What’s the consequence of choosing the wrong buyer’s agent?

April 4th, 2022

Five questions to help you find a buyer’s agent you can trust

 Most Sydney property buyers are hoping to find the home of their dreams or the wise investment to secure their future. Whatever the case may be, purchasing property in Sydney can be an emotional and arduous process. An experienced and professional buyer’s agent can help you carefully navigate this process with ease and success.

It’s when a buyer’s agent is inexperienced, has a conflict of interest or is mis-incentivised, that the consequence for the buyer can be devastating.

Both emotionally and financially.

Buyers can be left feeling irritated that their needs were not met, financially bitter having overpaid for the property, or stuck with a property that’s overflowing with problems after the buyer’s agent failed to complete thorough due diligence.

These consequences can be avoided. The key is to ask the right questions and find a professional buyer’s agent you can trust.

There are so many agents in the Sydney property market, that buyers do not have time to review all the options. To help you find a trusted right buyer’s agent, the Curtis Associates team have identified five key questions for you to ask.

#1 – Is the fee structure transparent and aligned with my interests?

Choosing a buyer’s agent with a transparent fee structure will result in positive outcomes for the client, every time.

The consequence of choosing an inept buyer’s agent will be compounded by a complex fee structure. Let’s explain.

If you’ve never engaged a buyer’s agent before and you’ve only been a vendor with a selling agent, you should know there is (and should be!) a distinct difference between a selling agent and buyer’s agent fees.

For vendors, there is a relatively easy exchange process. The selling agent is incentivised to seek the highest price for your property and this aligns with the vendor’s goal. The selling agent’s fee is based on a percentage of the purchase price. Even if the selling agent is inexperienced and the vendor is disappointed with the final sale price, the fungibility of cash in the bank makes it easier than being stuck with a property full of buyers’ remorse. Vendors walk away with money in the bank and move on to the next venture. The consequence is relatively painless and any disappointments are often quickly forgotten.

However, if a buyer is dissatisfied with the buyer’s agent process and has a negative experience, the consequence lingers. Buyers are left possibly with a mortgage, buyers’ remorse and a property which is a constant reminder of a painful process. Plus, when a buyer’s agent fees are complicated, the buyer is left with emotional frustrations and financial disagreements. It pays (literally) to find a buyer’s agent with a transparent fee structure. If it’s confusing or unclear, clients should take this as a warning sign. If it’s a poor experience, the complex fees will only compound the negative outcome.

Before you engage with a buyer’s agent, look for a fee structure that incentivises the buyer’s agent but is aligned to your needs. Clients should be in control of the process. For example, a simple fee structure for buyers’ agents should be separated into two clear stages. An engagement fee to kick-start the search process is paid upfront. Then a success fee is required but only upon purchasing the property. This simplicity ensures the buyer stays in control of the outcome. That is, clients only pay the success fee if they are happy with the purchase price.

Unclear fees create confused clients and negative experiences. To learn more about how much a buyer’s agent costs, read here.

#2 – How comprehensive is your buyers’ agent service?

A key factor that supports great outcomes for clients is how broad as well as deep is the buyer’s agents’ service?

A competent buyer’s agent is client-focused, experienced and has a business large enough to support your needs at a high standard. Such a buyers’ agent should:

  • be wholly independent and certainly not aligned to a selling agent
  • spend time listening to your needs and take a comprehensive brief (and not charge for this process)
  • be honest, realistic and supportive of your personal needs and goals
  • provide impartial advice on Sydney’s different property market sectors and micro-markets
  • tap into long term trusted and up to date networks to find your property
  • conduct extensive due diligence on a property and openly share all the results with you; both good and bad
  • alert you to risks posed by the property including previous unknowns about neighbours, infrastructure, environmental and other local issues
  • recommend you seek advice from experts rather than provide opinions that the buyers’ agent is not qualified to provide with examples including, contamination, town planning and legal advice
  • negotiate a good purchase price on your behalf.

This is not too good to be true!

Curtis Associates navigate this process with clients every week. It’s not only a positive experience for clients, the relationship between the buyer’s agent and client is open, trusted and genuine.

The wrong buyer’s agent will not offer a broad or deep service which should be seen as a warning sign. If the buyer’s agent cannot provide a comprehensive service, the consequences may be:

  • a narrow and inept shortlist of properties
  • an incomplete and generalised brief, unaligned to your needs and goals
  • a poorly researched property loaded with unknowns and expensive, ongoing or insoluble problems
  • poor due diligence provides no insights for clients (make sure multiple sources are consulted)
  • misinformation because the buyer’s agent is not an expert in everything
  • overpaying for the property.

Also Read: How much does a buyer’s agent cost?

# 3 Are you an exclusive buyers’ agent?

The relevant Oxford Dictionary definition of “exclusive” is “excluding…other things.”

Many buyers’ agents call themselves “exclusive” but also operate in vertically integrated businesses. For example, a buyer’s agent may also manage properties bought for investor clients or provide vendor advocacy to sellers rather than act only for property buyers. That is not “exclusive.”

Superficially the idea of a ‘one-stop shop’ might seem appealing, but the risk of a conflict of interests between businesses is real. You should ask those buyers’ agents:

  • how is that conflict is managed?
  • how do they protect clients from overpaying for a property, when a higher purchase price could secure them lucrative future income streams?

Better still, retain a buyers’ agent such as Curtis Associates which IS exclusive with no complementary businesses.

#4 What is your reputation like amongst selling agents?

In Sydney’s residential and commercial property markets, nearly every vendor is represented by a real estate agent.

Therefore, it is essential that you choose a buyer’s agent who is respected and well regarded by those selling agents. Their networks will assist in finding the all-important off-market properties for you. The buyer’s agent should maintain a healthy arms’ length relationship with those selling agents so as to keep negotiations professional. This distance ensures your buyer’s agent will not be compromised when the time comes to drive a hard but realistic bargain for you. It’s a difficult balance and the key is mutual and professional respect between agents.

The consequence for buyers when a buyer’s agent is disrespectful is that selling agents simply shut the door on those buyers’ agents and their clients miss out on access to off and pre-market properties. A good reputation in the market betters your chances of finding that perfect property. Here’s what property professionals say about Curtis Associates.

 # 5 How do you measure your performance?

The wrong buyer’s agents will overstate their expertise and not be able to evaluate themselves or provide evidence of their success. The consequence for clients is simply: uncertainty and stress.

Be especially careful of buyers’ agents who make promises that are impossible to substantiate like  “we will save you money.”

Alongside an elevated ego, the wrong buyer’s agent will also over-promise, under-deliver and mismanage your expectations. The consequence is a disappointment, frustration or worse – financial loss.

A key consideration for buyers is to ask buyer’s agents for evidence of their success and how that is measured. At Curtis Associates,  we have developed the Hindsight TestTM which outside of testimonials, is a retrospective measure of our success.

Here’s how it works: within six months after every purchase, we test the price our client paid against any comparable sales in that period. This provides a performance benchmark for our purchasing track record. It assesses whether the purchase price was spot on, above or below market value and it helps us continually evaluate and refine our buying strategies. For clients, it provides a clear, evidence-based measure of our past performance. When you first meet with our team, we will show you how the Hindsight TestTM improves our performance and our enviable track record in that regard.

For in-depth property buying advice, analysis and research from a team that doesn’t manage property or act for vendors– get in touch. We’ll send you the Curtis Associates monthly newsletter, complimentary.

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Speak to Chris now to find out how he can help you. Call us on +61 2 9238 8089

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