The questions buyer’s agents don’t want you to ask

As the property market tightens due to a lack of housing stock, property experts are warning that inexperienced buyer’s agents are a growing threat to consumer protections.

That’s the warning issued by the Real Etate Buyer’s Agent Association of Australia (REBAA), which recently raised the alarm over the increasing influx of inexperienced and under-educated buyer’s agents.

Real estate agents have also voiced their concerns about poorly qualified buyer’s agents, highlighting the gravity of the growing issue. Varying qualification and industry experience requirements coupled with mutual licence recognition has been blamed for the issue.

Low barriers to entry and a lack of specialist education have led to a growth in the buyer’s agent industry, bringing new players to the market and significant challenges with it, warns REBAA president Melinda Jennison.

She has even seen offers for so-called ‘free’ buyer’s agents in the market, which is a strategy often deployed by property spruikers to try and sell lower-quality developments.

Jennison advises buyers to do their due diligence on buyer’s agents, keeping an eye out for red flags like promises of a quick deal or access to exclusive off-market properties that will cost more.

“Imagine hiring someone for a $1 million purchase only to discover they lack knowledge of local laws or market dynamics. This is happening every day, and buyers are unaware,” Ms Jennison says. 

'Is your city leading Australia's home price growth?': youtube.com/mortgagechoice

“This includes a lack of regulatory oversight and the prevalence of inexperienced operators who may have completed their real estate license but know very little about buying property. Unfortunately, this can result in overpaying for properties or facing legal issues due to improper advice."

What is a buyer’s agent?

Unlike a real estate agent, who acts for the vendor or seller, a buyer’s agent acts for the buyer to help find your dream home. They provide services such as a property search, negotiations, auction bidding and due diligence, helping buyers access listings that suit their search criteria.

They can be useful if you’re not familiar with the market, determining a fair price for the property and exposing any hidden fees attached to a property, plus dealing with lawyers and local councils.

What do they charge?

Buyer’s agents tend to charge either a flat fee, tiered pricing or a percentage of the purchase price, which could as high as 3% of the purchase price.

However, when houses are selling for around $1 million, it adds up to a significant amount of money, so how do you know you’re getting value for money?

Picking a winner

Buyers agents require a real estate license, but unfortunately, legislation protecting buyers from unqualified buyer’s agents varies between states and territories, points out Melbourne buyer’s agent Cate Bakos.

Queensland and the Australian Capital Territory are considered relatively easier to obtain a real estate license compared to other Australian states. Operators can then cut corners by getting licensed in states with fewer requirements and then enter more competitive markets without proper training.

Ms Bakos points out that far easier set of requirements for obtaining a real estate license and mutual license recognition then enables some license holders to transfer their license to other states and start working.

“To compound this problem, buyers agents don’t require a specific amount of on the job training (outside of the real estate licensing requirements).”

Buyers agents require a real estate license to practice but different states and territories have different rules. Picture: Getty

Ms Bakos says this issue should be better management of buyer’s agents, pointing out that consumers aren’t often aware of the lack of training for certain buyer’s agents. “We currently have many inexperienced buyer’s agents in our nation, and the issue is getting worse.”

When selecting a buyer’s agent, start by checking the license register in the relevant state or territory they operate in, Bakos says.

“Also check that their buyer’s agent holds adequate insurances. The consumer can also check the REBAA website to see if their buyer’s agent is a member of the national body for buyer’s agents. And lastly, they should ask their buyer’s agent about their experience and tenure in the role. If in doubt, they can also explore their credentials on LinkedIn,” Ms Bakos says.

Be sure to check that the buyer’s agent has been operating in the area you’re looking to purchase for at least a few years. Look for evidence that they really know the local patch well enough to explain the best streets in the suburb you’re wanting to purchase in, Ms Bakos advises.

It's recommended you look for a buyer's agent with experience in the area you're looking to purchase in. Picture: Getty

Qualifying questions

Bakos recommends asking some questions of a buyer’s agent before signing on the dotted line to make sure they’re a good fit.

How long have you been working as a buyer’s agent?

This will help you paint a picture of their experience in the role.

What training did you do?

Some buyer's agents may have had more specific training than others.

What insurances and memberships do you hold?

It is important to understand the agent's insurance and their position in their field.

What is your area of specialisation?

It is worth seeing if the agent is a specialist.

Will you be assisting me yourself or will one of your staff members?

Knowing how things will work ahead of time is much more reassuring.

How many clients do you typically work with at any one time?

While there is no right or wrong number, it will help you anticipate communications.

Do you take any rebates or commissions from third parties?

Understanding what services are automatically connected or linked to your agent is important.

How do you source properties for your clients?

It is good to understand where the agent is getting their information.

Do you inspect in person every time?

Understanding how the agent operates ahead of time is very important.

How do you assess and grade a property?

It's good to understand clearly what your agent does and does not consider.