Who's Your Agent Really Working For? - May Market Update
May 2, 2022 / Written by Rich Harvey
Written by: Rich Harvey, CEO & Founder
One of the fundamental requirements for any successful business or personal relationship is the element of trust. When both parties trust each other and listen to each other’s perspectives and needs and understand the underlying motivations, then a fruitful outcome typically eventuates. Unfortunately, real estate sales agents get a bad rap and it’s not always fair as most are professional and reputable. They rank third from the bottom on the trust scale, only just above car salespeople and advertising people as measured by the Roy Morgan survey of professions. Nurses, doctors and pharmacists top the scale. But that ranking isn’t fair when you review their job description and their primary motivation.
Most Australians have a very strong radar to detect when people are not telling the truth – we can spot unauthentic speech at 20 paces by the tone of their voice, lack of eye contact, or just gut feel.
Remember the caricature of the property spruiker on the Gold Coast? In bygone years their white leather shoes, gold chain and glistening Mercedes may have given them away. But more so it was their language dripping with milk and honey, promising untold riches if you bought this particular property they had listed. Today’s real estate agents are sophisticated and often brilliant communicators.
The Property Stock and Business Agents Act requires that an agent must act with a clear fiduciary duty. This means that the agent must act in the best interests of their client.
One of the issues that we are frequently seeing as buyers’ agents, is some selling agents temporarily acting as buyers’ agents in order to win the listing of a potential vendor. This style of selling agent says to the vendor “Let me help you to bid at auction or negotiate the price of a property you are interested in, and I won't charge you anything for that service, but if I'm successful then you'll agree to give me the listing on your home.”
The major problem with this scenario is that the selling agent is not necessarily acting with the right motivation. Their primary end goal is to make the sale at whatever price so they can win the listing.
I'm sure you know of many buyers, or you may have been in this situation yourself, where you keep putting in offers and just miss out, but the agent says “I’m so sorry you missed out, there’s another house coming up soon around the corner that would be perfect for you”. You have to ask yourself, do they really mean it? Are they just giving you false hope in an attempt to get you along to the next auction and create more competition and drive up the price for the property? In most cases yes unfortunately.
So, what is their true motivation here to represent the buyer? Is it the motivation to list the vendors property, or is it a genuine motivation to service the client for the best outcome?
If an agent is representing you at auction, then you must have a significant level of trust in their motives and abilities. They will be spending your money! How skilled are they at bidding at auction and are they encouraging you to pay more without having a fair idea of value? Have they prepared a detailed appraisal report prior to the auction with comparisons to at least 5 other recent sales in the area with similar attributes? Have they discussed any auction tactics that they might use on the day? What is the overall depth of their experience?
Acting as a selling agent on a daily basis is vastly different to acting as a buyers’ agent. Whilst there are similarities, the mindset and the whole psychological approach is very different. The selling agent’s duty is to market the property and create competition. This helps the vendor achieve the highest price during the selling campaign. The buyers’ agent duty is to help the purchaser find the most suitable property in the shortest time frame for the lowest price.
My team and I have recently heard of examples of where a selling agent has represented a purchaser at an auction in order to win a listing. When asked what they thought the property was worth before the auction they replied – ‘I really have no idea!’ That is a stunning revelation. Beware.
One of the most important requirements I have drilled into my team during various training sessions is the need for empathy and care. I constantly repeat the simple truism: “People don't care how much you know, until they know how much you care!”
A selling agent really does not have the time, nor the motivation to act for buyers. By law, a selling agent cannot act as a buying agent on the same property.
A professional buyers’ agent, on the other hand, would:
- Sit down with the purchaser and take detailed notes on their specific requirements,
- Provide a strategy and guidance on the best locations and property types to suit their budget and create a concise buyers’ brief
- Prepare suburb profiles with current price data and examples of recently transactive properties
- Search extensively for the ideal property - both off market and using the vast network of sales agents to uncover new listings
- Spend adequate time inspecting a shortlist of suitable properties with the client, getting their raw feedback, and never give up searching till the right one is found
- Prepare a detailed appraisal report on the target property giving an accurate estimate of current market value
- Assist in conducting relevant due diligence, including pest and building reports, and whatever else is required to minimise risk factors towards a successful outcome
- Negotiate the lowest possible price in the best interests of the purchaser
- Facilitate the speedy exchange of contracts, and liaising promptly with all parties
- Attending to the pre-settlement inspection and ensuring a smooth handover
Just as you cannot have an attorney acting for the plaintiff and the defence, you can't have a selling agent acting for both the vendor and the purchaser - it just doesn't make sense.
If you are considering engaging a buying agent or selling agent to help you with your next property move, make sure they are properly accredited and that you understand their skill set and most importantly their motivation before engaging them. Propertybuyer have the expertise and the continuity of service over the past 20 years to get you brilliant results every time.
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