Yahoo Finance ‘Are you on my side?’: The hidden threat for home buyers
Homeowners need to be on guard against buyers’ agents who may be “cutting corners” and failing to properly inspect properties on their clients’ behalf, a property expert has warned.
Suburbanite principal and property advisor Anna Porter warned Australians that the Covid-19 pandemic has been providing an excuse for some property buying firms to take shortcuts.
“Now that Covid has dominated 2020, and border closures and air travel are a thing of the past, a concerning trend has been revealed in this sector,” Porter said.
“Property buying firms are in many cases not inspecting the property and relying on a video or photos from the selling agent to make buying decisions for the purchaser.”
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This constituted a “significant conflict of interest,” and often the property buyer was none the wiser, she added.
“Generally, the purchaser is under the impression that the buyer’s agent they have engaged and are paying a healthy fee to have inspected the property on their behalf.”
Among a pool of 20 properties that are reviewed, vetted and thoroughly researched by her own team of valuers and advisors, about 17 of them end up being rejected for not meeting “strict investment criteria,” Porter said.
“It significantly concerns me when we see other buyer’s agents’ not inspecting at all, using the agent to inspect for them or buying most of the properties they look at for their clients.”
What should I do?
Porter said buyers had to “beware” in the current environment and urged Aussies to inspect properties personally, or engage an independent property professional to do so, before purchasing.
“If I won’t do it, I would never let my clients do it,” Porter said. “I have seen too many times what can go wrong with ‘buying off the internet’ and relying on information from the selling agent.”
Don’t get a friend to inspect the property for you, either, especially if they have no property experience, she added – this will end up in buyers purchasing a property that isn’t what it seems.
How to pick a good buyer’s agent: Ask these questions
Michael Banitsiotis, the director of Adelaide-based buyers agent firm Swift Property Acquisitions, told Yahoo Finance that Porter raised “very valid points”.
“I think there are some below par operators out there,” he said.
In order to spot the difference between a good and a bad buyers’ agent, there are a few questions home-buyers should ask – and those who are qualified and legitimate will have nothing to hide, Banitsiotis said.
“People should be asking them what their qualifications are. ‘Are you actually licensed to be operating in this area?’”
Qualifications differ from state to state; buyers must be registered in the state in which they are purchasing property.
Banitsiotis buys property only in Adelaide, so he is registered as a land agent in South Australia.
“The reason for that is I want to be an expert in Adelaide. I know where the school zones are, what the council planning regulations are in different council areas, I know where shopping centres are. I know where the key arterial roads are and how this all affects certain amenities,” he said.
So the second question you should ask is: ‘What’s your experience in this area? What’s happening around the place that you can share with me?’
“That’s incredibly important. You need to know the area you're buying in instead of diving in and winging it.”
Buyers also need to know how their agents are remunerated.
“A key question to ask is: ‘Are you actually on my side?’ In other words: ‘How are you getting paid?’” Banitsiotis said.
“If they’re getting a $20,000 commission from someone else, they're not really acting for you, are they?”
A good buyer’s agent will have no issues with being transparent about their pay structure, he said.
Additionally, ask the agent if they have happy clients that they can speak to.
“If you’re talking to someone who has a shaky reputation or given people a bit of a disservice in the past, they might not be comfortable with that.”
Porter added that the person inspecting the property on behalf of the buyer should not be linked to the seller.
Another question to ask is: ‘What is the inspector’s liability if something is missed?’
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