By Kirsten Craze
In less than two decades, buyers’ advocacy has gone from a service almost exclusively for wealthy house hunters to a common option for purchasers with a variety of budgets and needs.
This shift in who wants to use a buyers’ advocate, more commonly known as a buyers' agent, has created a surge in the sector and as a result has offered property professionals a new career direction. While an increasing number of buyers’ agents choose the path from day one, many have “jumped the fence” from sales into purchasing. Although the move might appear to be a natural progression on the surface, sales agent turned buyers’ agent Ramon Mitchell said there is more to the job than meets the eye.
Booming market encourages more agents to enter buyers’ agency
“The hot market is definitely contributing towards the growth in the buyers’ agent industry. That old idea of it only being for the rich and famous has been well and truly dispelled. As people notice an expansion of our industry, and the growing appetite in the market for our services, that factors into thoughts on their future career,” he said.
A fast-paced market where buyer demand is outstripping supply can be challenging for selling agents who feel competition is too heated. Mr Mitchell, director of Gault & Co and committee member of the REINSW Buyers’ Agency Chapter, said those agents who might be seeking a career change without wanting to upskill into another industry, are turning to the buyers’ agent side of the fence.
“As we move through the property cycle, there's a natural ebb and flow of stakeholders. Whether that is selling agents or on our side of the industry now it’s far more established. Traditionally, when the market is running hot, everybody comes out of the woodwork wanting to be a selling agent thinking ‘As long as I can my hands on listings, I’ll sell them’.”
But when the market cools, the reverse is true.
“I've been doing this for 22 years and what I've seen over the cycles, at the end of the run when the market tightens again, is that there is usually a shakeout of the industry. A lot of agents just exit, allowing other agents to regain market share. Then it goes back to the natural equilibrium.”
Instead of jumping ship from the property industry all together, today the industry offers a number of alternative directions.
“Nowadays agents and consumers are more aware of our parallel service. We're orbiting around the same product, properties and people. What we're seeing is that some agents who are potentially exiting sales, are ‘quote-unquote’ giving this a try.”
Making the transition to buyers’ agent
With his role sitting on REINSW’s Buyers’ Agency Chapter Committee as well as his executive committee position with REBAA, Mr Mitchell said he was aware of the varying levels of experience and qualifications of newcomers.
“There are shared concerns because day in day out we see application inquiries to join from new entrants in the industry. But because there's a benchmark for entry, we have to say no to quite a few. It just gives you pause for thought about what they’re doing, where they've come from and what their qualifications are,” he said, adding that there was an inevitable attraction to the sector given the large number of frustrated purchasers seeking guidance.
“Some might think it seems easy at the moment. With a large number of buyers out there, potential buyers’ agents think if they can just get them to sign up, they can go and buy ‘something’ and the job is done. But new buyers’ agents are finding out it’s harder than it looks because it’s quite different to selling.”
Where the differences lie
Pricing is one of the biggest points of difference between the two fields.
“Selling agents put a guide on a home, and in a competitive environment they can let the market run its course. As buyers’ agents in a hot market, we've got to be very careful about what price we pay on behalf of our clients because our name goes on that price. For argument’s sake if, in the worst-case scenario, a valuation comes in short and the client is unable to finance the property, that's a pretty significant issue and that’s on us.”
Mr Mitchell said buyers’ agents need to be prepared to step away from a lot of properties, either due to problems with a property or its price.
“This is where I personally think there's a higher burden of responsibility on the buyers’ agent. When all is said and done and the contracts are exchanged, it’s time to face the music if something goes wrong thereafter. The buyer is investing their trust in us, they're engaging us to act in their best interests and that’s to ensure we're conducting thorough due diligence and protect them from overpaying.”
There is also a different kind of juggling act for those agents transitioning into buying.
“Selling agents are engaged to list a property and all the buyers come to them. I know some selling agents might have multiple listings at any one time, but I’d imagine it would come as a shock to many just how much geographic territory we have to cover for one client alone. A buyers’ agent could be reviewing up to 100 properties for the one client and then physically inspecting 30 to 40 of those.”
It’s a relationship game
Both sides of the equation build their businesses on creating great relationships, but Mr Mitchell said the connection can often be on a longer-term basis for those buying homes professionally, given the advisory nature of the relationship in the leadup to and post-acquisition.
“There’s a lot of work selling agents put into developing networks and relationships, cultivating trust to the point where they become the logical choice for an eventual sale. Post settlement, that's where the selling agent’s job is typically complete and, generally, the two part ways,” he said.
“Obviously we work with our clients pre-engagement - we’re with them every step of the way right through to purchase and then we’re there to help with the exchange of contracts…we don't disappear. Beyond that, if there are issues we identified during the due diligence phase we are often there working with clients for resolution, whether it's through renovation, repairs, or remediation.”
Mr Mitchell said any agent considering the switch because house hunting might appear to be the easier option, should be aware that today’s savvy buyers have high expectations and want a well-rounded service.
“My personal experience is, and I can’t speak for the whole industry, that the longer-lasting relationships are on the buying side. Post purchase I work with clients providing ongoing advice on renovations, do annual portfolio reviews for them, then liaise with them and their advisors around what's next in their long-term plans for the property. It’s not just a matter of find the house, buy it, then hand over the keys and see you later. The general perception of a traditional buyers’ agent might be that it’s a little more transactional, but the reality is there’s a lot more to it than meets the eye and there is a growing demand in today’s market, not just for a buyers’ agent, but a property advisor.”
Anyone intending to start a buyers’ agency will need a full real estate agent’s licence, both for themselves as an individual and an agency licence. We encourage accredited agents seeking to make the switch, to enrol in the REINSW Buyers’ Agent Course.