agent (BA) is asked is “Why Do I Need a Buyer’s Agent?” and “How does a Buyer’s Agent add value to my Property Acquisition?”
Whether you are a first-time home buyer or a seasoned property investor, the answer is the same. A buyer wants:
- Access to 100% of properties for sale, including off-market properties which are not advertised
- Certainty they won’t overpay for a property, particularly in a falling market
- Confidence that the property you purchase will keep pace with or outstrip the market
- Their interests protected and an advantage over other buyers in negotiations with vendors
Access to 100% of the Properties On/Off the Market
100% of the properties on/off the market includes all the properties that are advertised as well as all the quiet listings which are not advertised anywhere, but sales agents have listed them or are able to quickly list them if a suitable buyer comes along. Buyers Agents (BA) are in regular contact with all selling agents who have properties that suit their client’s brief. Often selling agents will contact a BA as soon as they have listed (or in some instances before they have listed) a property that matches the client brief. This affords the client an opportunity to purchase the property with little or no competition.
Case Study from Rose & Jones 2018
A family looking for a 4/5-bedroom home with garden and pool close to amenities and schools with a budget up to $10m. The BA assessed numerous properties, the majority of which were off market and inspected several that matched the client brief. The property that was secured was quietly listed at the end of 2018 (pre-market campaign) with a view to taking the property to auction in February 2019 if not sold. The selling agent had shown some buyers through but other than the client, there was no one else ready to put in an offer. The BA provided the client with a detailed comparable analysis on the target property which gave the client the confidence to instruct the BA to put forward an offer to start the negotiations. There was an agreed strategy in place and the client secured the property at a fair price, well within the client’s budget and without competition.
Certainty That You Won’t Overpay, Particularly in a Falling Market
When the property market is strong and prices are increasing year upon year, a buyer can afford to pay a little more for a property without getting into difficulty. However, when the property market is stable or falling, deciding how much to pay for a property becomes much more difficult especially if there is no competition. A BA, who has years of industry experience, will be aware of the effects of the changing market in the client’s suburbs of interest and when compiling the detailed comparable analysis for the client, will choose properties which are similar in land size, area, style (renovated or not), proximity to amenities and schools etc. When calculating the average and median price for the target property a clear pattern emerges and the BA can quite accurately calculate the current value of the property.
Case Study from Rose & Jones 2018
A long-term overseas client returning to Australia. The brief was to find a 5/6-bedroom home with harbour views and proximity to schools. Considering over 50 properties (both advertised and off market) and inspecting a variety of options, the client decided on one in Vaucluse that was going to auction. The selling agent had been marketing the property at $8m. The BA did due diligence and compiled the comparable analysis data. According to the figures, the property was worth in the mid to high $8m range. This knowledge gave the client confidence to instruct the BA to bid at auction to a level in the mid $8m range. At the auction there were 4 competitive bidders and the bidding stopped at $8.4m. The vendor placed a vendor bid of $8.5m and negotiations followed, with our client successfully purchasing the property for considerably less than the vendor bid.
Confidence That Your Property Will At Least Keep Pace with the Market
Factors that affect the ongoing value of a property include location, aspect, floorplan, natural light, proximity to main roads, transport and shops, the slope of the land and proximity to power lines, telecommunications towers and any developments in the immediate area. An experienced BA automatically assesses properties with all these factors in mind. As with all property purchases there may have to be some compromises, but a good BA knows the key issues which separate a good property from a lemon.
Case Study from Rose & Jones 2018
A long-term client who was looking for a 2-bedroom apartment with 1 car park – primarily as an investment but also where his daughter could live.
During the search, the BA came across 2 similar sized apartments in adjoining blocks being marketed at the same level. Both were freshly renovated 2-bedroom, 1-bathroom apartments with 1 secure car space, both blocks were built around 2000 and were equal distance to the train station, shops and local park.
Apartment 1 was in the north east corner of the block with a small balcony and district views and was surprisingly quiet. Both bedrooms were queen size and light and bright.
Apartment 2 was set at the back of the block and although it had a much larger balcony, it was completely overlooked by surrounding apartment blocks. The position of the balcony affected the light in the main living area and the second bedroom was quite small.
The BA submitted an offer on Apartment 1, but it sold well above the figure agreed with the client, based on the comparable analysis for the property. The BA did not recommend Apartment 2 and did not submit an offer as several factors pertaining to the property meant that it did not tick as many boxes as other properties on the market. In the BA’s opinion, Apartment 2 would not keep pace with the market and therefore would not be the best investment for the client.
Buyers Interests Protected and the Advantage You Have Over Other Buyers
The biggest mistake a buyer can make is to believe that the selling agent is their friend and will look after them by helping them to buy the property they are selling. A selling agent is contracted to get the best price for the property in the current market for the vendor. Most selling agents assume that the buyer has limited experience in negotiating property purchases and once the agent perceives that the buyer is emotionally involved with the property, they will take advantage of this to ensure they get the best price.
At auction, many buyers get nervous and are either afraid to bid or get so emotionally involved with the bidding process that they pay more than a property is worth.
When a buyer engages a BA to act on their behalf it takes the emotion out of the negotiations and an experienced BA will always work with the buyer to put a buying strategy in place which is important in negotiating with the selling agents particularly when there are other buyers competing for the target property.
Case Study Mid 2018
A couple were downsizing from the family home in the upper north shore. They decided they could buy the property themselves (without using a BA) and spent many months looking at properties and deciding where they wanted to live and what was important to them in this next stage of life. They eventually purchased a lovely house in Paddington at $31,000 per sqm when the average price for properties in that immediate area was $20,000- $22,000 per sqm. They fell in love with the property and the very experienced selling agent took advantage of this. The purchaser ended up paying $300,000-$400,000 more than comparable properties at that time.
In summary, when a buyer engages a Buyers Agent who has years of experience in;
- searching for and doing due diligence on properties that satisfy a diversity of client briefs
- skilfully negotiating with selling agents – with or without competition from other buyers, and
- bidding at auction with a clear strategy in place
they will have absolute confidence that they are purchasing a quality property for a good price that will prove to be a successful investment.