AssetBase Buyers Agent

Hi all,

This is my first post so thanks in advance for any insights you have. Currently starting research into our next investment property and looking at using a buyers agent to get exposure into markets all over Australia. Our broker suggested AssetBase as an option and was wondering if anyone has had any experience with them?

They aren't a buyers agent in the traditional sense as they source the property and obtain their fee from the vendor like any real estate agent would which obviously off the bat seems like a conflict. They assure us they are working with out interests in mind and commit to buidling a strategy and regularly reviewing it every 6-12 months which gives me some reassurance. This is much better than paying a buyers agent out of our pocket but seems almost too good to be true.

 

Hi OP,

I would suggest asking them how they could be acting in your best interests if someone else is paying them? That’s 100% a conflict of interest. You won’t get the best price or the best asset to meet your requirements. There are plenty of Buyers Agents that you could engage directly that work for you not the vendor.
I would also ask the broker if they receive a commission for their referral to this particular buyers agent.

 

Thanks for the advice re the commission the broker may be receiving, I hadn't considered that. We definitely raised the conflict as a concern and they understood where we were coming from. I guess my thoughts at the moment are that even if I am paying a buyers agent there is really no obligation for them to act with our best interests in mind besides their own goodwill. You pay them (at least partially) upfront and they aren't liable for any negative outcomes except maybe reputational damage I suppose. The other thing I should mention is that I am in the ADF and they market themselves to ADF investors as one of their niches.

 

You have made some interesting comments - perhaps I can assist further..

With regards to acting in your best interests, while you can never be 100% sure, there are ways to mitigate that risk by having a clear strategy and an idea of what you are trying to achieve. You do this by having measurable criteria. You give the buyers agent this criteria (and most good buyers agents will ask for it anyways) and then when they present you with opportunities or potential properties you measure them against your own criteria and also get the buyers agent to tell you how it meets your criteria. Having a buyers agent does not remove the need for you to do your own homework or assess opportunities according to your own risk levels and needs, they just help with some of the searching legwork, may have some contacts to get a look at properties that are off market and may be able to give you information about what a good market value for a particular property should look like. They are not psychic and can not predict the future!

With regards to you being in the ADF - what is an ADF niche? What makes them stand out from any other buyers agent? You have a PAYG income, a stable job and want your investments to make money... not too dissimilar to most other employees/investors, the niche may actually be that they deliberately target ADF employees because they have good stable income and may not always be investment savvy.. can be easy prey for unscrupulous characters..

Just like any professional advisor, interview 3 or 4 buyers agents and rank them on a number of things that are important to you.. perhaps; integrity, what are their ethics, can they provide customer testimonials or references, what is their process, what is their fee structure, what happens if you aren’t happy with their service?? Buying a property is a massive investment, don’t forget to invest some time and money into the team you build around you, it will save you time and money in the long run!

We have an amazing team that support us in our businesses and investments, a great solicitor, broker, tax agent, business colleagues and mentors to name a few! Best of luck!

 

Please don't go with a BA who you're not paying. They'll be selling you stuff (usually overpriced brand new stock, and touting the amazing tax benefits ) and getting paid by the seller - which you've picked up - and your broker will also be getting a hefty commission - way MORE than he'll get for writing the loan.

Find a new broker, and a new BA as these ones are not working for you...they're working for themselves OR they're just not aware of what makes a good investment property and transaction.

Either way, you're better off without them.

 

One of the traps you need to consider is the property valuation and how that is obtained AND how your finance may be "structured". I call this lesson Spruikers Scam 101.

Step 1. You are in a "group" - A work group usually. Or a church group - They are even more nieve and trusting. They market to (prey on) these groups as word of mouth makes them look sound. But the true test is a referral years later not the week you take settlement on a new property. ADF?. No problem. They likely understand how payroll works and also how the tax breaks and benefit works. Thats nothing they can influence of course and seems a good thing. It is in theory. Except you stand in a queue and think these guys are good - They must be!! . Watch how thye ingratiate themselves into a group. This allows YOU to lower your guard. They may even run seminars to these groups. Collectively its like rounding up sheep for slaughter. Follow the leader. Baaaa Baaaa.

Step2. They find a property and wow you dont have to pay them any BA fee. Bargain. Beware of free lunches. They probably get a much larger sum in kickbacks than you are told or suspect. Some even tell massive lies. Perhaps the spriuiker has relatives of a mate who is a builder and developer ! Its not unusual. They didnt lie. They just didnt tell you the full strory either. This self interest issue means they focus on property that suits them. Not you.

Step3. Finance. These is the heart of most scams. They will explain you can use existing equity for a deposit. Sounds great doesnt it. But here is the secret bit. The broker is in on the deal. He wants the fees on 100% borrowings AND maybe even a bit of preferential treatment by the seller and the real estate spruiiker. After all they want 50 clients like you. Its a money making club. And now here is why Step 3 is really really bad.

Step4. The broker / seller will explain they already have valuation and finance is largely preapproved for a 80% lend on the property. Yep of course they will say that. Because the valuation may come up short with other lenders but what they didnt explain is that the valuation works to say 70% but since you are borrowing using equity on YOUR OWN HOME. The LVR issue isnt a lender concern anymore since you get the money elsewhere. So you borrow what the property costs. Not 80% of what it is worth and you never get a lender warning about the valuation either. You wont realise this for a while and in 2 years when you get a val and its lower you will be surprised.

Step5. A guarantee with the rent. Good property wont need a guarantee. They just want to promise you something to make it sound safe. The costs are more than the rent anyway. So you just lose less money with a gurantee (maybe). They still get their fees. They know that they can always get their friendly PM to dump some cheap rental lease to fulfil the guarantee. Most of them also have PMs involved as this makes the property really well managed etc.. They dont want a random PM making this property look bad. What seems good is not always a great thing if the whole club are in on the money making

 

Even worse is something called a property investor club. There is no mutuality. Clubs are meant to be based on the legal principle of mutuality and have a intention that the club doesnt profit from members. What you get instead is commonality. ie a printing press that makes $$$ from its members at each breath. Profit motivators will always inflict on "members".

The term club is largely misused in many industries to give a homely warm feel. ie gyms, bars and so forth.

 

Hi all,

Thank you for the advice. A lot of this has confirmed my gut feeling that it seemed to good to be true and a bit too easy. A lot of your comments have been pretty close to the mark regarding certain promises and 'spruiking' techniques they have used so far. Next step is to engage some proper buyers agents.

 

Thanks for the detailed reponse, some of this is scarily close to the mark. Just to clarify the point regarding using equity for the entire deposit. That is something I want to be able to do and believe I am in a position to do. Excuse my naivety - I have had an IP for 5 years but am still very green when it comes to investment strategy - is there any issue with this in your opinion as long as the mortgage broker isn't chasing overvaluations on my property in order to make it happen?

I think I have enough sense to know my means and keep the next investment within that regardless of the valuation I get. Im confident even low ball valuations will cover a deposit.

 

Using equity for your deposit is a great strategy, when done right. It's the ideal way to do things for most investors.

The issue here is that you're using a broker who's either relying on you not understanding... and/or they themselves, potentially not understanding...that what they've put you in is a really sub-standard investment. And they're getting paid around $20k to do so - WAY more than they'll get for writing the loan.

It's possible they honestly don't understand that what they're doing is crap - they might just be doing what they've been taught.

Either way, as a property investor you can choose a better team.

 

I'm with Jess on this one. The strategy is actually sound when its done well. Its just you want someone who works for your best interests, not their own or that of the mates. You wouldnt use the same solicitor as a vendor so why use a mortgage broker that is part of the team selling something ? They may make it sound like a sensible / easy thing to do but it can cause more harm. And it wont cost anything extra.

With brokers I would recommend:
- Use a good independent broker. Not a bank adviser (they only sell what that bank offers). If something looks weired they will be honest and tell you.
- Use a experienced one. One good source of word of mouth referrals is PC.
- It doesnt matter where they are. Dont pick a broker based on proximity. You want one who cuts through the complexity and guides and advises you and manages any issues

If you are considering using a true Buyers Agent look at REBBA members etc And make sure they are also a licensed real estate agent. Have a chat to a small number to find one you feel can help and you can communicate with.

 

Hi @George K spot on so far with responses about conflicted interest and the importance of engaging a truly independent BA. @Paul@PFI has mentioned starting with those of us who are REBAA members- at least you can be assured of independence, accreditation and experience here. Running a BA business here in Sydney, I can attest to the fact that, unfortunately, there are still a range of "glorified sales agents" who are using the term "buyers agent" incorrectly, when they are anything but. As @Simon Hampel pointed out, if you're not paying a BA a fee, then they're not a BA. Pure and simple.

As for finding a BA who are "experts" across all of Australia, I have my own personal opinion here, however be aware that most BAs are actually specialists in their local area so you need to decide where you want to buy and not rely purely on the opinion of someone who may only have limited resources and accessibility to certain areas of the country. Remember, as an investor, it's your decision here. The BA is the person conducting the searching, assessing and negotiating on your behalf. Good luck!

 

Hi all & thank you for comments.

I'm the Managing Director of AssetBase, I started the business many years ago with the goal to help as many Australians as possible avoid the traps associated with property investment - off the plan, high density, overpriced house & land.

I could not agree more with comments above regarding "Property Spruikers" & those offering a "One Stop Shop". These businesses often operate off a "stock list" & have in-house finance to hide massive valuation shortfalls.

Our business does not offer mortgage brokering or property management services, we are not a "one stop shop". We're there to locate the best real estate options for our clients. We refer to accredited mortgage brokers & local real estate agents to look after our clients property purchases. We have been doing so for many years with a tremendous amount of success.

AssetBase is purely driven by the clients needs, wants & objectives. Our first meeting is to ask the client first what they want (price point, location, type of property, development) & to then source appropriate options through our vast network.

We've helped clients purchase all types of real estate options, from established homes right through to small projects / duplexes (e.g. - recently we've had long form valuations on our small duplex projects come in at $200,000 above purchase price).

We would never allowed a client to proceed with a property where a valuation issue occurs. As an ethics driven organisation, we're very proud that we have looked after so many happy clients who have made money through various property cycles.

George K, I wish you every success with your property journey.

Thanks, Joshua Boctorani

 

So how do you get paid? Who pays you?