question re buyers agents

Hi all ,
As I mentioned in a post elsewhere I am at the stage where within the next 12 months I am going to start buying significant amounts of property (all things being well). I expect that I may be purchasing anything from 4-5+ properties per year from 2007/2008 onwards.

There is no question of me having the time to research the property market and therefore I am inclined to utilise the services of a buyers agent. I am hoping to realise value in terms of selection and negotiation but in the end it's about time for me.

Now........I am about to start contacting buyers agents and deciding who to go with (I already have a short list). I am undecided as to whether I should select one - I don't have much luck selecting tradesmen/specialists at anything so far - OR (my current inclination) establish a team of 3 , give them a couple of properties each in the first year and then either retain the team or choose one from there once I know who's good and who's not. Also may create a higher awareness of the rewards for top service if each is aware of this situation and the likely flow of business going forward.

I'd be interested in the thoughts of Jacque and others on that and also:

- any general views/good or bad experiences with buyers agents, especially in my area of interest (Melbourne)
- some thoughts on the potential conflict of interest with % fees
- what sort of questions you'd be asking potential agents to sort the men from the boys (or tha ladies from the girls )

- is a buyers agent likely to give volume discounts once it becomes clear I am a serious long term, high volume client?

Any thoughts appreciated.

Ed

 

Ah, right up my alley

Eddie, can I ask how you've come to a shortlist already of Melb BA's?
On what criteria have you sorted what you consider to be the "better" ones so far?

Knowing the answer to this will really help me in providing thoughts of my own here

 

Hi jacque,
I probably should've made myself clearer there. My "shortlist" was more just a list of the better known buyers agents that I have seen metioned previously as part of my research , those that have decent website and clearly operate in Melbourne. Other than knowing that a few from this list seem to have a decent reputation I really don't know any of them particularly well.

The only one I have spoken to so far is Wakelins but I found them totally dismissive of anyone with an opinion and rather arrogant.

A few others on the list for example include Mark Armstrong, Morrel and Koren, Metropole (although I had experience with their guy as a selling agent quite some time ago and wasn't impressed........maybe that's a good thing on the other side LOL ) , Domain/Acquise , James , KPI ,Advantage etc........not really a short shortlist

Cheers,

Ed

 

I have the name of a reputable person for you, Eddie, who's been recommended by another BA in Qld whom I consider a great BA as well. Will pm you the details when I get them all.

As for fees, most BA's do operate on a commission basis (2% seems to be the standard) with a minimum set fee for their services.
Some, such as myself, prefer the fixed fee as a fairer way (after all, I would argue why are you paying more when the aim is to get the property for the lowest price possible?) However, you can negotiate with them for this and offer to pay 2% on a likely budget that suits you eg: you have $500K to spend so will pay 2% of anything between $450-500K. This way you can plan ahead and know upfront how much you're likely to be up for.

As for questions, look for the usual: experience (personal investing as well), testimonials, why you should use them, what makes them better to other BA's, systems in place to source properties and whether or not they're appropriately licensed and insured (prof indemnity being a must). Seek to find someone who has been personally referred (word of mouth often being best business as you know) and talk to them for a while (in person is ideal but on phone can suffice) to develop a "feel" for them personally. As using a BA is a position of trust that you are placing someone else in, it's important that you feel comfortable with them and the way they operate.

Hope this has helped somewhat!

 

Thanks for that Jacque

Regards,

Ed

 

Actually just realised I didn't address the issue of bulk discounts.
Hmmm..... tricky, considering that we often don't know what our clients are going to be like (in terms of realism, fussiness, procrastination) until we're 100% into a search on their behalf.

I would consider, however, if you were to hire a BA to find you properties simultaneously that a discount would certainly be warranted. However, if you were merely "testing" the BA for a first purchase (as you've mentioned doing) then I wouldn't offer a discount for the first search.

Again, a very individual situation, but, with the right approach of creating a favourable win-win outcome, I'm sure something amicable to both parties could be arranged. The most important thing is finding someone you can place your trust in to achieve your goals at a price you feel happy in paying.

 

Yeah that's fair enough - I'm realistic about what people may offer. I was thinking moreso once a relationship has been established and my intent was clear (frequent purchases) that something could be negotiated for say the 3rd property onwards gets some sort of volume discount.

I suppose I can get an indication with a simple yes/no question in the early stages. Some may not entertain the prospect at all. In the end the issue would not be a deal breaker if someone impresses me anyway , but if I do meet my goals and am buying say 5 properties a year on an ongoing basis I'd like to think that I'd be a client worth keeping happy (said whilst trying not to sound arrogant )

Cheers,

Ed

 

Bulk discounts

Ahhh, a topic I'm interested in at the moment also.

Regarding bulk discounts, I know that Scott McGeever, a BA in Brisbane, gives something like a 10% discount off their standard rates for the 2nd and 3rd properties, then 20% discount for any more properties after that, as long as the service is used at least every 12 months (or something like that).

Ed, I'm also interested in whether you have been looking at other cities as well as Melbourne. As I know Brisbane very well I was planning to buy our next IP there, as I'm aslo pretty short on time and didn't want to start my research from scratch. However, it occured to me that if I'm going to pay for a BA's knowledge then that allows me to consider Sydney or Melbourne as well - obviously I'll still need to do my own DD, but leveraging off the BA's knowledge would give a huge head start.

John.

 

Gday John,
I can understand why you'd be looking interstate given what the Tassie market generally serves up. I actually like the prospects for Melbourne relative to other states and really don't see the need to complicate things further than they already are. The only motivation to invest interstate for me may be land tax depending on the structure in which I choose to invest. If I choose to invest via a trust then land tax becomes even more of an issue as they are penalised rather heavily.
In that case I'd likely stick with Sydney and Brisbane.

I have this itch to own a beachfront/waterfront apartment in Noosa just because I love the place. I need to keep pinching myself and forcing myself to admit that it's not purely an investment based decision and would likely be a lot more trouble than it's worth compared to just renting a nice place up there when I feel the need .

Cheers,

Ed

 

If you're going to be buying 4 or 5 IPs a year then imaginge that this will hit you pretty hard and pretty quickly.

Mmmm, that would be nice, although I prefer things a bit quieter, like a bit further south around Peregian Beach. Close enough to Noosa to go for a bite to eat, but far enough away from the crowds.

John.

 

Yeah land tax is going to be a problem no matter how you look at it. I may just end up with a team of buyers agents around Australia .......lots of weekend inspections coming up Can't see myself investing heavily outside of the east coast though to be honest. Perth may have been nice a a while back but not now.

Despite my remarks about Noosa , it may just make a decent (smallish) part of my portfolio once I've done some more research on likely vacancies , cashflow issues etc.......With their population cap etc....and limited real estate it'd be hard to see their property values crashing but funnier things have happened and I haven't done enough research yet to satisfy myself.

But again......that's where a buyers agent familiar with the Sunshine Coast (but not working there exclusively) may come in handy.

Cheers,

Ed

 

I would entertain doing something similar to this, especially for repeat clients as it generates both goodwill and fosters trust. Not too many investors would fit into this category, however. They are exceptions.

 

Ed

Good goal! If you're looking at that sort of volume have you considered developing? It would probably still be more hassle than 5 individual buys but at that number you could look at say 4 townhouses on a block and get someone to project manage them for you (and save some of the developer's margin for yourself). Depends what type of properties you're looking for ... and I'd love a property at Noosa too!

Dave

 

I went to dinner about 4-5 years ago with a group of well-heeled people (I was a hanger on) many of whom owned in Netanya Noosa.

One nice older guy had just paid $1M for the penthouse or presidential suite - I can't remember which - but apparently has the best aspect in that complex (which must be pretty good ).

Everyone was having a laugh at his expense as they all said he'd paid $250K too much. I was interested to know why such a smart bloke paid over the odds, so I asked him. He said his wife had helped him every step of the way for 23 years and this was all she had ever asked him for, so she deserved it no matter what, and as that was the asking price, that's what he offered. I thought that was pretty cool

We stayed there in a small 1 bedroom which I saw for sale last week at $850,000 - so I'd imagine his overpriced $1M is now more like $3M ... so I thought that was fair too

 

Nice story

As to your question Dave...........yes I have investigated project managed developments with people like Metropole etc........but decided that there just wasn't enough margin for error left after they'd taken their cut.

If you know the right people (I'm in the process of establishing some contacts) you can ofcourse get some good commercial opportunities and/or a share in a development with a developer who needs some funds so they can move onto their next development. This sort of thing requires a lot of extra DD , solicitors , and risk and is something I will look at later when I have that sort of money to lose.

In the meantime my main goal is just to be set in residential safely and in a very big way before the next boom.

Ed

 

re buyers agent

Hi there,
Agreed with Ed I had the unfortunate dealing with one of metrople buyers agent and was not impressed.I gave him 3 months to find an ip and I'd call him every week to touch base to see how things are going but he always had an excuse on why he couldn't find one.
In the end I lost $1000.00, and I found my own investment property.
Do your due dilegence.

 

Surely you got email updates or pics/links sent to you about the properties that were being inspected on your behalf?
This is standard procedure that we have in place for our clients, not only to let them know what we're rejecting (sounding like John West here!) but also for them to see that we are working on their behalf and getting out there in the field.
We also maintain stringent property checklists and files of every property we've enquired on or physically inspected, and present these quite happily to clients upon request.
Were you happy with your final purchase, Pitts?
Next time you want to try a different BA, give me a PM and I'll give you the name of an independent one who's very reputable and comes highly recommended.

 

Jacque,

My conversations with the BA always ended with "looking at several properties" but I didn't receive any further information apart from this. I try to be as patient as possible but waiting 3 months to find the "perfect IP" was I thought a little too long.

However I must clarify to the readers of this forum that this person was not with the METROPOLE group at the time and I have no intention to drag their name through the mud.

Just want to send a clear message to due your due dilligence and not make the same mistake as I did.

I will be on a lookout for another IP soon in the Brisbane area. Any referrals would be greatly appreciated. Of course any possible BA's will undergo a stringent grilling of questions .

As for the IP I found myself I'm very happy. It's sitting on two lots bought for $20k under value and close to water.

However I know BA's can offer a great service and save me alot of time in researching, if a right one is chosen!

cheers
pitts

 

Ed,

No I don't have any names for you. I do know of a lady who had begun with Metropole and was very happy with the progress (had a block, doing the subdivision approval thing), but that was a few months ago so it would be interesting to know how things turned out.

My wife and I plan to do our own development some day. We may need to have someone project manage or just depend on the architect and our own visits - we have two potential sites (settled on the second one last week), but not in Canberra where we currently live. We are waiting for a bit of CG to help secure the building finance.

You've got excellent goals, and I think you've got good timing also. Perhaps if there's another rate rise you'll be able to pick up a few bargains in the established house market. Then it's just a matter of time.

Dave