How to choose a buyers agent (Sydney)

Discussion in 'The Buying & Selling Process' started by Jove, 9th May, 2021.

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  1. Jove

    Jove New Member

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    I’m looking to brief a buyers agent to help me find a property in the lower north shore in Sydney. There’re many to choose from, even if I pick from the ones on REBAA. I’ve spoken to a few of them, and have personal recommendations for some of them, but I’m finding choosing one over another hard. It’ll be great if I can get your thoughts on the following.

    1. I’ve come across some BA who is a one person team, and others with a cast of thousands, and some in between. What are the benefits of choosing the one person team vs the one with the large operation? I’m sure the BA who operates by himself/herself will say he/she can dedicate all their time to me, while the benefit with the large team is they can specialise in due diligence or negotiations.

    2. Are the fees of the BA negotiable or are they set in stone? I’m not sure whether there is scope to negotiate.

    3. Almost all the BAs I’ve come across use the fee structure of a retainer + success fee, where the fees differ depending on whether you’re buying at the $500k-$1mill tier, $1 mill to $1.5mill tier and so on. Is this what is known as “fixed fee”? That’s not my definition of fixed fee, but it seems to be what the industry has adopted. Also, is this the standard structure of a BA’s fees, or are there BAs who truly charge a fixed fee (one amount for the BA's fees no matter how much the property costs)?

    4. How would you choose one BA over the other when all have glowing recommendations from other clients? They all say they can get off market properties, and that they’ll help me buy at market value. As they are all so similar, fees are all I have to choose and rank them. I feel I've asked them all the standard questions, so was looking for more offbeat questions I can direct at the BA.
     
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  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Hi Jove

    Seeing that 2/4 of the questions relate to the cost of the investment, you personally, may be well served to go for the lowest cost service provider, at least initially.

    Longer term though that lower initial investment may prove to be a so so decision.

    Having done finance to support purchasers using BAs, we get to see what has worked well and what hasn't worked as well

    Within reason, I would lose the context of trying to see value in the fee, and rather rely on well established previous outcomes, and someone you can personally relate to and most importantly - trust. Thats the core piece in the decision making process.

    As to sole operators, small groups or a cast of thousands, I have a view that the larger an organisation, the more folks to feed and costs to carry, which has the potential for conflicts of interest, and getting lost in the crowd.

    Even what look like sole operators or small groups outside of the box, many have significant research etc being done behind the scenes

    ta
    rolf
     
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  3. Ernie247

    Ernie247 New Member

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    6 Tips for Choosing the Right Buyer's Agent
    1. Listen to your gut. First and foremost, don't downplay the importance of first impressions or strong emotional responses. ...
    2. Ask about experience. Naturally, you want an agent who has a lot of experience helping buyers. ...
    3. Be clear about your goals. ...
    4. Ask about the contract. ...
    5. Ask about communication style. ...
    6. Seek testimonials.
     
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  4. Jacque

    Jacque Jacque Parker Premium Member

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    Hi @Jove

    I am a BA however, so full disclosure upfront, but feel I can assist with some of your queries above. As @Rolf Latham as mentioned already: "I would lose the context of trying to see value in the fee, and rather rely on well established previous outcomes, and someone you can personally relate to and most importantly - trust. Thats the core piece in the decision making process." This is so true, and especially relevant in a property transaction, where you're spending significant sums on securing a quality asset. It all comes down to trust and your faith in the BA to represent YOUR best interests, so finding the right BA who you feel comfortable with and who you believe is the best advocate is vitally important here. Meet with them, call them and make sure you're 100% on board with your decision, rather than just selecting on the basis of their fee structure alone.

    As to attributes, look for experience and longevity in the industry, positive testimonials and google reviews and great local knowledge in the areas you're buying in. Not all BAs cover all of Sydney (we certainly don't) so make sure whoever you select has worked in the areas before, have and retain solid relationships with selling agents in these suburbs, and have the runs on the board.

    Team size: whether or not they're a one man show, a smaller outfit (like us) or a larger one, it's the quality of the service that counts. Again, this comes down to the personalised interactions you receive throughout the search, but what is important here is that your brief doesn't clash with any other clients that the agency already has, so ask the question: What happens if you already have a client with the same search parameters as me? Some of the bigger teams can quickly fall into situations of conflict of interest, where you can be actually competing against other clients of the same agency.... why should you be paying a fee to find yourself in this scenario? Always seek clarification here from the agency on what their protocol is. In our agency, we simply don't take on two clients with the same brief, as we believe it represents a clear conflict of interest, but not all BAs do this, so ask the question.

    A few other questions to also consider:

    Are they members of REBAA? This provides assurance they are fully accredited exclusive BAs and don't sell or list property at all. They've also been through a very rigorous membership process to establish their experience, qualifications and references from both clients and selling agents they've done deals with.

    What is their track record like and how long have they been in business?
    This is very important, as it denotes experience, longevity and essential knowledge. Unfortunately there are a number of newer operators in the BA industry who promise the earth, but fall short on delivery. One of my clients refers to them as "shiny suit salesmen" :D It's SO easy to look up how long a BA has held a licence for here in NSW so make sure you do your DD on the BA (and their team) here OneGov Mobile | Public Register at the very least. Re: track record. Read their websites, their google reviews, testimonials but also ask for personal recommendations not just on forums like this, but also FB community pages, and chat to selling agents in the area you're looking to buy etc. All valuable sources of referrals.

    How well do they know your area?
    Having solid relationships with key selling agents in an area is very important, and especially in a market like the one we're experiencing now. Look for BAs who have worked in your areas before, know the selling agents, the local layout, what's going on on a micro level, best school catchments etc etc as they are going to be in a much better position when it comes to local knowledge and what's good/poor value and, more importantly, why.

    Fees: everything in life is negotiable (well almost :D) If you don't ask, you'll never know. Be wary, however, of those agents who discount too quickly- it could represent desperation. Any good BA worth their salt in today's market is already very busy and most likely there may be a wait period or, at the very least, securing an appointment may take a little longer....

    Also on fees, unlike selling agents, most BAs won't charge commission but fixed fee schedules are popular, as are a % within staggered price brackets (eg: 2% fixed $1-1.5m at lower end = $20K) Others, like us, choose to assess the brief first and quote individually based on the complexity of the brief and size of the search area, rather than price alone. After all, there's significant differences between searching for and inspecting 1 bed apartments to acreage properties, checking out and conducting DD on development sites vs established homes, and some searches require time-heavy canvassing campaigns (approaching private owners) due to lack of supply on the open market. Almost every search is different, hence the reason we quote individually here.

    How many clients do they service at once? Another valuable question to ask, as some BAs find themselves so overrun they simply cannot provide the quality of service required to look after their clients. I heard a story recently, of a BA here in Sydney, who actually doesn't take her clients to ANY properties but rather sends her clients to the "selected" properties and then calls them afterwards for their feedback- not just sometimes but EVERY time :eek:
    At the very least, any BA you engage should be not only physically inspecting properties WITH YOU (and/or before you, to ensure they are suitable- not always possible in a heated market like the one we are experiencing however) but they should have a backup plan with another team member if they can't attend, or if there's a clash. We can't always be in two places at once, but doing our absolute best to be there is important.
    In order to provide a quality service, and to ensure you're being looked after properly, ask the BA how many full search clients they normally look after at any one time. The response will depend on the no. in their team, your search parameters and the types of searches (and areas) being covered, but particularly if it's a one man/woman show, be careful not to engage someone who's already saturated and you rarely end up seeing them. Too easy to drop the ball here on quality service.

    Why should I hire you? It may seem obvious but ask the question and listen to why the BA believes they're a good fit for you. If they're not, they should also be able to point you in the direction of a colleague who can.

    I hope this helps and best wishes with your quest to find the right BA. :)
     
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  5. Jove

    Jove New Member

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    Hi Rolf

    That’s a good point on what may appear to be a sole operator might simply mean that person is the public face, while there may be a team working behind that person.

    Interestingly, are there any BAs who are truly sole operators, or is that simply not feasible?
     
  6. Jove

    Jove New Member

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    Hi @Jacque

    Lots of useful information, so thank you for typing this out. Fortuitously, when speaking to other BAs, I’ve covered many of the questions you’ve raised.

    On your point about ensuring there isn’t a conflict of interest, many BAs assure me they wouldn’t take on any briefs that conflict with other similar briefs. What are your thoughts on including a clause to that effect in the agency agreement with the BA? Or do you find clients do not usually negotiate the terms and conditions of the agency agreement?

    Your story of the BA who left the clients to do their inspection scares me. I hope that BA isn’t a REBAA member!

    Thank you for the tip about asking the BA why I should hire them. I expected they would all have a stock response but never hurts to hear the answer.

    On fees, you’re right about fixed fee schedules. I’m looking for the full search package, and many are a % within staggered price brackets. I’ve seen a couple BAs who individually negotiate depending on the brief but it seems more than coincidental that as I suggest a bigger house or sized land, the BA’s fees rise.

    Regarding negotiating fees, and noting you’re a BA, would it be frowned upon if a client negotiated fees? Would that cause you to not take that client on? Or is it standard in the BA industry for clients to negotiate fees? If so, in your experience, do clients throw out a figure to start the negotiations, or perhaps negotiate a separate fee for a narrower price bracket (ie, $1mill-$1.5 mill is a large range, so as a percentage for the $1 mill purchaser, the BA’s fees are likely to be higher.)? It’s a balancing act – if the norm is to negotiate, then I don’t want to miss out. However, the BAs I’m considering all say they have a waiting list, so they may say take it or leave it and move on to the next client on the waiting list.
     
  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    None of the "sole operators" we have done finance for their purchasers are Lone Rangers.

    It doesnt make commercial sense for a BA to be spending their time scraping data for example, rather than spending their time building and maintaining relationships with their chosen area's agents, or simialr higher value work.

    ta

    rolf
     
  8. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    An important consideration here is how this is perceived by the service provider.

    While you arent looking for a credit adviser or financial planner, one of the first things we look for is "capacity to make a decision" based on data that is materially relevant to the transaction. In our case this is typically not a transaction, but a business relationship that may live on for decades.

    While a large chunk of the one on one work we do with clients is education based, if we can not articulate that rates fees and charges need to come in the middle to bottom of the decision tree ranking for a portfolio builder we deem that person to have " competing commitments".

    Competing commitments are sub-concious programs that once served a person in a particular scenario(s) often a LONG time ago. We all have them.............many recognise them and realise they no longer serve them and replace them with new ones.

    One of the early initial orange flags is " i have been talking to x number of brokers or banks" about the best solution for my family.

    The challenge with this is that often ( not always) there is ZERO consideration given to how to weigh what the optimum outcome is, and how to weigh up the various features, benefits and downsides of any product/structure or service.

    The usual gauge is " perceived value", and in the mortgage industry for most borrowers is total monetary cost of the product. This isnt at all surprising since Regulators have pushed this context for almost 2 decades with Comparion Rate Legislation, which is about as useful as comparing an orange and a carrot because they are the same colour.

    Recent Borrower Best Interest Duty Legislation further drives this context of cost as a primary ( but not sole) tool of deciding what is BEST for the borrower.

    In most circumstances, for our client base, if our focus was total cost only, we would fail the Best Interest Test, because that focus is in direct competition with the borrowers stated goals of say "we want to own our house as soon as possible" or " we would like to build a property and equities portfolio to retire better and earlier".

    All the above is a long winded way of saying one isnt going to buy a Lexus at a Corolla Price.

    In any service provision there is an old adage that says

    Price
    Quality
    Service​

    Choose any two

    As has been alluded to here by others, if you use a decision tree, with materially relevant data you may find that cost of the investment (within reason) is so low in outcome that you can put that aside and focus on what may really matters to you.


    ta
    rolf
     
  9. David_SYD

    David_SYD Well-Known Member

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    1. Fees - in my view should be fixed. What’s the incentive for the BA to negotiate a price down if their feed is based on a % of the Sale Price
    2. Form - you need to check their past deals and press them for details. Where areas do they specialise in? Do they know these areas inside out? Where’s their network and is it strong?
    3. Flexibility - and patience are very important. It can be a frustrating journey for all parties, not least the BA. You need a BA that’s in it for love and passion. Their job is to establish a strong brief and understand what type of property best suits their Client. Any body can buy in the climate (if you’ve got the most money). A skilled BA will seek out the right deal(s) and STRIKE
    Good luck. A good BA is worth their weight in gold
     
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  10. Jacque

    Jacque Jacque Parker Premium Member

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    See my responses above and best wishes with your selection and impending purchase!
     
  11. Branden

    Branden Well-Known Member Business Member

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    It looks like you have enough information on this thread to answer your question/s already. But after using a few different BA's myself these are the things I would consider:

    • Does the agent practice what they preach? Are they a successful investor and have a portfolio themselves that can prove to you to show they are a successful and knowledgeable investor?
    • Do the agent’s services fill the “void” in what the investor is looking for? For example, if the investor is looking for a specific type of property is the agent able to obtain this property with their contacts and expertise?
    • Does the agent provide the investor with more value than what their fees are? Utilising a Buyer’s agent can be a quite expensive service so the investor will want to get the most value out of the agent.
    • Does the agent understand the market they are investing in? The agent does not necessarily have to live in the market to understand it, but the investor will want to decipher if the agent is actually knowledgeable about the area and knows the driving factors behind growth with that area or region.
    • Does the agency have a proven track record? By looking at the agency’s website the investor should be able to see reviews or evidence of past purchases from the agent. Do they have similar property purchases which align with the investor’s goals? Is the review from previous clients positive?
    Hope this helps.
     

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