Demand for buyers agents grows rapidly in Australia
Buyer’s agent services
The Australian property market
At the moment, we’re seeing limited supply of properties for sale – and some desperate buyers. Many properties never hit the open market, being snapped up (especially in desirable areas) as soon as they’re officially listed for sale or even before.
Property investors, in particular, are looking for guidance to find and secure property that meets their investment goals of wealth creation. In short, they need help to find the right property in the right place at the right price. Generally, this means finding a property that will not only deliver good rental yield but also has capital growth potential.
With interest rates creeping up again, loan approvals are lagging, making the right property choice vital.
The rise of the buyer’s agent
While the Australian buyers’ agent market is relatively new, in the US, for example, the market is well developed. The buyer agent profession became recognised only in the 1990s; today, about 50% of buyers claim to have used a buyer’s agent.
In Australia, it’s a growing market with just 3% of buyers currently engaging a buyer’s agent.
Currently in Australia there are fewer than 100 buyer agent members listed on REBAA. Given that 21,600 homes are bought using a buyer’s agent in Australia, with an average of 216 properties each, it’s easy to see the demand is there. This figure is only set to grow, with a recent survey finding nearly 34% of buyers are considering using a buyer’s agent.
Should Australia follow the lead of the US, that would mean 50% of the current annual sales of about 720,000 homes – i.e. 360,000 homes – would need a buyer’s agent services.
Conditions that favour buyers’ agents
I’d like to say ‘all market conditions’ but the reality is buyers will turn to a buyer’s agent for help under certain market conditions. These include:
Booming markets where homes sell rapidly for above asking price
Over the past few years, we’ve seen ‘silly money’ prices; for example, one run-down cottage in the Inner West of Sydney sold for more than $1 million over the reserve price while another modest waterside home sold for $8.3 million – more than $3 million above asking price. Buyers need help to secure a property before it goes to auction or have a buyer’s agent bid on their behalf so they don’t get carried away.
A high-interest-rate environment with reduced stock
This includes where stock is reduced because sellers can’t get the finance to upgrade. While sellers can achieve high prices, many are reluctant to move as their purchasing power is reduced.
A severe housing affordability decline
Australia is ranked as one of the worst countries in the Western world, according to experts from the University of New South Wales (NWS) Sydney. Any property is in scarce supply but affordable housing most of all.
A lack of time to research and inspect properties
As more buyers find the world of real estate purchases harder to navigate or too time-consuming, they’ll turn to a buyer’s agent.
Unfavourable press regarding real estate agents’ integrity
Good real estate agents are being tarred with the same brush as those who lack an ethical spine. Increasingly, buyers mistrust an agent whose primary motivation is to achieve a good price for their vendor.
Other factors that favour a buyer’s agent
Off-market sales
Our current market environment, which some consider to be ‘normal’, is showing signs of stress, although home owners have proven to be remarkably resilient in the face of all the interest rate rises. We’re seeing real estate agents promise the world while selling off-market to reduce or eliminate costs to the seller.
It’s estimated about 20% of all listings currently are being sold off-market. This phenomenon is a prime opportunity for a buyer’s agent, who usually has connections with 50 to 100 real estate agents. A buyer’s agent can tap into their contacts to source suitable off-market property for their client. An inexperienced property investor or home buyer either isn’t aware they can ring around to find a property that suits their needs or they simply don’t have the time.
Rentvesting
As many potential buyers, particularly young people, are priced out of the areas in which they choose to live, they’re being encouraged to ‘rentvest’.
Rentvesting is a strategy whereby the purchaser finds a property with potential in a lower-cost growth region while continuing to rent in their favoured suburb or city. A buyer’s agent can help source a suitable property that a buyer can afford with growth characteristics.
Purchase risk increases
If property investors or mum and dad buyers aren’t experienced they won’t have access to the data to support a preferred purchase. It’s important to ensure the property or properties the buyers are considering have long-term potential, either for rental yield or capital growth.
A buyer’s agent must ask questions such as “Can you afford to service the loan on this property even if you are temporarily out of work?”, “Are there any risks in this suburb or location?”, “What issues did the building and pest inspection highlight?”, “Are there any liens or other restrictions on this property?” and more. These questions will ensure the buyer’s agent can recommend the right property for the right reason; wealth creation.
The role of expats and international investors
The pandemic saw a rapid influx of expats returning to Australia. While many of them owned a home in Australia already, others needed to find a home to land in. While it can be tempting to enrol a family member or friend into being ‘boots on the ground’, in my experience, family or friends can’t match the expertise of a qualified property professional.
International investors and migrants, too, are looking for the right property at the right price. The property that fits their needs might be in a regional area with good potential and one that generates income while they rent in a capital city.
The Australian real estate industry is calling out for more buyer agents. If you currently work in the property industry and would consider making a career switch, reach out to me, Julie Crockett, for a chat.
As a buyer’s agent, I am happy to be your sounding board. I also run buyers agent courses and offer mentoring opportunities if you decide becoming a buyers agent is the right fit.