Why use a buyer’s advocate and how to make sure you are engaging the right one?
Published on 13/10/2020
Buyers’ advocates (also called buyers’ agents) work exclusively for the property buyer to negotiate the purchase of a property either by private sale or auction. The good ones will take time to get to know you as a person and to understand your goals. Some people engage buyers’ advocates to find them a family home because they are time poor or not confident to negotiate; others do it because they are planning to move interstate and don’t know the local market there. Buyers’ advocates are ‘on the ground’ so can do all the property searching for you as well as negotiate the best price on your behalf.
For investors, however, the stakes are much higher. Of course, buying a family home is an important decision, but when you’re planning to buy three, four or five investment properties, you want those decisions to be good ones. You want someone who can not only select properties with the best potential for capital growth but who also understands the desirability of the property for future tenants and be able to clearly demonstrate to you how much your rental return will be. Some selling agents often have no idea about market rents because it is usually handled by their rental division. It’s important for you to know your holding costs.
Buyers’ advocates have access to data that is not readily available to the general public. This includes details of sales of similar properties in the same area, trends to help pinpoint high-growth suburbs, and other industry-based information only available to licensed agents and valuers. Other information, such as how long a property has been on the market and how that compares with others in the area, can impact on how negotiable the vendors are. Buyers’ advocates often have access to silent or ‘off-market’ properties (that never make it to the internet) through their industry contacts.
5 Key reasons why you should always engage a buyers’ advocate.
1. Expert advice on pricing, negotiation, and local trends
Perhaps the most important reason for working with a buyers’ advocate is to make sure you don’t pay too much. While you may be an experienced negotiator in your profession, that may only get you so far. As mentioned above Buyers’ advocates have access to sales data that is not readily available to the public which helps them analyse what a property might be worth and understand what a potential buyer may be prepared to pay. This research gives them the ability to provide a negotiation strategy that leverages these data points and other local trends they are seeing from working with other customers.
2. Save time and stress less
Buying a property is a huge financial commitment and whether you’re a first homebuyer or have plenty of experience, purchasing a property is emotionally stressful for most. Buying property can take a lot of time, something most people just don’t have because of work, family or business commitments. Having a buyers’ advocate do all the heavy lifting means you save valuable time trying to understand the market and looking at inappropriate properties. Buyer advocates are better able to distance themselves from the purchase taking the stress and emotion out of property buying. That’s something not everyone can do when they’re spending their own money.
3. Off market purchases
Buyer’s advocates have access to private sales as well as the properties that are unavailable for sale to the public through their networks. These properties aren’t listed because the vendor might not want to go through a protracted selling campaign, may not want to pay for advertising, or doesn’t want a bunch of strangers and unqualified buyers traipsing through their home at an inspection. Real estate agents know that buyers’ advocates always have clients ready to buy if the property is right. Since COVID-19, I have been given access to an even greater number of off market properties for our clients’ consideration. This is because my business has been operating since 2005, which means that I have built up strong relationships with selling agents during this time.
4. Having a professional negotiator focused on your best interests
Some buyers like to do everything on their own, but working exclusively with a buyers’ advocate gives you a significant advantage as you have your own property expert that has the obligation to represent your interests only. If you deal directly with the listing agent, it is important to remember they have a fiduciary responsibility solely to the seller. While they may seem like a very nice person, they only have an obligation to represent the seller’s best interest, not yours.
The other added bonus of having your personal representative through the buying process is that your buyers’ advocate acts as a buffer for you. What does this mean? Well, the buyers’ advocate will help remove the emotions from the negotiation process and prevent any information leakage between the buyer and seller that may otherwise negatively affect a negotiation if you handled it yourself. Furthermore, having a buyers’ advocate as an intermediary can allow you to play good cop bad cop as a helpful negotiation tactic when necessary.
5. Avoid buying the wrong asset
As skilled negotiators, buyers’ advocates can save you thousands of dollars as well as protecting you from making ill-informed emotional decisions when buying your home that can set your financial goals back by many years. For investors, a buyer’s advocate specialises in sourcing and securing properties that will attract capital growth, healthy rental yields and attract quality tenants. An experienced buyers’ advocate will help you buy smart.
My top tips on how to choose the right buyers’ advocate
Buyers’ advocates work on a commission basis, fixed price, or both. They often have an upfront engagement fee to cover some of time it takes to search for the right property just in case the client decides to pull out or significantly change their brief. The investment for engagement fee may be offset against the fee for purchase. However, as buyer advocates skill levels can be different, it is important to not to base your decision exclusively on price.
Buyers’ advocates must be either fully licenced real estate agents (if they are running their own business) or work as an agent’s representative with a real estate agency. At a minimum, ensure your buyers’ advocate:
- Holds an appropriate license, as either a licensed real estate agent or agents representative working under a fully licensed real estate agent that specialises in buyers advocacy
- Is registered with the real estate institute in their state.
- Has a minimum of three to years experience as a buyers’ advocate. They need an established track record – see if you can talk with past clients
- Has worked as a general selling agent before working as a buyers’ advocate – you want them to understand the inner workings of the industry
- Has their own property investment portfolio, not just their principal place of residence.
- Has an in-house property management division within their agency. This is very important if you are purchasing an investment property because your buyer advocate should be up to date with rental regulations and market conditions
- Has professional indemnity insurance
- Regularly attends training to keep abreast of industry changes
- Clearly understands your property investment goals and has strong knowledge in the area you are looking at buying in.
- Has the runs on the board. What industry recognition, awards & experience do they have?
In the end, whether you choose to go it alone or take a more modern approach by using a buyers’ advocate I can only speak from experience, knowing that I have provided clients with peace of mind when making large financial and lifestyle decisions. In uncertain times like we are currently experiencing, you need a property expert on your side to help you make the best decisions.
It has always been an honour and pleasure making deals and clients dreams come true. Throughout my expansive career I have transacted over a billion dollars worth of real estate for clients. I am one of Australia’s most awarded buyers’ advocates, having been the winner or finalist for the REIV Awards for Excellence as the Buyers’ Agent of the Year for 12 years since 2007 and a finalist again for 2020, (with the winner to yet to be announced). My agency has been the winner or finalist as the REIV Small Residential Real Estate of the Year for 7 years since 2011 and a finalist again for 2020 (with the winner yet to be announced). I was appointed as the Vice Chairperson of the REIV Buyers Agents Chapter 2018-2019 and was elected committee member from 2006 to 2019. I was the elected Chairperson for the North Western Division of the REIV 2006-2012 when in force. For other industry awards and recognition refer to the awards page.
Should you have any questions regarding the state of the market, your existing portfolio or considering buying or selling please feel free to reach out as I would be happy to have a no obligation chat.
Until next time, stay safe and stay well.
AKA The Property Lady