Buyer’s agency is relatively new to the New Zealand property investment sector. The proliferation of the buyer’s agent industry is driven by Kiwi investors becoming increasingly more professional in their approach to property investment. Engaged the right way, a buyer’s agent can accelerate the growth of your portfolio as well as add to your investment momentum – essentially, become your secret weapon in the property market.
If you are considering the services of a buyer’s agent, here are some tips to help you start on the right foot:
1. Know what a buyer’s agent does
Simply put, they are agents who act on behalf of buyers. However, the range of services offered by buyer’s agents differ across the board. Focusing on the feasibility and acquisition end of the investment process, a buyer’s agent’s role ranges from researching, identifying and evaluating investment opportunities to negotiating, purchasing as well as overseeing settlement. Essentially, these agents are there to help you acquire the right property at the right price.
2. Know what you need
In an age of information overload, bottom-line-focused-investors elect to do without a buyer’s agent and instead prefer to manage the acquisition stage themselves. That is fair enough. But what about those investors who lack the knowledge or time to properly evaluate an investment opportunity? What about those who have an investment goal in mind but no strategy in place? Or those who are not confident negotiators and cannot secure properties at the right price? This is where buyer’s agents come in.
Having a clear understanding of what you need your buyer’s agent for is one way to make sure you get the most out of the agency and its costs.
3. Is your agent suitably qualified/experienced?
As the buyer’s agent industry becomes increasingly common, the challenge is the pick the right agent for you. First and foremost, have a clear understanding of the Financial Advisers Act and how you are protected as a consumer of financial advice. Even though not all buyer’s agent will come under the ambit of the act, there will be some overlap from time to time.
While there is no formal training course for one to become a buyer’s agent, qualifications in property or valuation or evidence of extensive (successful) experience in the investment market may be advantageous.
Finally, be aware that agents are by their very nature, sales people who are skilled at building trust. Before you charge your agent with the ability to spend a substantial amount of your money, make sure you feel comfortable enough to build a working relationship with them.
4. Who exactly is your agent representing?
Despite recent regulations, the property investment industry remains largely unregulated. A market that sees housing supply lagging tragically behind demand and good investment gems being few and far between is an ideal breeding ground for the buyer’s agent industry. Be aware that some operators within this sector may have questionable objectives. Some will hold themselves out to be buyer’s agent where in an actual fact they represent a specific development. In such cases, these agents will receive a fee of some sort for convincing you to buy a certain property – essentially serving two masters. When you are researching a buyer’s agent, be upfront about your expectations and ask whether they are earning any sort of commissions or payments other than from investor clients as well as who they have business relationships with.
5. Is your agent a local?
Is your agent an expert in your investment locality? While it is not a be-all-and-end-all, part of a buyer’s agent’s role is to secure the right property at the right price. Oftentimes this requires them to have good relationships with local real estate agents (especially those who have unlisted properties yet to come onto the market). If you are unfamiliar with the area you invest in, you will benefit more from an area-focused agent who can rely on both his/her expertise and established business network.
Have you ever used the services of a buyer’s agent? Share some of your experience and tips by commenting below.