What service does a buyer’s agent offer? Here’s what to expect before you pay a Retainer fee
July 1st, 2021
Here’s a snapshot of how to establish trust with a buyer’s agent in the first conversation.
It’s not every day that you engage a buyer’s agent. With so many buyers’ agents in the market, how do you choose who’s right for you?
Are you more comfortable with someone with a sales background, or from another profession? What service should you expect? How much information should you share and what questions do you ask them to satisfy that critical question: Are they honest?
An honest buyer’s agent should demonstrate that quality by providing plenty of practical advice for you to verify their experience. They should be prepared to undertake considerable research is required before any fees are paid.
Equally, a prospective client should explain their circumstances in detail and any needs for flexibility. This allows for an authentic discussion and gives you a baseline from which to assess all your options.
Within 20 minutes of speaking with an honest Sydney buyer’s agent, you should have developed a good rapport and begun to establish trust.
Also read: How to find and buy property off-market in Sydney?
You should never feel pressured to commit or sign up with a buyer’s agent in the initial conversation. Instead, the experience should empower you to decide if the buyer’s agent is right for you.
How will the first conversation with a buyer’s agent unfold?
Expect loads of questions and be prepared to share.
In the first conversation, a buyer’s agent will aim to form a clear idea of your situation to assess if your property expectations can be a reality.
They will ask what type of property you need and what suburb/s you prefer. A thorough buyers’ agent will send you a buyers’ brief for you to complete and return so that they can begin to understand intimately the purpose behind the property purchase as well as your likes and dislikes. Whether it’s an investment property, a commercial or industrial premises or a forever home, a buyer’s agent will want to understand your long-term goals. They will ask for details about your budget, investment hurdles, longer-term intentions regarding the property, any relevant family circumstances and will consider your needs, now and in the future.
Even in this first contact, a good buyer’s agent will challenge your preferences and possibly alert you to deal breakers of which you might not have been aware. With this level of detail in hand, an experienced buyer’s agent will begin to analyse whether your expectations match reality and they should share useful insights with you from the outset.
Tip: If a buyer’s agent isn’t curious about you, it should be a warning sign. Ask them directly if your expectations are realistic and what are your alternatives.
Talk about money.
One of the first questions a buyer’s agent will ask you is, “What’s your budget?”
Also read: Qualifying Buyers: why quality questions equal success
Be candid and share what you can afford. Ideally, (unless you are a cash buyer), you will have pre-approved finance before this initial conversation and resolve any relevant residency issues.
It can feel a bit personal in the initial discussion, but it allows the buyer’s agent to offer realistic advice and helps the buyers’ agent get comfortable with you. Trust should be mutual. Aligning your budget with your expectations is key to a successful property purchase. If your buyer’s agent suggests your goals are unachievable, they should offer alternatives and generate ideas to move forward. Look for a buyers’ agent that is solution-driven.
Now, it’s your turn: Ask about their fees. Fees should be easy to understand. You should expect a one-off retainer fee to complete research and due diligence. Then a success fee upon exchange of contracts. The success fee should be fixed in your property price bracket. This allows you to budget and ensures the buyers’ agent has no incentive to drive the purchase price higher. Both your interests should align and have no conflict.
Tip: The fee structure should put you, the buyer in control. No purchase, no success fee. You should never feel pressured to purchase.
Expect to obtain practical advice and valuable information.
To assess if a buyer’s agent is right for you, they need to share knowledge and offer insights. Once you’ve shared your circumstances, a buyer’s agent should provide direct advice and demonstrate they can think outside the square.
Examples of valuable information include, an analysis of recent sales, information regarding pending infrastructure changes for the area, examples of insights from skilled interviews neighbours can provide, local council constraints or environmental issues that may impact your purchase. An honest buyer’s agent should be a wealth of knowledge and should openly share information that’s relevant to you, even if it’s bad news. This first contact should not feel like a sales pitch or even an infomercial. It should feel like and be a candid discussion with a professional.
Within the first conversation, you will know how experienced the buyer’s agent is, by their assessment of your situation and the current property market and its many micro markets. Interesting insights will not only prove their knowledge but will also help you confidently take the next step along your property journey.
Tip: Be cautious of generalisations. There is not one single Sydney property market. It is made up of multiple micro markets that are all shifting separately. Good information should be backed by evidence, so request more details if things sound unclear.
Expect evidence and a voice of reason.
Ultimately, a buyer’s agent will be your advocate. They should be your confidant and a sounding board for different options. This requires an open-minded approach when you first contact a buyer’s agent. Be prepared for complete honesty – the good, bad and ugly truth.
They should not offer sweeping opinions with no evidence to support their views. For example, all buyer’s agents will claim to have a network of contacts and offer you opinions on an area, but you should expect evidence and data to support these claims.
While anecdotal experiences may be interesting, do not rely on this information alone.
Similarly, avoid any buyer’s agent claiming to “save you money.” That’s a claim impossible to verify so see it as a red flag.
Tip: Be cautious of the “yes” person, anecdotes without evidence and sweeping statements. If it sounds too good to be true, it probably is. There is no substitute for evidence to support anecdotes and opinions.
Discuss potential conflicts of interest.
Often a buyers’ agency will also manage the property. Some may also offer vendor advocacy to sellers. Such buyers’ agents cannot truthfully call themselves “exclusive” buyers’ agents.
Be aware of these potential conflicts of interest:
If you are an investor, you need to satisfy yourself that the buyer’s agent has no conflict between buying and managing the same property. If they manage the property which they buy for you, a higher purchase price may reward them financially in property management fees.
A one-stop shop might not be as attractive as it seems.
If the buyers’ agent acts concurrently for two or more buyers with similar criteria and budgets. Ask the buyer’s agent how this is managed and ensure the answer is transparent.
If the buyers’ agent’s relationship with selling agents is too close. A professional, arm’s length and mutually respectful relationship between buying and selling agents is healthy for all but when the relationship is too close it’s a conflict. Be sure to ask questions of the buyer’s agent whose brand is promoted by selling agents and auctioneers.
Actual or apparent conflicts of interest will quickly dilute any trust that’s being forged, so sort it out early when short-listing buyers’ agents to avoid confusion later. You need confidence in the organisation you are working with. Find out how potential conflicts are separated and managed.
Ideally, your buyer’s agent should have no actual or apparent conflicts of interest so you can relax knowing that you have your buyers’ agent’s undivided loyalty in every respect.
Tip: Establish who will represent you immediately and speak with them directly. Find out if they are a principal of the business if the business manages property that they buy and if they or a related business also represents vendors and how they deal with potential clients with concurrent interests.
Close the first contact with a plan.
By the time the first conversation with a buyer’s agent is at a close, you should have enough useful advice to assess,
- if your property purchase is a feasible one and
- if you are on the way to finding the right buyer’s agent.
Following this, a formal presentation should be offered. It’s an opportunity for the buyer’s agent to share what service they provide in much more detail – what, how and why they do what they do to act in your interests rather than their own. You should see evidence of their experience, qualifications and solid data that are relevant to your circumstances and they should be frank about the limits of their capabilities. Managing expectations is essential to building trust. The last thing you need is a buyers’ agent who overpromises and under-delivers.
Only when you’re ready will you be asked to pay a retainer fee and the search will begin.
For in-depth property buying advice, analysis and research from a conflict-free team that doesn’t manage property or act for vendors– get in touch. We’ll send you the Curtis Associates monthly newsletter, complimentary.
