Another email hit my inbox today offering free property buying services. It’s the second message I’ve seen lately from a sales agency and it’s quite alarming. Let’s have a look at it below.
No question, buying a home can be a difficult undertaking. From figuring out what you can afford and finding the ideal property with the best price and terms to structuring your offer so that it will be accepted and navigating the closing process with its avalanche of paperwork and legal agreements, there’s much that can go wrong. That’s why it makes sense to place yourself in the hands of an experienced real estate professional who deals with these issues every day and knows how to save you time, money, and countless headaches
Think of me as your full service real estate solution. First, we’ll determine your budget and get you pre-qualified for a loan. Then we’ll sit down together to identify and prioritize your needs and wants, and I’ll create a custom home search based on your preferences and requirements. When we’re out looking at suitable properties, I’ll advise you about pricing and other factors you may not have considered. Once we’ve located the perfect home for you, I’ll help you write your offer so it has the best possible chance of being accepted. Your offer was accepted? Great! I’ll explain the contract and settlement process to you, and I’ll be there to deal with home inspection and title issues and advise you on contract contingencies.
Let me worry about the details and do the heavy lifting. You’ll find that with me by your side, the home buying process isn’t just easy and hassle-free, it’s exciting and fun! The way buying a home should be. And since the seller pays my commission, my services will cost you nothing!
The first paragraph, couldn’t agree more! That’s why buyers agents exist. The second part, yes perfect, exactly what a buyers agent helps with also. The third part is where the alarm bells start to ring. This agent is going to do all this and not charge me because the seller is paying his commission? Sounds great? This is the catch. It may sound obvious but the agent is working for the seller and is bound by law to act in their best interests, not yours. With a buyers agent, you have a buyers agency agreement (BAA) in place that protects you as the consumer and the buyers agent. This ensures independence and no conflict of interest. It’s the same reason I advise people to use either a buyers agent or a trusted friend or relative to bid at auction as the cost of using the ‘free service’ of the sales agent could be a lot more than a measly $550 when they know your budget and are working for the vendor. What about conditions of the contract, are they going to fight for those conditions that could save you some money or make the transaction easier? Unlikely, typically the sales agents offering this free buyer service are inexperienced or new to the business and are using this as a hook to generate listings for themselves to sell.
The other reason to exercise caution is that the sales agent is only showing you property they have listed for sale. Not the whole market or quiet listings that a buyers agent may have access to. Again coming back to a conflict of interest, if you ask them about a property that someone else has for sale outside their agency; are they going to be as keen to get a result if they aren’t being paid by that seller? Gone are the days of simply picking up keys from any agent and looking through the property. With the demise of multi-list and exclusive sales agreements, the days of sharing commissions are all but dead.
Property investment companies or property spruikers have been doing a similar thing for some time. A client of mine referred me a young couple looking at spending close to $1,000,000 on two properties through a property investment firm. My client was a bit nervous for them, and suggested they have a chat to me. I made a few calls to agents and buyers agents that I knew in those areas and discovered that both properties were not only overpriced (due to the massive commissions the spruikers receive) but unlikely to reach the growth or the yields promised. Thankfully they were able to avoid the loss as they hadn’t signed anything at that stage. If they had, it would have been financially devastating.
For more reasons why to use a buyers agent rather than a sales agent posing as one, check out my video library for more information