Should you use a Buying Agent?
Estate Agents work on behalf of the seller. No matter how nice they appear, they are being paid a big commission by the seller, not you – the buyer! That means their loyalties lie with the homeowner and they will always try and achieve the best price and deal for them, not You.
In recent years Buying Agents or ‘Property Finders’ have become more common. The reverse of Estate agents, they are paid by the Buyer (you!). Why should you want to do that? I mean pay more money for something you can do yourself?
Given a property is the most expensive purchase you will make, it seems strange that we know so little and rarely educate ourselves about this process. LondonAndProperty.com is invaluable in this sense – we give you a huge amount of information that you won’t get from other sites, who have their best interests at heart. On top of this we give you the tips and tricks the professionals, including buying agents, use themselves.
Property finders go one step further and hold your hand through the whole process, then do the ‘dirty’ work on your behalf. They will go through many of the steps outlined in our previous pages – sorting your priority list, ensuring you are a serious buyer, getting you in position to buy, helping you find properties suited to you, negotiate price and terms on your behalf and connect you to other professionals who can help with financing, conveyancing, surveys, decoration or building work.
You can use the information on this site to give you make you a great professional, just like a property finder. For those who wish to consider enlisting a Buying Agent, they will offer all of the following:
1. Managing the search process, speaking to agents, private sellers and searching property portals (some of which are not public).
2. Filtering out properties so you only view those that would match your criteria. A good buying agent will visit several properties that seem to fit your criteria, then whittle down to the best properties and only take you to see these.
3. Access to “off market” properties. Although, if you are seen as a ‘serious buyer‘ Estate agents will also let you see these too.
4. Quicker access to new properties agents are taking on – again, use our tips to appear like a serious buyer and you can see these first too.
5. “Inside knowledge.” This could be about the area, knowing specifics to avoid certain streets or bulidings, or even about how to secure a property that will never be marketed.
6. Negotiating tactics and skills. They will handle all conversations on your behalf and advise on which approach is best. They are unemotional (unlike you) and experienced at negotiating, so they won’t fall for the “there are lots of interested buyers” trick.
7. In a competitive property market (like Prime Central London), they can get your offer taken more seriously in some instances.
Although Property Finders have alot to offer, not all buying agents can offer such a service to high-standards: they are varied in their expertise and success – there are no qualifications or performance measurements for buying agents. When using a property finder, you pay a retainer fee: they only really cover their expenses by taking this fee, so they will be committed to finding you a home as the “success commission” they receive is their real wage. That means they won’t waste your time, they will be working hard to get you a new home quickly.
A real advantage is when a Buying Agent can take you to view a property before it is openly marketed because they have strong relations with Estate Agents who respect the Buying Agent would only be working for a serious buyer (if you pay a retainer fee, you’re serious)! Estate Agents like property finders because as fellow professionals in property, neither has any interest in wasting the others time (for them it’s a job not a hobby).
Financially, an agent can add value if they negotiate you a bigger discount on the asking price, because they understand the sellers motives or uncover information that an Estate Agent would not openly disclose to public buyers. In a competitive market it may well be they can secure you a home instead of another potential buyer, who may at first seem more attractive (like a Cash buyer). How? Well a good home finder will have you set up with a good mortgage, from a provider who approves your new home quickly, a conveyancing solicitor that acts Fast and a surveyor that is in and writing up his report within 24-48 hours.
Probably their best value is that Agents will visit properties before they take you along, assess if they are suitable, then give you clear honest advice, accompanying you on the viewing. This means they may only show you 25% of the properties they have viewed, which seemed most suitable. That saves time and focuses your search very quickly, rather than confusing you with unsuitable properties.
All is not What it Seems
A good example of hand-holding from a property finder was a conversation I heard between an Estate Agent and Buying Agent, when the Estate Agent was trying to convince the French client to view a flat in Kentish Town (the buyer said they were only after a house). This is an extreme conversation, but illustrates the point well (the agent didn’t have the best reputation in the area – but the foreign buyer was not to know this!)
Estate Agent to French Buyer: This Penthouse property we’re about to see is in a gentrifying area of London, close to a key transport hub, with a tremendous view and around the corner from the new French school. The floorplan is huge – as big as any terraced house in the area.
Buying Agent to Foreign Buyer: This flat was built into roofspace above another flat, so alot of the walls are sloping, reducing the practical floorspace by 20% [and so the valuation per square foot was inflated]. This part of Kentish Town is rundown, but improving quickly. A railway line runs past the bedroom windows [not visible because they were frosted glass] and there are no childrens places available at the French school, in the age group of your children.
That is where Buying Agents can be priceless. Nevertheless, you can be almost as effective yourself by following our guidelines and doing plenty of research.
Off Market [sssshhhh!]
As a reality check, Yes, some property finders hark on about getting you access to “off the market” properties. Realistically there are far fewer of these than many agents lead you to believe. Property finders tell us that off-market properties come up in 3 categories:
* Sellers who are genuinely very private and either don’t like others knowing their business, or don’t want neighbours to know they wish to move.
* Sellers who wish to sell their ‘unique’ properties at high prices, sometimes seen as unrealistic by estate agents. If the Agent does think the price demanded by the seller is very high they may suggest only offering the property to buyers who come along from time-to-time that would be interested, rather than openly market the property and leave it on the market for months or years.
Some of these properties are ‘unique’ in offering desireable accommodation rarely found in the area. Many more are only unique in that a house may not have come up for sale in that road for a number of years.
* A few ‘off-market’ sellers are not actually that serious in selling. They like their home, are happy to continue living in it, yet if someone were to pay well above what they think the property is worth, they would consider selling.
* Competitive markets, such as houses in the catchment area for very desirable schools or properties on prestigious roads which rarely see homes come up for sale, often have a ‘waiting list’ of interested buyers registered with all the local estate agents. If one of these homes comes up for sale, an Estate Agent may tell the seller they know they have several serious buyers who will pay asking price and just show those registered with them, saving the seller the hassle of pictures, floorplans and time-wasters. In this case property finders may be alerted if they have indicated they are after a similar property for their client. If you followed our rules on making yourself appear a serious buyer, you should be informed too.
How much will I pay a Property finder?
Buying Agents charge a ‘retainer’ of a few hundred pounds to a few thousand pounds upfront. To ensure you are serious and not a time-waster, the upfront payment guarantees their attention and hard work. Once you buy a property through them they will charge between 1% and 2.5% of the property value. This is a little cheeky as it doesn’t always take more work finding a £4 million house, versus a £700,000 flat (in fact there are less expensive homes to choose from and vet for you). However it follows the Estate Agent model – charging a percentage of sale price, so is widely accepted by buyers. Of course feel free to ask for different terms – there are many Buying Agents today, so competition is more fierce. Don’t go solely on price though, you need to trust the agent and feel they understand You, aswell as the Areas you want to purchase in.
Buying Agents were the preserve of multi-million pound properties a few years ago, yet their services stretch all the way down to property budgets as small as £250,000 these days. Just check how many other clients they have at the moment to ensure you will get a good deal of their time and effort, if you do have a smaller budget.
Will they really look after me first?
An agent can only fairly represent one buyer in each price category and area (if they have 2 buyers with a £1million to spend in Chelsea, they would have to pick a favourite, so they avoid having competing buyers). You will have between 3 to 6 months of service in return for your retainer fee. The big commission you pay them can be saved in monetary terms if they negotiate better than you would or in happiness if they find a property you love that you wouldn’t have otherwise seen and in time and effort.
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