- Key reasons include acting in the client's best interest without outside influence
- Fixed fee Buyers Agents are more likely to be independent
- Doing your own research remains paramount
If you are engaging a buyer’s agent to purchase your next property it will be to find a property that suits your needs and negotiate the best purchase price.
However, in a fast-paced and competitive industry that is based on business relationships to secure the best properties and have access to off-market listings, there are some questionable practices whereby buyer’s agents are not acting completely independently.
The importance of a buyer’s agent acting independently:
- To act in the best interest of their client without outside influence,
- To negotiate the best purchase price for a property,
- Secure the most suitable property for their client without inappropriate incentives to purchase from a specific selling agency, developer, or private party, and
- No conflicts of interest
If you are thinking of using a buyer’s agent for your next property purchase, there are some ways you can ensure that your buyer’s agent is independent:
Fee structure
Buyer’s Agents that charge a fixed fee over a percentage-based commission are more likely to be acting independently. Not to say that all percentage commission-based agents are dodgy, it’s just more transparent having a fixed fee to remove any reward for the buyer’s agent not getting the best and lowest price for you. An agent should always be acting in your best interest, which means negotiating for the lowest purchase price possible.
‘Free’ or Cheap fees
No buyer’s agent is going to work for free, or cheap. Their expertise comes from hard work and buying property is a stressful and tactful process. Any buyer’s agent who is saying they offer services for free, or very cheaply, is likely receiving incentives from elsewhere.
Some agents appear to be buyer’s agents offering a free service, but they are actually marketing new development projects or only selling a particular developer’s product in return for an incentive from the developer. These incentives are paid to the agent from the developer but will always be factored into the purchase price of the property you buy, so in the end it is the client paying for this “free” service anyway!
Referral partners
Buyer’s Agents will have a list of their preferred contacts. This usually is a list of mortgage brokers, accountants, financial planners, solicitors, etc. If a buyer’s agent is receiving a kick-back or referral incentive from any of these professionals by referring your details onto them, you need to question if they are acting in your best interests, or just filling their back pocket.
A good buyer’s agent will refer you to a professional because they are a good business partner, not because they are receiving referral incentives from the referral partner.
It is important to question your buyer’s agent whether they are receiving any referral fees from their referral partners or any other incentives apart from their service fee.
Background research
Do your research. You should see who is the licensee-in-charge and director of the company and whether they have any other companies under their name or vested interests with other companies or parties. It is common for buyer’s agents to develop relationships in the business with selling agents, but all these dealings should be done above board and in the best interests of their client and nothing “under the table”.
~~
Disclaimer: This article contains general information and should at no time be considered advice to the reader. The reader should always verify their situation with the relevant certified professionals before taking any further steps.
