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The rise in popularity of buyer’s agents is certainly a positive for consumer choice. The service these professionals provide is becoming increasingly important with the property market becoming tighter.
An effective buyer’s agent can help clients access properties, provide expert negotiation, and reduce the overall burden of property hunting.
Rather than a real estate agent – who works in the interests of the seller – a buyer’s agent works in the interests of the buyer.
However, with the importance of buyer’s agents increasing, this has made way for “inexperienced” and “undereducated” individuals.
This is according to a report from the Real Estate Buyers Agents Association of Australia (REBAA).
Low barriers of entry and a “lack of specialised education” has resulted in an influx of ineffective buyer’s agents. The impact of this falls onto the consumer.
“Unfortunately, this can result in overpaying for properties or facing legal issues due to improper advice,” REBAA president Melinda Jennison said.
Speaking to Broker Daily, PRPTY360 founder Julian Fadini said there has been an “explosion” in buyer’s agents over the last few years. This has made way for some inexperience to creep through.
Fadini said that the buyer’s agent space is “noisy” and rife with misinformation. This is resulting in poor outcomes for consumers that can be costly.
“If people aren’t careful, they could be encouraged to purchase a certain type or a certain style of investment that may not be as beneficial to them. And that in itself could cause financial distress and other issues for the client,” he said.
“If you implement the wrong strategy or you go out to buy the wrong types of property based off inexperienced or potentially malicious buyers’ agents, then that could cause you quite a significant amount of financial stress and burden.”
Cunninghams Real Estate managing director John Cunningham highlighted similar issues with dodgy buyer’s agents.
“They hung around open homes and pounced on buyers, but they simply did not know what to do and could never get to the point of getting any sales done via our firm as they kept losing out due to inaction or absence. Many buyers lost up-front fees before the agency folded within 18 months,” said Cunningham.
According to Fadini, in the 17 years he has been in and around the market, there has been a significant rise in the number of buyer’s agents. He said there is up to 100 times more than there was.
Inefficient regulation is the issue many are having. Without anyone pulling up the inexperienced agents, the trend continues.
Jennison said there is a distinct “lack of regulatory oversight” compounding issues. With fewer requirements needed to enter the profession and a lack of training, it’s no surprise bad actors are able to slip through the cracks.
Do your due diligence
Purchasing a property is likely the biggest financial commitment an individual will make in their life. It pays to ensure those assisting in this journey know what they’re talking about.
As Fadini said, “there’s no substitute for experience” and buyers should be engaging in proper research."
He said there are questions that must be asked before utilising a buyer’s agent’s service:
- Are you licensed?
- What’s your track record?
- How long have you been a buyer’s agent?
And avoid part-timers. As explained in a recent episode of The Smart Property Investment Show, host Phillip Tarrant said you wouldn’t visit a part-time surgeon – so why use a part-time buyer’s agent?
“I wouldn’t go to a part time surgeon to get something done. I wouldn’t go to a part time accountant to get my finance done. I wouldn’t go to a part time mechanic to get my car fixed. I’m not going to go to a part time buyers’ agent or part time property professional for the purpose of significant financial decision making,” said Tarrant.
“The first property you buy as a property investor is absolutely critical. Are you going to outsource that into the hands of a part timer to make that call? Because if you get the first one wrong and the second one wrong, guess what, you’re going to be one of the statistics of people who had a bad experience investing in property.”
