Property Hub - Investment Insights & Inspiration - Realty Talk Vault: Question Buyers Agents

Episode Date: April 18, 2023

We bring you another classic Realty Talk episode from the vault, which was originally published on October 6, 2022, but is still just as relevant today. Buyers Agents can have a big impact on your property experience but how do you distinguish a great buyer's agent from an average one? To help you with this our host Bushy Martin reveals the questions you need to ask before engaging them. RealtyTalk is part of the Property Hub podcast channel, your home for property investment insights, inspiration, and stories from Australia’s top property experts, investors, leaders, and analysts. Subscribe now to get every RealtyTalk episode delivered to you each week for free, and also get full access to Get Invested, the leading podcast for Australians who want to unlock their full ‘self, health, and wealth’ potential and get inspired by the stories of investors, founders, and entrepreneurs. Subscribe to RealtyTalk on the Property Hub channel: Apple Podcasts | Spotify | Google Podcasts | Email Property Hub is a collaboration between Bushy Martin from KnowHow Property, Kevin Turner from Realty, Andrew Montesi from Apiro Marketing and Apiro Media, and Australia’s largest independent podcast network DM Media.  Business and partnership enquiries: [e-mail] omnystudio.com/listener for privacy information.

Greetings and welcome. Now, for some time we've been espousing the merits of engaging a buyer's agent to assist you in levelling the playing field to secure a superior performing property on better terms. But like everything, I'm not just suggesting you engage any old buyer's agent because like any relatively new and growing profession, there's a massive chasm between the average buyer's agent and a really good one. Because unfortunately, there's been a swag of inexperienced and ill-prepared opportunists that have moved into the industry, as there's very low barriers to entry. And they're giving the industry a bad name and making it harder for the few select and proven buyer's agents to demonstrate their value. And don't be fooled by high-profile buyer's

agents companies who spend a poultice on advertising and marketing that promise the earth in terms of access to so-called off-market properties at under market prices because unfortunately once you've signed up and handed over your cash behind the smoke and mirrors they over promise under the liver and often pressure you to buy a property that doesn't actually optimize your opportunity or satisfy your strategy because they just need to get paid. In our experience we're finding that the majority of buyers agents tend to operate at either end of a spectrum from totally remote desktop research and no boots on the ground with no local knowledge at one end or the opposite where they know the ins and outs of their local area but have very little quantified leading

indicator macro, micro and micro research to support their findings. The reality is that you need to engage advised agents that can deliver on both and is committed to finding the best property to suit your needs not just whatever's available. So how can you separate the sheep from the goats when it comes to bias agents, by asking the right questions and then knowing what the answers mean. But what are the right questions to ask? Well, this is how I'm going to help you today with a host of questions that will give you the good oil so you're engaging a bias agent that's not only going to source, negotiate and secure a great property that ticks all the boxes of your strategy, but they're also aligned with your values. The questions are the ones that we quiz

prospective buyer's agents on before we go any further with them. So let's run through them. Firstly, tell us about your background and how this has helped you as a buyer's agent. Now here you're looking for evidence of their understanding and experience along with their passion and performance. Secondly, how long have you been a buyer's agent and who are your buyer's agent's mentors? Now this question is about their level of experience and expertise along with their understanding of how a good buyer's agent operates. If they've only been operating for a short period of time without much expert guidance, then you need to question their ability to do a good job. Thirdly, what are your personal values and how do you demonstrate them? This is about understanding

what's truly important to them and whether this aligns with what's important to you to ensure that fundamentally you're on the same page and operate and respond in a similar way. Number four, do you own any property either home and or investment yourself and can you share an outline of your personal property investment strategy and your property portfolio this question is about understanding if they actually walk their talk past personal property investment experience is an essential undertaking for those buyers agents that are fulfilling investment briefs if they don't have skin in the game and haven't done what they're looking for you to do then you need to question whether they're a good fit. If it's a matter of do what I say,

not as I do, then run. Question number five, what qualifications have you undertaken to become a buyer's agent? Here you're looking for a reputable qualification, not a 10-second course from a coupon in the Cornflakes packet. If they own their buyer's agency, they're going to need to have a full real estate agent's license both for themselves plus an agency license for the company they operate under. So ask to see copies of this. A ground-up training system partnering experienced buyers agents with assistant buyers agents in training or apprenticeship style pathways are actually preferred. Ideally apprenticeships with REBA accredited buyers agents and advocates who have mentored them in the early years is much recommended. Now state-based

real estate institutes and TAFE or private institutions also run training courses. But many of the short courses teach enough to be dangerous. So be aware of online non-accredited courses. If you're unsure, contact REBA, which is the Real Estate Buyers Agents Association of Australia. Question number six, are you a fully licensed buyers agent? And if they are, ask for copy. If they're not, get nervous. Number seven, are you a member of REBA, which is the Real Estate Buyers Agents Association of Australia, and or PIPA, which is the Property Investment Professionals Australia? And if you are, do you uphold their standards of contact? If the buyer's agent's not a member of either, then I'd question their validity. Question eight, are you licensed as

an exclusive buyer's agent or does your current license permit property sales as well? Now, Now, if the buyer's agent or buyer's agent company also sells property, then this is a very clear conflict of interest and will likely compromise the quality of services provided and the outcome that you're likely to achieve. So you need to be engaging dedicated independent buyer's agents who only buy property and aren't affiliated with selling agents or others in the industry. Number nine, do you hold professional indemnity insurance? Now, this is critical if something goes wrong and the buyer's agent fails in their duty

of care, because without professional indemnity insurance, you're going to be left high and dry and out of pocket. So make sure you get to see the PI insurance policy certificate of currency. Number 10, do you have conflict of interest policies? And how will I know you're going to act in my best interest? Now, everyone's obviously going to say they do, but get them to show you their actual policies as evidence of their commitment. Number 11, what differentiates a great buyer's agent from just an average one? Now a great buyer's agent relies on in-depth quantifiable research to identify locations. They have an extensive network and good relationships with sales agents to source off-market, pre-market and non-market properties. They're able to

negotiate favourable terms and they have access to a team of independent building inspectors, property managers, quality surveyors and conveyances to guide and manage the entire process through the settlement and beyond. Question 12, what areas and or property types do you specialise in? Now here you're looking for evidence that they have good experience securing the type of property you're looking for. This is a buyer's agent who says they do everything because there's a big difference in the approach required between types of properties and locations. Question 13, how will you add value to our property purchase? Now listen here for how they're going to do this and then keep them accountable for delivering on this if you

actually engage them. It needs to go beyond the platitudes of just saving you time, money and headaches. You're looking for superior networks of contacts, sourcing and negotiating skills and the ability to guide and coordinate the entire property process. Question 14, what's your approach to searching, sourcing, selecting and negotiating a property? Get them to walk you through their typical process from end to end with real examples of what they've done recently. Question 15. What growth drivers and leading indicators do you use to identify high potential growth properties? Now here you're looking for forward-looking data, not rear-view mirror history. Think infrastructure, industry employment and income demographics. Question 16. Where do

source properties. Here you're looking for evidence and examples of a strong network of contacts in your preferred area across selling agents, property managers, and others who are able to identify good off-market, pre-market, and on-market property opportunities. Question 17, what process do you go through prior to recommending a property to a client? Now this is a subtle way to identify the level of due diligence and the checks and balances against your strategy and your preferences that are instituted from the macro right down to the micro level, which then flows into the next couple of questions, which is, hey Dean, how do you combine desktop data with local knowledge to identify the best property opportunities? Now this is about

finding a balance of quantifiable data combined with intimate local knowledge to better form property solutions. For example, an area and a property can look great on your laptop and on paper, but local knowledge may identify that the area has a bad stigma or reputation and locals avoid it like the plague. Next, we go straight for the jugular by asking, what's your due diligence process? Do you have one? Is it in-house or outsourced? What's included and who pays? The answers here are critical to ensuring that the property that has been assessed against all the key criteria at the macro, micro and micro levels with quantifiable leading indicator data not just historic data combined with local independent professional insights on the area

and the property. As a minimum a good buyers agent will be providing you with a full report that addresses all of the good bad and ugly aspects of the area and the property to allow you to make fully informed decisions. For example for growth properties at the very least you're looking for evidence of new committed infrastructure, new and strong industry and employment diversification and strong growing income demographics under what I like to call the three I's of growth, infrastructure, industry and incomes. Question 20, what negotiation approach do you adopt to achieve the best property outcome for your clients? Now this is also critical as it's what and under what terms that you buy a property that actually establishes your success.

So you're looking for detailed examples of how they've successfully negotiated property purchases to ensure your offer stands out from others without paying a premium for it, particularly in hotly contested situations. You also need to understand how they negotiate favourable terms for off-market properties where there may not be any other competition. And do they include due diligence clauses? And what else do they look at other than price to successfully secure a property on your behalf? Question 21, how do you make a recommendation on price?

Now, here you're looking at how they establish a reasonable market value for the property. Do they just use CoreLogic data, comparable sales? Because they need to be able to demonstrate what's the right price to pay for the property. And remember, you're not just looking for an average property at a bargain price, but a great property at the right price, because it's always about quality and value at the end of the day. Question 22, how often do you recommend your clients not buy a property? Now, make sure they give you actual examples of when they've done this, because you're

looking for confidence that they're finding you the best property, not just the best available property. Question 23, how many off-market silent listings have you secured in the last two years? Now, this is not a deal breaker, as you're not just engaging a buyer's agent to find properties that you can't, and there's a fair bit of smoke and mirrors around this. but knowing that they have a network of contacts that make them aware of off-market opportunities may identify good properties ahead of the pack but you need to ensure that they're going to still negotiate a fair price on them. Question 24, if I find a property myself how do you treat this?

Now a good buyer's agent will still get you to pay their fees for the property as they still need to put the property through their full detailed due diligence process and then negotiate the purchase under favourable terms. Question 25, how long is your process taken from initiation to purchase for your last five clients? Now this will vary depending on location, property type and the prevailing market conditions, but it's not unusual for the process to take anywhere between three to four months or more from commencement through to sealing the deal. Question 26, what sets you apart from other buyers agents and what do you do differently? and why would we engage you instead of another buyer's agent?

Here, you're looking for evidence and examples of superior and customised approaches to researching, selecting, negotiating and securing the property through the combination of leading indicator data combined with strong networks of relationships with independent professionals with intimate local knowledge. 27, what previous purchases have you made and what experience do you have

in our preferred location and or price range? Here, the buyer's agent needs to provide concrete and recent examples of successful property purchases in your location with your property type and your price. 28, how extensive is your network of related property contacts? Now, successful property is a game of relationships, so you're looking for evidence of a strong network

of local selling agents, property managers, building inspectors, conveyances, and finance brokers. 29, what's your track record of securing high growth properties? Now, make sure they can actually evidence actual properties with buy prices and dates against their current values, and then get details on annual growth rates and the rental yields. Question 30, can you share examples of testimonials of properties that you've sourced and secured that have performed above the average? That's fairly self-evident. Question 31,

can we talk to some of your previous clients, preferably with a similar brief? If they can't, run. If they can, make sure you talk to three or more of them to make sure that you're looking at the good, bad and ugly on the buyer's agent performance. 32, can we talk to some of your current clients? This will confirm their actual current performance. 33, are there any industry professionals who will vouch for your credibility. We're talking here about property managers, mortgage brokers, and conveyances, and some selling agents, because these are going to be useful to talk to in order to get second opinions on their prowess. 34, what's your policy for handling competing or overlapping client briefs? Now, this is also important because if they have

two clients looking for the same type of property in the same area, which client's going to get preference? Is it first in best rest or how else do they manage this? And question number 35, finally, we get around to their fees and costs because it's more about their values alignment and their value added than price that's important. So you need to ask, how do you get paid and do you receive or pay any financial rewards to or from selling agents, property managers, accountants, mortgage brokers or other allied property professionals? A true independent buyer's agent doesn't take commissions from anyone and doesn't take kickbacks or fees in brown paper bags. Question 36, how's your pricing structured? Is it a percentage, a fixed fee or

other? Now I suggest you try and agree a fixed fee regardless of property value because a percentage of the purchase price, normally around one and a half to three percent, subconsciously means that the buyer's agent has no incentive to negotiate hard on the purchase price because the higher you pay, the more they get paid. Now, most reputable buyer's agents will get you to pay an initial commitment deposit of around $3,000 with the remainder paid on successful settlement of the property so that they're actually paid on performance. 37, what happens if you can't source or secure an above average property to satisfy my brief that we're happy with in a reasonable timeframe? Now, if the buyer's agent is unable to successfully identify and secure a

property over three to four months or more, will they refund your deposit monies paid? And finally, question 38, what happens if our expectations are unreasonable? Here you're looking for a buyer's agent that is happy to have the tough conversations in the sense that if a property brief is unachievable or your expectations around timing, quality and cost are unreasonable, will they push back to qualify expectations to ensure that everyone's on the same page from the get-go. And there you have it. If you have the fortitude and confidence to ask these questions and then really listen to the answers in terms of what's said and what's not said, then you're in a much better position to make a truly informed decision on engaging a

great independent buyer's agent professional that you respect and enjoy working with to achieve superior property performance results. And remember that the only dumb question is a question that you don't ask so don't be afraid to ask anything and keep asking if you don't understand the answer and you're not clear on the response. And if you'd like a copy of all of these questions just email me on bussy at knowhowproperty.com.au and we'll reply email with a copy of our template. That's more food for thought. Stay with us for more here on Realty Talk.