The number of people choosing to work with buyers’ agents has been steadily increasing over the years.
When I first started in the industry a few years ago, we were a niche part of the sector, but that has been changing steadily ever since. More property investors in particular are recognising that there needs to be a strategy behind their buying decisions to maximise their chances of superior capital growth and cash flow in the future.
Unfortunately, the growth in the sector has resulted in an increase in the number of underwhelming supposed training programs being offered to novice and wannabe buyers’ agents.
To operate as a buyers’ agent in most states and territories you must have your full real estate licence, but even this qualification can have differing levels of training attached to it depending on where people choose to study, and in some instances novice trainees are being encouraged by above mentioned training programs to take the “easy route”, in other words to get licensed as quickly as possible with as little training as possible. And these newly minted agents, can be in charge of hundreds of thousands of your precious dollars
Likewise, given buyers’ agents still remain a relatively small part of the sector, the normal real estate training programs don’t usually offer much in the way of specialised training for anyone keen to operate on the purchasing side of transactions. The Property Investment Professionals of Australia, or PIPA, is the industry body for people working within the property investment advice space, but it is not compulsory to be a member – although all Adviseable Buyers Agents have been for a number of years. PIPA also provides the only specialised training program out there to ensure that people are Qualified Property Investment Advisers (QPIAs), rather than someone who pays through the nose to complete a weekend course that just teaches them how to market themselves but not the fundamentals of strategic property investment selection.
With property markets running so hot at present, the risk is greater that some novice investors might choose to work with buyers’ agents who don’t have the skills or the education to provide professional and objective advice.
And, when we’re talking about spending several hundred thousand dollars on a property investment, the fallout of not using a sufficiently experienced and qualified professional can be financially catastrophic.
So, here are five key questions you should ask before working with a buyers’ agent.
What qualifications do you have?
Not only should your buyers’ agent have the relevant real estate qualifications, such as a licence, but they should have undertaken further specialist training, preferably the QPIA. That’s because buyers’ agents who are also QPIAs are educated to diploma level about the fundamentals of strategic property investment rather than just being an order-taker from a buyer or recommending a property because they are being paid by the developer.
What is your professional experience working with investors?
While I accept that everyone has to start somewhere, the financial consequences of buying an inferior investment property are too great to not work with someone who has plenty of experience. Your buyers’ agent should be able produce evidence of working with property investors over the years as well as provide contact details for you to talk with their former clients if you so wish.
Are you a property investor yourself?
The very best real estate professionals do it because we love it! Plus, we are usually property investors ourselves. Your buyers’ agent should be a property investor themselves and preferably should follow the same strategy that they are recommending to their clients. If a buyers’ agent is promoting off-the-plan properties to their clients but only purchases existing houses for their own portfolios, you really need to question why they are doing so.
Do you belong to any industry associations?
The most professional buyers’ agents belong to their relevant membership associations to support their industry as well as continually improve their professional abilities. On top of that, associations such as PIPA require that all of their members abide by a code of conduct for consumer protection reasons, including the disclosure of their commission payments.
What is your fee model?
This leads me into the last question: it’s imperative that you understand how your buyers’ agent is being paid. Adviseable has an entirely fee for service model, no third-party vendor commissions, or similar conflicts of interest. We always work solely for our investor or homebuyer clients. Your buyers’ agent should have no problem disclosing how they are paid and by whom and preferably are also operating with a fee-for-service model from their clients. If they are vague about how they are paid, then it would likely be financially beneficial to say “thanks, but no thanks,” and then find someone who has the skills, knowledge, experience, and ethics to help you on your property investment journey instead.