Ep 60. How to evaluate a Buyer’s Agent
In this episode of the Buy Your Side podcast, Michelle dives into the important considerations you need to make when selecting a Buyer’s Agent, including key qualities and red flags that can make or break your property buying experience.
Here’s what you’ll learn from today’s episode:
How to identify an underqualified Buyer’s Agent
How experience influences the quality of your Buyer’s Agent
Why transparency in fees and service structure is key
How local knowledge and connections make a difference
Why a team approach enhances the buying process
Speakers in today’s episode:
Michelle May - Michelle May Buyers Agents
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This podcast has been produced and edited by Snappystreet Creative
Please note that any views or opinions presented in this podcast are solely those of the speakers, and do not necessarily represent those of any business. These views and opinions are general in nature, and do not take account of your personal objectives, financial situation and needs. Please consider whether it applies in your circumstances and seek professional advice wherever appropriate.
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VIEW TRANSCRIPT
Hi, and welcome to another episode of the Buy Your Side podcast, the property podcast to help you make smarter property buying decisions. My name is Michelle May, and I'm the principal of Michelle May Buyers Agents here in Sydney, and we buy around the 10km radius of the CBD here.
Making smarter decisions has always been really important to me and educating the clients that I work with is obviously something I'm very passionate about and to reach a wider audience I started to put this podcast, and before that the Sydney Property Insider podcast, check it out it's still available, because I wanted people to know perhaps the things they didn't know or the questions they didn't know how to ask. Another thing that I'm passionate about is being on the Buyer’s Agency chapter of the Real Estate Institute of New South Wales. Being a part of that allows me to be part of a conversation for change, better representation, raising the bar and all of those things.
Particularly as a Buyer’s Agent the industry is still changing a lot. To become a Buyer’s Agent, it doesn't take much at all. So I wanted to have this conversation with you because potentially you might be in the market for a buyer's agent. Ultimately, I actually think that those who have never bought before probably need people like me the most because you simply do not know what you don't know.
But look, Back in 2008, when I became a Buyer’s Agent, we were very much a rare breed, sales agents are questioning, why do buyers need your help? I can help them. Do you want a part of my commission? and No, we don't.
But anyway, nowadays in 2024, of course, also because you've had shows like, Luxe listings and all this kind of stuff where buyers agents have a representation there, it's well and truly become a fixture in the real estate landscape. So what it has also done, because the barrier to entry into the industry is so incredibly low, It's given rise to many opportunists who are wanting to make a quick buck out of your need to get onto the property ladder. So now more than ever, I think, it's really important to understand how to discern a great BA or Buyer’s Agent from one that really should not be involved in your property transaction at all. So I wanted to run you through the things that are essential questions that you need to know about. So let me run you through them and use them next time you are considering talking to someone and also to help you understand what makes a great BA and not such a great one, even if you don't need to use one.
So first and foremost they are licensed and insured. So whilst Googling Buyer’s Agent Sydney or wherever you may be will give you a whole list of names, with ads or without ads. The first thing you need to do in New South Wales is that the Buyer’s Agent has a Class 1 license. So you can actually check that in New South Wales on the Office of Fair Trading website.
And due to tightened requirements here in New South Wales, it takes a minimum of three years to get to a Class 1 license. So you have a certificate of registration, class 2, and then class 1. And between those are periods of time that you need to work for someone else with experience and who can teach you the ropes because really with a Buyer’s Agent, there's only so much you can learn from the books. It's really about being exposed to things like attending auctions, listening to the conversations when it comes to negotiations and all that kind of stuff. You need that kind of exposure before really you can take on your own clients. When I started, I was someone's counterpart for a year and I didn't have any of my own clients. I just absorbed, listened, did all the nitty-gritty research in the background and all that kind of stuff. So in New South Wales, it takes three years to get your Class 1 license.
So when you check on the Office of Fair Trading website and it looks like all of a sudden they've gone from nothing to a Class 1 license, it means they've done something dodgy, okay? So there are some loopholes in this country that will allow you to go from nothing to a Class 1 license. Those are the type of people who are willing to cheat the system to all of a sudden, sell themselves as experts. So if they're prepared to take advantage of that loophole, what else are they prepared to do in order to push you into a property? So that is very much a red flag for me, if nothing else. So that's first and foremost.
The second thing is that they need to have professional indemnity insurance. Now, this is a requirement for all license holders in New South Wales. So check their insurance, make sure that it is adequate. Again, this is something you can check with the Office of Fair Trading of what the requirements are but any Buyer’s Agent who doesn't have it or is cagey about responding to that question is probably someone you don't really want to work with.
Now the other thing is the motive of the person who becomes a Buyer’s Agent. Too many times I have seen not so successful sales agent become Buyer’s Agent for some reason they must think it's in an easier role but from my experience because there's so many out there make sure that your Buyer’s Agent has at least five years experience under their belt because first of all you're paying for someone's expertise and knowledge and local know-how and repeated actions, transactions, situations which are all different by the way all my clients are different every property is different every agent is different every vendor is different. I am not resting on my laurels. I'm still learning so much over the years and I'm still, sometimes some things happen and you go, gosh, didn't see that coming, I'm going to admit to that. So someone who has less than five years experience does not have the right to call themselves an expert in my opinion and so therefore you need to have that continuously as a Buyer’s Agent, by the way. When they say I've had 20 years of experience in the real estate industry…but how many have you actually had as a Buyer’s Agent? Because the one thing you should know about sales agents and you probably already know this is that they're expertly trained in objection handling okay so for every negative that you have they can spin it into a positive. That is their job but when it comes to being a Buyer’s Agent the shoe is on the foot so to speak. It is my job to critically look at a property from all angles to really help understand whether this is a good proposition for the client, not just their brief, but also from a capital growth perspective.
If there are dark interiors, can we fix them? Or is the road too busy? Are the development applications in the area going to change the landscape of the area and also the value of the property? There's so many things we need to look at and look at holistically and advise the client, in a non-subjective manner by the way, and advise them the best way forward. So if you're really driven by sales, by selling to your clients, then you're not going to be a good Buyer’s Agent, and your clients are not best served by you. So make sure they're licensed and insured. Make sure they have a minimum of five years of continued experience as a Buyer’s Agent and question their history there.
Now, the second thing I would look for is a proven track record. I'd be very wary of agents who claim to be the best because a lot of awards are handed out like candy without any discernment of proof that the winner has actually deserved the award. I can't tell you how many tables I've been asked to buy at special local business awards to ensure that my team and I have been guaranteed an award and finalists category. That's BS. I could have a whole array of stickers and awards and crystals hanging off my desk, but you need to understand the differences between these awards. A lot of them aren't worth the paper they're written on.
Awards like the Real Estate Industry New South Wales, for example, where I've been a Judge in the past, and other institutions alike, carry credibility because they are actually put through quite a rigorous process. And they have jumped through quite a few hoops to even put a submission in. There is a judging panel of their peers in other states who will then be looking at their stuff. So do your own research when it comes to looking at their track record and that includes Google Reviews. Now, I'm very proud of my Google Reviews. What was it, Kath and Kim who say, “I'm very proud of how I look.” But I'm very proud, and very, very honored by our Google reviews because our clients write the most amazing reviews to the point where even Google has removed a few because they thought they were fake. But go through those reviews and actually see who they've been written by because I can't tell you how many new amazing Buyer’s Agents have actually got the vast majority of them written by sales agents for example. So question the origins of, or of the person who's writing the review. So are they genuine or are they just a way to boost the rankings?
So another great way to check actually the quality of the work is to check their past purchases. So have they bought on yellow roads? As you know, we don't buy on yellow roads, and we don't eat yellow snow. We don't buy on yellow roads because they are bad for your capital growth and you're also not going to really enjoy living there. So yellow roads, as you know are the very busy roads on Google Maps and if the Buyer’s Agent that you're looking at is buying those types of properties they don't really care about quality locations which ultimately are going to cost you in capital growth potential, but also if it's in a down market you're going to have trouble selling your property. Have they bought new or off the plan? In my opinion they are, and it's not just my opinion it's a fact, they are very very high risk propositions due to the lack of build quality over the years. You can't check that stuff thoroughly before you move in so you need to know how well a building is run and built in without a strata report, how can you review that? So if a Buyer’s Agent is buying that stuff over and over and over again, maybe not the right Buyer’s Agent for you.
A good Buyer’s Agent should not just be able to be proficient and competent and experienced in the whole transaction, but they should also be able to educate you about these kinds of things that I've been teaching you through the podcast for all this time now and steer you away from making bad property decisions. Their focus should not be turning over, turning over, turning over fast, quick and dirty. That's not the best level of service for you, the buyer.
Point number three, their service is transparent. So when it comes to charging a Buyer’s Agent who charges a percentage of the price or of the budget, I'm sorry that's a complete conflict of interest. A percentage of your budget is a conflict of interest. A tiered system may seem fair, but it also implies the higher your budget, the more work it is for the Buyer’s Agent, which is not always the case at all. I can tell you the smaller budgets, the education, the time we spend with our first home buyers, which we love, we love working with them. That is a lot more labor intensive. It takes a lot more time. It takes a lot more trust than working with people who've got 10 to 20 or $5 million dollars who've been doing this for years and years and years, and just need someone on the ground to do it for them because they're too busy. Very different equation. So we charge a fixed fee based on the complexity of the search requirements. If we are looking for a needle in a haystack, we are going to charge you more than if we think we're going to have lots of options for you to look at. If you're open to renovations rather than having a brand new pop and pop kitchen, only that is going to make a difference in how difficult your search is going to be run. So the other thing is that in my agency I don't have a time limit on our agency agreement because we don't want you to feel under pressure to buy quickly. So do you feel when you're talking to this Buyer’s Agent in the initial conversation are they using those cold calling tactics? They would say things like Are you feeling frustrated? Are you feeling like you've been let up garden paths? Do you feel like you're going to miss out? Do you suffer from FOMO? Oh you really should sign up with us! That's actually happened to me because those are the type of Buyer’s Agents that would actually purchase your information from selling agents.
At the open, you know how you always have to leave your name and number? Well, some selling agents sell them to particular Buyer’s Agents, and that's when I get a phone call on Monday afternoon going, Hey, are you feeling frustrated? And I can fill you in on the story about what I actually did to that agency when they kept harassing me, but that's a different episode. But yes, if they're using those kinds of tactics to get you on board, maybe think about what they're trying to do. Is it about you or is it about them making a buck? Going back to the time limit on your agency agreement, ask them how long are their agency agreements for and how many clients do they look after at the same time?
So, that for us depends on the market and the complexity of the briefs, but it should be well below 10 for any Buyer’s Agent working out there. For me I only work with three or four, five depending on who they are and what we're looking for at the very very very most. But that's also because I have responsibilities as a principal and doing this kind of stuff. But how many clients do they look at at any one time? And also, do they take on competing briefs or are they just about turning out as many clients as possible? So we do not take on competing briefs because how can I justify favoring one client over another when it comes to a particular property that comes on the market? And we are very open and transparent about this. And we actually have waitlists for clients who come on and want you to start, but we already have another client.
And let me tell you those people are happy to wait. They're happy to wait because they know that when it comes to their turn they're also going to be the only ones on our books with that kind of exclusivity and they know that we will be doing our utmost for them. So do you want to be in one of many or do you want to be one of one? Because if you're going to be one of many maybe you're better off on your own. So make sure that you also know what your Buyer’s Agent will actually be providing in terms of research for the property. So some agents may be cheaper than the rest, but there may be a catch because they're not competent or experienced enough, but also because they may not be doing a lot of due diligence. So look at things like what does their due diligence actually entail? Is it just an auto val from RP Data like your broker has? Well, that's not going to be worth a lot, because I can tell you those auto vals are quite often wildly inaccurate.
So do they look at things like infrastructure projects or flood mapping or capital growth assessments or what their pricing research looks like? Do they look at development applications and zoning and the new metro line and everything else that will have an effect on the property value, how much you are prepared to pay for it or whether you are even willing to purchase it. I was recently contacted by a lawyer who wanted me to come to court and answer some questions about what a Buyer’s Agent does because their client was taking their Buyer’s Agent to court. So that's going to be happening more and more, I reckon, because there's too many incompetent Buyer’s Agents out there. So make sure that if they're cheap, cheap is, how do they say that, cheap is what you pay for. But in my experience, the service may not be worth paying for at all if they can't answer any of the things that I've just mentioned.
Point number four is buy local. Your Buyer’s Agent needs to have local knowledge. They need to be the expert of the suburb that you're purchasing in. They must have the experience, they must have the contacts. A lot of what we do is not about property, it's also about people. So understanding who those selling agents are and having those connections so you can see off-market, pre-markets, all that kind of stuff is extremely important. For me, I say no to people all the time who contact us when they're looking in an area that is not where we buy. I could make a quick buck if somebody wants to buy somewhere out of my area if they're happy to sign up, but I don't do that because I can't bring you my full cheese of wheel of knowledge and experience. I wouldn't know where the rat runs are in Hornsby per se. So an experienced Buyer’s Agent has local knowledge but they also have a vast network of connections from mortgage brokers to solicitors to cleaners and roofers which by the way, they should all be referred on merit and not on referral fees. So on a side note, if you get a really, really strong referral from a local selling agent for a particular Buyer’s Agent, make sure that they're not paying each other. That needs to be disclosed and when you sign an Agency Agreement, there's a Section 47 Certificate which talks about referral fees. Now, when you see mine, it has a whole list of people and we pay no one, nothing, nada, zip, zilch. Because I refer on merit only, I want to know that my clients are looked after in the same manner that we look after our clients. So a very high level of service, great communication, et cetera. So if you hear from several selling agents, the same Buyer’s Agent over and over, it may be that they are getting a kickback. It may not always be the case, but it may well be the case. So make sure this is one of only a few, like the rest, you need to still check the rest of those things that I'm talking about but yeah that's definitely very very important.
Last thing, my team. So the Buyer’s Agent that you choose to work with should not be a one-man band. Having my team around me for so many years now, they have been an essential part of me growing as a Buyer’s Agent and therefore we feed off each other, we make each other better, we learn off each other. I've got another Buyer’s Agentin my team and two support staff and my other Buyer’s Agent has different experiences with agents and she has different clients, and like I said before we're constantly learning from each other. My research assistant is constantly finding new things that we need to look out for for our clients to make sure that our due diligence stays up to date and we're always talking to each other and going hey have you got experience with this agent what's the best way forward with them or actually this is what happened with this transaction and actually that might work for your client because it's slightly different etc etc. So having a team around me, I can tell you, has resulted in better outcomes for my clients, but also, it allows me to work at a speed when necessary to get things done for my clients. It has happened and recently, actually, where we saw something on the Saturday and we bought it on the Monday, and that was because firstly I have the contacts, like a building and pest inspector, I call them up, hey, can you do me a favour? Can you do this tomorrow? Can you do this now? They will do it because we give them so much business and they're amazing at what they do. Same with solicitors and lawyers and my team can knock out the due diligence, we're not skipping any steps but because we're working together and we've got the systems in the place not unimportantly the backup system that we've built over the years and rely upon and trust, It allows us to to work at such a speed that no single Buyer’s Agent could ever compete with at that level of service. So make sure that that is also something you consider on your list. If I'm never sick, that's okay. The search doesn't stop. My team is still there to help us out. If I go on holiday, what's that? Let's say I need to go away somewhere. My team is still there. We cover for each other and we work together really well. So I think that is something that sometimes gets forgotten about, but definitely something that you should consider as part of your due diligence on finding a Buyer’s Agent.
So I hope that helps. As always, like, follow, share, please. I'm also on TikTok, Buy Your Side as per usual. If you have any questions, please drop me a line at hello@buyyourside.com.au and I look forward to sharing some more knowledge next time. Thanks for listening.