G’day. My name’s Ben Everingham, and today we’re going to talk about how to choose the right buyers agent.
G’day. My name’s Ben Everingham, and today we’re going to talk about how to choose the right buyers agent for you. I’m the director here at Pumped On Property. We’re a buyers agent that works in Queensland and New South Wales. We roughly buy around about 30 to $50 million worth of property per year for our clients throughout Australia. Today we’re really going to jump into what is a buyers agent and how can you actually sift through all of the buyers agents in the marketplace to find one that is in alignment with what it is you’re trying to achieve, and that has the knowledge, skills, and capacity to actually go out there and help you get a better outcome than you might be able to get yourself.
The first thing I wanted to talk about today is what actually is a buyers agent. A buyers agent is basically somebody that goes out on your behalf to the marketplace, inspects properties on your behalf, presents opportunities in the marketplace back to you, and then helps you decide which of those options would be best, based on your strategy, short-term and long-term goals. A buyers agent is basically the complete opposite of a real estate agent who sells the property.
A real estate agent who’s selling a property is working, obviously, for the person who’s paying them, which is the person they’re selling the property for, where a buyers agent, on the other hand, is working exclusively for you and legally for you, which means they have to help you get the best possible price on the best possible property that meets your goals and criteria.
A question that I’m constantly asked is: What is it actually that buyers agents do? This is a question that my friends and family members constantly ask me in my day to day job. I say the easiest way to explain it is basically you’re looking to buy an investment property. Maybe you’re just getting started or maybe you own 5, 10, 15, 20 properties, but you are looking for somebody in a very specific marketplace to get you a very specific outcome. You might know what that outcome is or you might be coming in very cold and need the support of the buyers agent to actually help you develop a strategy or a plan for the future.
The first step, if you were to work with a company like mine, or one of the other amazing buyers agency businesses that there are in Australia at the moment, would be to sit down and understand where you are and where you’re looking to go longer-term, and to help you actually create a strategy to achieve that.
Once your strategy’s clear, the buyers agent’s job is then to educate you on your options in the Australian marketplace, so maybe looking at a certain state and then a market within a state, and then identify very specific suburbs within that state to target. Then once they’ve educated on those options, they then go to the marketplace and they look at those properties on your behalf and provide you with feedback on the inspections that they’re undertaking.
Once they’re providing you with this feedback, it’s your job with the buyers agent to sift through all of the things that they’re looking at until you find something that directly aligns with your goals and your strategies. For most buyers agents, that’s where it stops. For us, we are looking at much, much longer-term relationships with our clients. We would, at stage, introduce them to brokers, solicitors, accountants if required, property managers, building and pest inspectors, town planners, developers, builders, granny flat builders, whatever it is that they need to take the property that they’ve bought to that next level.
I suppose most people are looking for one of a few things. It’s capital growth, it’s cash flow, or it’s creating chunks of money through manufacturing growth, and then buying at the right time in the cycle’s equally important. That’s, I suppose, what a buyers agent actually does.
But for those of you who are really, really interested in actually choosing a buyers agent, or let’s say you speak to someone like myself and then you speak to a couple of others, and you’re trying to understand what everybody does, the first thing that you really need to consider before making a decision with any buyers agent is what is their actual fundamental strategy as a business and as an investor.
There’s some buyers agents that just focus on capital growth. There’s others that just focus on cash flow. There’s others that focus on development. Then there’s those like myself that look to get capital growth, manufactured growth, and cash flow in one deal. It’s about finding an agency that has a core strategy that they implement time and time again to achieve a very specific goal for their clients, and making sure that that strategy is alignment with exactly what it is that you’re looking to achieve. Strategy is important.
The next thing is: Where do they buy? Us, for example, we specialise in the Queensland and the Sydney marketplaces at the moment. In New South Wales, for example, we focus on Sydney, Wollongong, and Newcastle. In Queensland we’re focusing on Brisbane, the Gold Coast, and the Sunshine Coast. If you were looking for a property in Melbourne at the moment, we’d be the wrong partner for you. Finding someone who’s very, very specific to a market or a number of markets is really important because the number one thing with a buyers agent is you can’t be everything to everybody everywhere. Otherwise, you won’t be able to do anything for anyone. Making sure that they’re in the location that you want to work within is very, very important.
The third thing is: What type of property do they actually buy? Again, like I talked about with strategy, which was the first thing, the type of property they buy is very, very important. For us personally, we like to buy property in major metro marketplaces with good potential to add value to that property over time. We like to buy property at the rising stage of the property market.
There’s all of these other things that we focus on, but if you’re looking to buy a very high quality, blue chip capital growth property, you can’t go to a buyers agent that focuses on small-scale developments or a buyers agent that focuses on regional cash flow opportunities, because they’re not going to be able to, one, understand what it is that you’re looking to achieve, or two, have the market knowledge to actually help you achieve it. The type of property is really, really important.
Another question you’ve got to ask when researching buyers agents is: Are they actually licensed to trade in the state that they are buying property in? Every single state in Australia has a real estate licence. If the buyers agent is buying property in that state, they actually need that licence to be able to trade. Making sure you tick that box is very important. It’s also important to make sure that they’ve got public indemnity and public liability insurance to protect yourself and themselves against the marketplace in the future.
Another question which is extremely important and is obviously on the top of everybody’s mind is: How much do they charge? There’s two ways that buyers agents charge. The first way is a flat fee for service. The second way is a percentage of the sales value. Generally, a buyers agent would charge between 2 and 3% of the total purchase price, which could mean, let’s say on a $400,000 property, anywhere between 8 and 12 or $13,000, and on a $1,00,000 property, obviously significantly more than that.
Then you’ve got buyers agents like ourselves that just want to keep it simple for people, that just charge a one-off flat fee for service regardless of how much you pay for the property. Understanding their pricing model’s important. Generally, the average in Australia is buyers agent would charge at least $10,000 for a $500,000 purchase. Again, we’re a little bit more affordable than that, but it’s important to compare apples with apples in terms of what you’re getting for that money as well, and to make sure that they’re a full-service buyers agency. They’re not just going to help you get a transaction and then you’re not going to hear from them again and you’re left out in the wild again.
Another important question for me personally, because I’m such a results-orientated person, I can’t help it but results is all I really care about, is: What have they actually achieved in the past and what evidence are they prepared to give you of that achievement? Any buyers agent worth talking to should have tracked every single property purchase that they’ve ever bought, the average growth for that purchase, for that property, and the average rental return for that property. They should have also been tracking every single suburb that they’ve ever bought in and what the average annual growth rate and average rental return for that suburb has been as well.
I think any company who’s not prepared to share that information with you and their results with you has got something to hide. Because if you’re actually achieving at-market or above-market returns, then why would you have a problem sharing that information? For us, we’ve been in business now for three years. In the first year we got a 13.5% average annual growth rate for our clients. In the second year we got 11.5%. In the last 12 months we’ve got a 10.5% average return. It’s not about necessarily going to the buyers agent that is waving their hands up and has all the smoke and mirrors, and he’s telling you and promising you that they can do everything for you, and in reality they can’t do anything, and they’re going to put you further back.
It’s about being with someone that’s an open book, at least from my perspective, that’s prepared to share the results, prepared to share the successes, prepared to share the failings, and prepared to just keep it real with you so that you know what you’re getting before you buy.
Another thing that’s extremely important for me, because we can all say whatever we want to say online … It’s so easy to get some testimonials from some happy clients or to shoot a video with somebody that’s had a great experience with you, but what about all of the other people that have had an experience with you?
For example, this year to date, just having a look at my board, we’ve helped 94 people buy investment properties throughout Australia. Basically, if you were to come to me, I would give you any one of those 94 people’s numbers. Some of those people have had amazing experiences and we’ve really connected on a personal level. Some of those people have had good experiences, and for whatever reason been satisfied.
But at the end of the day, you want to get the warts and all story. You really want to understand what it’s really like to work with that person and what their success rate is, what their repeat client rate is. For us, 70% of the clients that we work with, and this is a tribute to my beautiful team and my family that support me in this business, that 70% of the people that we work with come back and work with us again within 18 months. That’s an absolute privilege to be able to work with people over the long-term rather than just on one transaction. Because long-term is really how you achieve your results.
Giving the names and numbers of people that you’ve worked with and giving you access to all of that information so that you can make up your own mind rather than relying on a sales pitch on Facebook or a sales pitch here, there, or everywhere, or tweaking the numbers. I come from a marketing background so I understand that better than absolutely anybody what some PR and what some positive testimonials online can do for your business long-term. Behind that mirror or that façade is the reality of what it’s like to work with. I think only people that have worked with the buyers agent can tell you that.
The last thing that I wanted to talk about is: Who are you actually going to be speaking with in the buyers agency? Because there’s plenty of amazing buyers agents in Australia where the director’s, like myself, are doing these videos, and then you pick up the phone and you’re talking to some 22, 21 year old that’s in a sales role that needs to sell you the product to actually achieve their sales target so they don’t lose their job that month. Sometimes those people own properties, sometimes they don’t. Sometimes they’ve got real experience and sometimes they don’t.
I think it’s really important to make sure that the person that you’re buying from is a full-time investor or a professional investor in their own right, and well on the way to achieving their own financial independence through their property portfolio. For me personally, at the time we’re shooting this video, I’ve bought over $3 million worth of property in the last seven years.
I think that’s an important thing, because it means you’ve gone through the process more than enough times of buying, renovating, developing, building, selling, creating value, making money, losing money, but to understand the cycle and to understand the property industry in enough detail not from a theoretical perspective but from a numbers perspective, and from really having to cut your teeth the hard way.
I hope today’s video, in terms of how to choose the right buyers agent for you, was useful. Again, I apologise. I know I’m biased because I have a buyers agency, but for any of you that are interested, I’d love the opportunity to continue this conversation. Please feel free to jump on our website, which is www.pumpedonproperty.com, and jump on strategy session at the top of the website. Hopefully we can book a time for us to get together one on one, talk about where you are, and where it is that you’re looking to go. Until next time, stay hungry. Thank you.