Buyer's Agents

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It was hard not to miss the unflappable buyers' agents lining the front (and or back) row when The Block Gatwick apartments went to auction last month.
All five of the renovated St Kilda apartments sold in the televised finale were purchased through buyers’ agents this year, just like last time at Elsternwick. 
Buyers’ agents are licensed professionals who specialise in searching, locating, evaluating and negotiating the purchase of property on behalf of buyers.
They do not sell real estate, although many buyers’ agents were previously real estate agents.
They are engaged independently and paid for by the buyer to act on their behalf perhaps because they don't have the time for the required research, calculation, and consideration.
There were times during the auctions when there was an obvious tense showdown between the auctioneer and the buyers' agents.
Both were doing their job, adding to the televised excitement. There was even a brief suggestion of collusive bidding.
Egos were there on display, as auctioneer and buyers’ agents battled to triumph. 
There was the strategic decision by one auctioneer not to accept opening bids which were above reserve because he thought the apartment was worth much more.
The auctioneer then aggressively declined, at certain stages, to take small incremental bids despite having confirmed the apartment was on the market.
All those threatening "final" bid calls didn't have the normal impact because the auctioneer was dealing with hardened professionals, not susceptible emotional buyers.
The virtual absence of genuine buyers from the crowd from Block auctions meant the typical auction anxiety was limited to the contestants on the couch.
The buyers' agents were mostly playing it deadpan.
Buyers’ agents typically represent buyers, although The Block has roped them into helping the contestant understand buyer desire.
When the buyer's advocates joined the series, many speculated that the move was intended to help prevent a repeat of the Richmond season's dismal auction results.
These buyers' agents enjoy huge publicity during the series and then again on auction day.
One of the key aspects of using an independent buyers’ agent ought to be their ability to evaluate a property’s pros and cons objectively.
They’re not supposed to get emotional about the purchase like buyers do.
They can assist buyers retain their privacy.
Buyers’ agents can be a good idea for the simple fact that most people don’t buy a home or investment property on a regular basis.
A buyers’ agent is in the market every day, so their skills are well-honed and well placed to advise clients on how to buy the right property at the right price.
They also can source off-market properties before the public marketing campaigns.
When it comes to fees, there is no industry standard however the general rule of thumb is a around 2% commission plus GST on the purchase price. 
Some buyers’ agents choose to charge a fixed fee. 
It can depend how much of the service buyers seek. 
Word of mouth recommendation is a good way to start the selection. And in the same way vendors would interview a few estate agents before engaging one to sell their home, buyers should interview a few buyers’ agents.
This enables buyers to compare their services, knowledge and fees and find the right one.
This article first appeared in The Daily Telegraph. 
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jchancellor-FAypfDUnLy

What do buyer's agents do for real estate buyers?

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The former Essendon captain Jobe Watson has secured a buy for a client in his new role as a Melbourne real estate buyer’s advocate.
The Infolio Property Advisors director nabbed a two-bedroom Kensington house for interstate clients at $1.03 million.
He told the Sunday Herald Sun that <a href="https://www.realestate.com.au/sold/property-house-vic-kensington-127751274" target="_blank">34 The Ridgeway</a> (pictured above) was the first property he’d bought in his new role.
Watson said he was initially a client of Infolio.
He then did some work experience for the agency.
He purchased equity in the company in 2016.
He began as a buyer’s advocate after his 220-game AFL career came to an end last season.
“I really love property. It’s been my transition for after footy,” he said.
“It’s a good balanced market — there are really good opportunities for buyers. There’s also some real competition for good properties.”
Watson’s clients paid $80,000 above reserve for the dated Victorian on 201 square metres.
It last changed hands for just $175,500 in 1998.
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firstname1-iYD4UYzvBa

Jobe Watson secures first purchase as a buyer's advocate

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GUEST OBSERVER 
Australians should think carefully about engaging a buyer's agent to help them purchase a property.
Buyer's agents were prominent in this year’s series of reality TV show ‘The Block’, with four out of the five renovated apartments auctioned in the finale purchased through buyers’ agents. 
While contestants in The Block made huge profits from properties selling far above reserve prices, it was often a case of buyer's agents bidding against one another and pushing up prices.
Many more Australians looking to purchase property have been turning to buyers’ agents but they need to approach them with caution.
Prospective property purchasers must consider whether a buyers’ agent will provide genuine assistance in securing a property or just find ways to spend more of their money.
Buyer's agents charge between 1.5 percent and 2.0 percent of the purchase price of the property if they find your home and negotiate the deal or secure the property at an auction, which means the fee they charge is linked to the price you pay for the property.
That is the less you pay the less they make, which seems counter intuitive to me.
Their fees can end up being very costly, especially for people who have struggled to save to get on the property ladder.
Consumers using a buyer's agent should ensure they are licensed as a real estate agent and independent. 
While buyers’ agents can be very useful for time poor property buyers or those looking for something particular, buyers’ agents in the general market may cost the consumer more than the benefit that is derived.
Mark Mendel is founder and chief executive officer of iBuyNew and can be contacted <a href="https://www.ibuynew.com.au/">here</a>.
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Think carefully about engaging a buyer's agent: Mark Mendel

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GUEST OBSERVATION
The new NSW 2014 Contract for Sale and Purchase of Land 2014 edition will be released in a few weeks and there are several changes that both buyers and vendors should be aware of. 
The main alterations include the following:
<ol>
<li>
The introduction of E-Conveyancing in Clause 30 means that National Electronic Conveyancing (NEC) is to be the new environment for completing real property transactions and lodging land title dealings throughout Australia.  The aim is to streamline conveyancing and mortgage transactions but it’s s not an entirely electronic conveyancing environment.  Contract formation, vendor disclosure, and even requisitions (in NSW) will still be paper-based.  NEC, however, will allow for electronic settlement, funds movement, revenue collection and lodgement/registration.  
</li>
<li>
Extra vendor disclosure documents will be required including those relating to the Swimming Pools Amendment Act (2012) and the Home Building Amendment Act (2014) as well as amendments to additional disclosure obligations on lot owners of strata and community schemes. 
</li>
<li>
Recognition and insertion of buyer’s agent names with space being provided on page one of the 2014 edition, if a purchaser is being represented by their own buyer’s agent.  The definition of “deposit holder” in Clause 1 has also been extended so a buyer’s agent (who maintains a trust account) is able to be deposit holder for those matters where there is neither a vendor’s agent nor a vendor’s solicitor. 
</li>
<li>
Additions to Inclusions on page one now to include solar panels. 
</li>
<li>
The increasingly common practice of payment by deposit bonds or guarantees is reflected in a new Clause 3 which now requires vendors to explicitly choose whether to accept a deposit bond from a purchaser, with the default choice in the printed form being a “no”.
</li>
</ol>
The 2014 edition will also only be sold in an electronic format with watermarking of the individual address across the contract, to minimize possible multiple duplication and copyright issues. It is expected that, as with previous NSW editions, that the cross-over period for solicitors and conveyancers will take time, however a new edition was long overdue given the last one was 2005.
As buyer’s agents, I believe the new insertion is a step closer to widespread recognition of the increasing role our industry is now playing in real estate property purchases.  Buyer’s agents are fast becoming a secret weapon in the property market as home buyers realize the benefits of having a professional and fully independent advocate on their side.
Jacque Parker is director of <a href="https://www.housesearchaustralia.com.au">House Search Australia</a> and the president of the <a href="https://rebaa.com.au/" target="_blank">Real Estate Buyers Agents Association of Australia</a> (REBAA).
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JacqueParker-uBQkZrvXSL

The five changes to NSW sale contracts that every buyer and seller should know

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Guest observation
As a buyer's agent, when talking to potential clients, we engage in a series of qualifying questions to ensure that we aren't wasting time by taking on buyers who are unrealistic or unprepared.
Though some buyers may believe they're ready and committed to purchase, this can be far from the truth. As part of our initial interview, one of our questions is: "How long have you been searching?"
If the response is more than 12 months, the warning bell sounds and I dig a little deeper. In most cases, buyers have been looking "on and off" over a period a time, or their definition of "looking" has only been restricted to surfing Domain and RealEstate.com.au - hardly definitive research to build up knowledge of an area and its values.
At least wearing out some shoe leather to attend opens and auctions is a start and a necessary part of any serious property search.
However, every now and then a buyer who has been searching for a longer period of time approaches us, hoping that we can find something that they haven't been able to. Unfortunately, some buyers simply cannot make a decision as the "ideal property" is an unrealistic utopia, especially for those buyers on limited budgets or searching in restricted areas.
We call this analysis paralysis. 
It can be a very frustrating process if you are inflexible or unrealistic, unwilling to make simple modifications or allowances for the perfect home.
Most of us enjoy putting our own "stamp" on our home, no matter how small, so it's important to remain open when searching, and view alternative possibilities as well as striving for perfection.
Investors can also suffer from analysis paralysis, as they can become so caught up in pinpointing the "perfect location" that they can let buying opportunities pass them by.  While it's fine to concentrate on criteria such as minimum rental yield, proximity to preferred amenities and position of property, the age-old goal of buying a property in a suburb with potential for great capital growth is certainly something all of us, as investors, strive for.
However, none of us have a crystal ball and while it’s fine to draw educated conclusions on factors including historical growth, demand and supply figures for a particular area and infrastructure and development updates, there is no such thing as a guaranteed return when it comes to property.
We all know this. Investors who are smart enough to understand this, and yet are still willing to take risks, eventually make a buying decision, secure in the knowledge that there is no one perfect suburb or type of residential investment.
Buying well entails research, but overanalysis results in confusion and indecision.
I often suggest to buyers, when embarking on a purchase for the first time, to write two shortlists.
One with a list of six "essentials" and another with six "preferables".  Ensure that your budget is sufficient for the essentials list before you embark on a search, and maintain a checklist of the first five to 10 properties you inspect, to verify that you are indeed on the road to reality.
Buying property shouldn’t be without its challenges, but the search for that perfect property needs to involve compromise, no matter what the budget.  
Jacque Parker is director of <a href="https://www.housesearchaustralia.com.au">House Search Australia</a> and the president of the <a href="https://rebaa.com.au/" target="_blank">Real Estate Buyers Agents Association of Australia</a> (REBAA).
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Are you suffering from analysis paralysis?

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Buyer’s agents are becoming increasingly popular, but like every other professional – they weren't all created equal.
If you’re currently considering a buyer’s agent, you can read Property Observer’s comprehensive<a href="/expert-insights/buying/28406-buyers-agents-tips-to-finding-a-buyers-agent" target="_blank"> introduction to the factors you should consider before paying someone to act on your behalf</a>.
You might also want to read <a href="/news/28308-how-buyers-agents-pick-the-best-performing-properties" target="_blank">this Q&amp;A with a number of buyer’s agents about their tactics and techniques in finding and purchasing the best investment properties</a>.
However, there are some simple things you can ask a buyer’s agent to quickly get a shortlist of those to consider.
The Real Estate Buyers Agents Association (REBAA) president Jacque Parker says that as well as the questions you should ask below, you also want to know if they’re accepting a fee from any other party or parties besides yourself in the transaction.
“Some agents calling themselves ‘buyers’ agents’ have actually been taking a fee from a selling agent’s commission, yet claiming to work for the buyer,” warns Parker.
“This is a clear conflict of interest because effectively they are representing the vendor, they’re not acting solely on behalf of the purchaser.”
She also notes that it’s worth asking for accreditation to associations and peak bodies, such as REBAA.
Here are their five questions to ask:
<ol>
<li>
How experienced is the buyer’s agent? Many have set up without prior, or field, experience. Make sure they have local experience in the areas you’re considering. 
</li>
<li>
Do they operate as an exclusive buyer’s agent? Ensure that they are being truly exclusive and don’t receive kickbacks or commissions. If they do, they may not be impartial. 
</li>
<li>
Are they a licensed buyer’s agent? Agencies can be licensed in one state, but not others, and still advertise as able to purchase interstate. Ensure they hold qualifications for each territory or state you’ll be buying property in – the rules differ and they need to be licensed for each. Check with your local Office of Fair Trading for licensing requirements. 
</li>
<li>
What and where are their most recent purchases? View their recent purchases to get an understanding of their specialty. Not everyone is able to assist you with your preferred suburbs or areas. 
</li>
<li>
Can they provide recent client testimonials/references? Ask to speak to previous clients.</li>
</ol>
Source: REBAA
YOU MIGHT ALSO WANT TO READ
Investor warning: <a href="/news/34836-investor-warning-is-your-buyer-s-agent-properly-licensed" target="_blank">Is your buyer's agent properly licensed?</a>
<a href="/expert-insights/investing/35321-15-questions-to-ask-your-buyer-s-agent-wa-department-of-commerce" target="_blank">15 questions to ask your buyer’s agent: WA Department of Commerce</a>
Q&amp;A: <a href="https://www.urban.com.au/expert-insights/buying/32434-q-a-should-buyer-s-agents-take-commissions" target="_blank">Should buyer's agents take commissions?</a>
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jduke-EHk3XBmHkn

Choosing a buyer’s agent? Five questions you should be asking: REBAA

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Hi
There is a property I'm interested in is going to an auction while I'm travelling interstate. What's involved in engaging a professional to bid for us and sign the paperwork on our behalf?
I looked into a few buyer's agents but they were after 1% commission, which I believe is way too much just for bidding on the day. I have done my own research so don't need this as part of the service it's purely the bidding.
Also what's involved in signing the paperwork if we are not physically present, could this be done electronically or via fax?
Thanks for your assistance.
Regards
Katie
Margaret's answer is on the next page. Please click below.
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Dear Katie,
Having someone else bid for you on auction day is becoming more and more common these days, with people either telephoning in bids and having them presented by someone else, or appointing someone else to bid for them either in their presence or when they cannot attend the auction themselves.
In your case, you have done all of your research and so you should find someone you can trust to attend on the day and make the bids.  Depending upon how skilled you think they may be, you might want to phone your nominated person when the auction starts and make the bids yourself, using that person to simply present your bids.  If you are not available to do this, be sure that you carefully coach the person on how much you would like to pay and what your upper limit is.
While you can appoint someone else to bid for you, be careful when it comes to signing on your behalf. Although there is a nominee clause in all contracts, this can result in double stamp duty being paid when the contract passes from the nominee to you, and this can be very expensive.
The person bidding on your behalf must give the auctioneer written authority from you before the auction starts. You will need to furnish them with a letter which includes your name, address and details of proof of identity, such as your driver's licence or passport.
It also needs to contain an acknowledgement that the person on whose behalf bids are made has been given a copy of the conditions that are applicable in respect to the sale, and has seen a  copy of the contract.
If your bid is successful, and depending upon the state you are buying in, either the auctioneer can sign the contract on your behalf, or you may wish to have a power of attornery granted to your representative prior to the auction.  In some states a power of attorney can be 'limited', where you provide a power of attorney for a single instance, such as bidding at a particular auction.  These powers of attorney forms can usually be downloaded from the internet from the government department in your state.
Kind regards
Margaret
Have a property question?  <a href="mailto:askmargaret@propertyobserver.com.au" target="_blank">Ask Margaret!</a>
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mlomas-KC9MUPZ6Ca

Should I hire a buyer's agent? Ask Margaret

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Finding a buyer's agent that fits your investment plan is tricky business. They're not all made equal.
If you're currently in the process of choosing a buyer's agent, then here are 15 questions that you should be asking:
<ol>
<li>What are your skills and experience as a buyer’s agent? 
</li>
<li>What is your fee? 
</li>
<li>How is your fee determined? 
</li>
<li>What services are included in your fee? 
</li>
<li>Are there any additional fees/charges? 
</li>
<li>Do you need my authority to incur additional fees/charges? 
</li>
<li>How frequently will you provide me with a list of suitable properties? 
</li>
<li>How thoroughly do you evaluate properties on the list? What research do you undertake before recommending a property to me? 
</li>
<li>How does the negotiation process work? 
</li>
<li>What strategies will you employ to achieve the best possible outcome for me? 
</li>
<li>Are you a member of a relevant industry body, such as the Real Estate Institute of WA (REIWA) or the Real EstateBuyers’ Agents Association of Australia? 
</li>
<li>Can you provide references from former clients? 
</li>
<li>Do you have Professional Indemnity insurance? 
</li>
<li>Do you have a conflict of interest? In other words, are you the selling agent for a property that you think I might be interested in purchasing? 
</li>
<li>What happens if I locate a property myself or inherit a property during the period of our contract?</li>
</ol>
Source: Government of Western Australian, Department of Commerce (for <a href="https://www.commerce.wa.gov.au/consumer-protection/buyers-agent" target="_blank">more of their tips, see here</a>).
You can also read Property Observer's <a href="/expert-insights/buying/28406-buyers-agents-tips-to-finding-a-buyers-agent" target="_blank">guide to choosing a buyer's agent here</a>.
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15 questions to ask your buyer’s agent: WA Department of Commerce

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Investors have been active in the property market with many seek out properties by themselves, but some appoint a buyers’ agent to assist them with the process.
<a href="https://rebaa.com.au/">Real Estate Buyers' Agents Association of Australia</a> (REBAA) president Jacque Parker talked to Property Observer about the kinds of property investors are looking for at present and why it’s worth considering the services of a buyers’ agent.
Why should an investor consider using a buyers’ agent?
The first reason is that you are given an edge by having an advocate on your side, just like when sellers engage a sellers’ agent.
Buyers’ agents are 100% independent because their service is being paid for by the buyer.
Not everyone buys property every day whereas buyers’ agents do that. They understand the complexities of the market and the process.
It’s important to have local knowledge of the market. Not everyone has that.
[Buyers’ agents] save time by doing the research and field work. As far as investors go, it’s narrowing down the suburbs, that will fit their budget and, if they have a strategy in mind, whether it’s a property that needs renovation or is in an area that offers potential capital growth.
What are investors looking for in properties at the moment? 
Most investors that come to us are looking for properties at the low end of the budget.
[Some are] looking for low entry [price] suburbs where they can buy something and do a renovation. Because we have that market knowledge, we can suggest areas that might suit them.
Most investors are looking for something that they don’t have to do anything to. Most people who hire buyers’ agents are time poor and while we don’t manage the renovation, we can help them on that by providing names of tradespeople and builders. We can provide guidance on how to start.
Investors are looking for yield and capital gain. People say you either get one of the other, but that’s not true. I’ve bought properties in regional areas that have achieved great capital gains and delivered high rental yields.
It’s about what your budget can allow and your cash flow can afford.
What are you seeing in the residential property market? 
Sydney is a sellers’ market. It’s an active market. There’s still more demand than supply.
The market overall is not one market though. That’s the trouble with any opinion from any so-called expert in the field. You are talking about a broad market. NSW is not one market. It’s made up of one huge capital city with lots of variation in its demographics, plus regional areas.
The market in the capital city has been very robust and over the past 18 months there have been many areas that have not boomed so much since 1993. It’s not sustainable, though. Property does have a boom, followed by slower growth and then plateaus out.
We don’t make forecasts but the key drivers are still in place because we have record low interest rates, increased consumer sentiment and positivity which goes a long way to accounting for activity and we still have affordable prices within Sydney and Melbourne.
Investors can still afford to get into the market for a reasonable amount and it’s relatively easy to get credit.
The past 18 months has seen all of those factors collide and there has been a boom in activity. It probably won’t continue, however that’s not to say it will go backwards. It will settle into a more stable and consistent growth pattern when interest rates start to rise.
Where are investors looking?
In Sydney, the median house price is almost $800,000. That’s not affordable. Most investors are starting off with units or looking further out for houses: <a href="https://www.urban.com.au/property-observer" target="_blank">Blacktown</a>, <a href="https://www.urban.com.au/property-observer" target="_blank">Penrith</a>, <a href="https://www.urban.com.au/property-observer" target="_blank">Campbelltown</a> and to a lesser extent <a href="https://www.urban.com.au/property-observer" target="_blank">Parramatta</a>. Regional areas have been attracting more interest as people can’t afford the capital cities.
Certainly there’s still a lot of interest in buying as close as possible to the city and maximising land value. Investors are trying to get the biggest piece of land they can as close to the city as possible and they’re prepared to go further out to get a piece of land.
Blacktown is still affordable for houses. Most investors buy properties under the $600,000 price range. Most people go in with $400,000 to $500,000.
What does REBAA do? 
The Real Estate Buyers’ Association of Australia is the only national body for buyers’ agents. All of the members are independent and none of them sell real estate.
People are either an independent buyers’ agent or they’re a sellers’ agent that calls themself a buyers’ agent.
In the US, they have a model where the commission is split between the sellers’ agent and the buyers’ agent. Commission there for sellers is around 6%. In Australia, we don’t have that model. It presents a danger of conflicts of interest.
All the buyers’ agents who are members of REBAA are licensed and carry professional indemnity insurance, which is not mandatory throughout Australia. They have to be endorsed by two other buyers’ agents to gain membership.
How can investors tell if a buyers’ agent is independent?
You have to be careful. Check their license number with the state or territory Fair Trade website. Ask them if they sell real estate.
If they receive any form of commission from any selling agents they have to disclose that and that’s where it gets grey and murky. If they sell real estate, they are not a buyers’ agent.
A buyers’ agent is not selling you property. They are looking for property that meets your criteria and presenting those properties to you. It’s very different.
What about property spruikers selling to SMSFs?
It’s not a new problem but the fact is that some financial planners and advocates are asking for big fees from developers because they see it as an easy way to make commissions.
Buyers have to ask what else is out there that compares to the property they are being sold and realise that the recommendation is a clear conflict of interest.
Even if the fee is disclosed with the SMSF property developers the buyer ends up paying an inflated fee which covers the cost of those commissions. You are better off paying someone to look for property for you independently.
Buyers need to be a bit smarter when they go to anyone who is giving them advice and ask them why they are giving that advice. Knowledge is power. Don’t be afraid to ask questions. 
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zfielding-GvX3Uq9KTa

Why investors should consider using a buyer's agent: Q&A with REBAA's Jacque Parker

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Property investors and, increasingly, home buyers are being encouraged to look towards hiring a buyer’s agent to assist with their purchase. Understandably, when throwing hundreds of thousands, and sometimes millions, of dollars into an asset you want to get it right.
However, not every buyer’s agent is made equal and there are some profound differences between the different experts in our space.
If you missed it, last time we asked <a href="https://www.urban.com.au/expert-insights/buying/31967-q-a-how-close-should-a-real-estate-agent-get-to-a-buyer-s-agent" target="_blank">'How close should a real estate agent get to a buyer's agent?'</a>
In our Tuesday Q&amp;A, Property Observer has taken the debate to Miriam Sandkuhler, the founder of <a href="https://www.propertymavens.com.au%20" target="_blank">Property Mavens</a> and author of Property Prosperity, and asked her the questions we wanted to get her opinion on – from whether commissions should be allowed to how much she thinks we should be paying.
What do you see as the key role of the buyer’s agent?
The role of a buyer’s agent is to research, source and negotiate to buy a property on a client’s behalf. They must always act for the client and advocate on their behalf, protecting their interests.
Just as a solicitor will act for both defendants and plaintiffs, a licensed buyer’s agent can act for a buyer or a vendor (in a selling capacity), but never both at the same time.
A buyers’ agent is in the market and negotiating every day, so their skills are well-honed and because they understand the market and the sales tactics real estate agents use, they are well placed to advise clients on how to buy the right property at the right price.
They also have access to the same information and databases real estate agents use which are not readily available to the public and can source ‘off market’ properties before the public finds out about them.
Most people only ever buy a few properties in their lifetime and can make the mistake of assuming because they have owned property; they are expert enough to identify an investment grade property.
Unfortunately each year I see people who have made this mistake - and paid the price in the tens of thousands of dollars.
Do you think a buyer’s agent should receive commissions from a developer?
Absolutely not.
If someone is receiving a commission from a developer, they are a sales person working for the developer and not for you, the buyer.
Whoever pays the fee is the client. That means if you are receiving “free advice” you are being sold to and the “adviser” does not have your best interests at heart. That includes someone calling themselves a "buyer agent" who is not charging you a fee or is rebating it when you sign a contract or at settlement.
You should always ask an agent, accountant, mortgage broker or financial adviser, if they are receiving fees from anyone else.  If you believe you are not being told the truth, refer them to Consumer Affairs in your state.
Never deal with anyone calling themselves a buyer agent who does not have formal real estate qualifications, as they cannot legally represent you in a real estate transaction and won’t be covered by professional indemnity insurance if things go wrong”.
You can search the Consumer Affairs website in your state which will have the Public Register of licensed estate agents. A buyer’s agent or buyer’s advocate should always be a licensed estate agent or agents representative.
What other sources should a buyer’s agent accept payment from? (E.g. property management referrals)
The issue of receiving referral fees is a matter for each agency to determine and the regulations differ from state to state.
For example in Victoria, if a buyer’s agent (or selling agent) receives a referral fee from a property management firm,  the landlord is required to sign a commission sharing authority approving the arrangement to ensure it’s a transparent transaction.
Some buying or selling agents elect not to take referral fees at all and merely require that a high level of service is delivered to the client. This is my preferred way of operating, because when there is no money changing hands, I can hold a service provider to account and keep the client’s interests at the forefront.
Article continues on next page. Please click below.
<hr class="system-pagebreak">
Do you think there is an issue in the industry of unscrupulous practitioners?
As with any industry, there are always some practitioners who are more professional than others and a minority who behave unscrupulously.
The biggest problem in the industry is people masquerading as a ‘buyer’s agent’ when in fact they aren’t qualified property advisors or licensed real estate agents and are taking a commission from a developer or a vendor to sell you a property. 
Another problem I see with some buyer agents is when they let their egos gets in the way of a good outcome at an auction -  determined to get a ‘win’ at any cost and show others they have ‘beaten’ another buyer or buyer’s agent.
I have seen occasions where two or more competing buyer’s agents bidding on the same property have driven the price well beyond its true value and this is not acceptable.
A buyer’s agent should never lead you into overpaying for a property to ensure an outcome for them. It can lead to problems financing the purchase, because if the bank valuations do not stack up, the client can be left in a precarious financial position.
Even worse, in my view, is where a buyer’s agent ‘switches hats’ and sells clients property they have bought on the market or developer stock to their clients. If a buyer’s agent tells you they have bought a great property they have come across and suggests you buy one too, but don’t charge you a fee, they are either profiting from the sale or earning a commission. While this is not illegal, the ethics of this in my view are highly debatable. At a minimum they should at least be transparent as to how their fees are being earned and who they legally represent in the transaction. In addition, if they own the property but charge you a ‘buying fee’ to purchase it, there is a definite conflict of interest here, even if transparent.
An emerging problem is accountants, financial advisers or others giving advice on which type of property to buy for a super fund (SMSF) or with a family law settlement.  Again an adviser must be qualified and have years of experience to understand what type of property will suit these different scenarios.
There has been some <a href="https://www.urban.com.au/news/32137-collusive-auction-bidding-not-prevalent-victoria-consumer-affairs" target="_blank">media attention recently on ‘collusive bidding’</a>, where multiple buyer agents from the one firm bid at an auction to try and secure a property for a client. I don’t think it is unreasonable to do this because as a buyer’s agent they are just trying to counter the tactics auctioneers and agents use to sell property. 
How can a buyer ensure they don’t end up using one of these buyer’s agents?
Be aware! In some states there is no legal definition of a ‘buyer agent’, and the term can be misused.
To ensure you are engaging a professional buyer’s agent, ask them these questions:
<ol>
<li>Are you a licensed real estate agent or agent’s representative? 
</li>
<li>Do you have a qualification as a buyer’s agent? 
</li>
<li>How and when do you get paid? 
</li>
<li>Do you only buy property or do you also sell property for developers? 
</li>
<li>How many clients do you work with at any one time? 
</li>
<li>What happens if you bid for me auction and miss out? 
</li>
<li>How many properties will you negotiate/bid on for me? Will my fee change or is it fixed? 
</li>
<li>How will you protect me from overpaying for a property? 
</li>
<li>What recent client testimonials can you offer as evidence of your work?</li>
</ol>
What prices are reasonable for a buyer’s agent to charge?
The level of a fee must be linked to the value of the service delivered.
Buyer’s agents charge fees in different ways – sometimes fixed or sometimes as a percentage of the purchase price.  Many charge an engagement fee upfront with the balance paid on securing a property, while others have no upfront fee.
One method isn’t necessarily better than the other, it all comes down to the firm’s policy.
The old adage ‘you get what you pay for’ is what all consumers who want to engage a buyer’s agent should always keep at the front of their mind.
When engaging a buyer agent, be clear about what your needs are, what service is being offered and if your needs will be met for the price.
If you don’t think the deal is good value, then check with other buyer agents until you find someone you wish to engage. Gut feeling, compatible working styles and personality can also make a difference.
Note: Some of this information came from Property Prosperity, with Sandkuhler’s permission.
YOU MIGHT ALSO WANT TO READ
Q&amp;A: <a href="https://www.urban.com.au/expert-insights/buying/31967-q-a-how-close-should-a-real-estate-agent-get-to-a-buyer-s-agent" target="_blank">How close should a real estate agent get to a buyer’s agent?</a>
<a href="https://www.urban.com.au/news/26385-sept-24-the-argument-foragainst-buyers-agents" target="_blank">The argument for/against buyer's agents</a>
<a href="https://www.urban.com.au/news/28308-how-buyers-agents-pick-the-best-performing-properties" target="_blank">How buyer's agents pick the best performing properties</a>
Select your buyer's agent wisely: <a href="https://www.urban.com.au/expert-insights/buying/28406-buyers-agents-tips-to-finding-a-buyers-agent" target="_blank">What you need to consider</a>
Property Observer readers, and industry members, what’s your take on the debate?
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