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If there's one group of people I truly feel sorry for, it's today's property buyers. When they head out to try and buy a property, often a family home for themselves, they generally have no idea just how bad things are going to be.
But they soon learn. Within a day or two, buyers discover an unpleasant truth. In the real estate world - which is more like a real estate jungle - property buyers have few friends.
As almost every buyer knows, most agents treat buyers shabbily. Typically, agents start lying to buyers the minute the buyers speak to the agent.
It often begins with the quote lie where the agent - in an effort to lure in the buyers - will quote them a false low price about the likely selling price of a property. This is particularly so when properties are being auctioned. The agents want a big crowd at their auctions and many of them don't care what they say to the buyers as long as they can persuade the buyers to turn up.
If the true price of the property is $600,000, the agents will tell the buyers that they "might" get it for $500,000. The poor buyers will get their hopes up, often going to the trouble of arranging inspection reports at the cost of several hundred dollars.
But then, at the auction, they discover that the 'reserve price' (the lowest the sellers will accept) is many thousands of dollars above the price they were quoted by the agent. The agents lie, that's the nature of the business. And the poor buyers get their hearts broken and their wallets walloped several times before they realise that the real estate jungle is a truly dirty and dangerous place.
Many times, agents will have more than one buyer interested in a property (or that's what they'll claim). The agents seem to have no regard for the emotional feelings of buyers. Sometimes, buyers will make an offer, the agents will give the buyers the impression that all is okay and then, presto, with no warning, the agents will sell the property to another buyer. I could fill a book with the horror stories of how buyers are treated badly by agents.
So, why is this? Why are so many agents so bad to buyers? Well, first of all (as many an agent will say), most agents are employed by the sellers. It's the sellers who pay the agents and it's the sellers for whom the agents work. The agents have no real duty to the buyers.
Furthermore, agents know that if they have a good property for sale at a sensible price, there will always be buyers for it. The agents don't have to treat buyers well because there is an abundance of interest in the best properties. That's why agents are notorious for being rude to buyers, for failing to return their calls, for failing to consider their feelings and for generally not caring a damn about the buyers.
With the widespread frustration from property buyers, it's a wonder that more of them don't take an obvious course of action and hire their own agents.
Yes, it's possible for buyers to hire their own agents to help them do battle with the sellers' agents.
In the United States, the concept of buyers' agents has long been a feature of the real estate world. In thousands of sales in the US, there are two agents, one for the sellers and one for the buyers. But not so in Australia. In the vast majority of sales there is one agent, the sellers' agent. The buyers have to fend for themselves.
But it doesn't have to be this way. A growing number of Australia's property buyers are now hiring their own agents to help them hack their way through the real estate jungle. And, judging by the overall feedback, many buyers are impressed and delighted that they hired their own agent.
In many cases, a buyers' agent is a wonderful idea for buyers. The buyers' agent can do all the looking for the properties - thereby saving the buyers scores of frustrating hours; and, best of all, when it comes to negotiating the price of a property, the buyers' agent can take care of it all.
For some reason (perhaps because they are dealing with a similar breed to themselves) the sellers' agents seem to treat the buyers' agents a lot better than they treat the buyers. But that's probably because the buyers' agents know all the tricks and traps that the sellers' agents use on the buyers. They tend to behave themselves when they are dealing with someone who knows their game.
If handled correctly, the cost of a buyers' agent can easily pay for itself because the buyers' agent can often negotiate a better price than the buyers would have been able to negotiate. Good buyers' agents are good negotiators, they can easily save the buyers a small fortune.
In my own case, I have used buyers' agents three times - and each time, I have to say, I have been delighted. Not only did the agent save me a heap of time and get rid of the typical hassles, but they also saved me several thousand dollars on the purchase price of the property. How much? Well, in two of the three cases that I have used a buyers' agent, they have negotiated at least $50,000 off the price (that I was willing to pay). This more than covered their fees.
What do buyers' agents charge? Most buyers' agents charge a fee for searching for properties (say, a couple of thousand dollars) and then they also charge a percentage of the price of the property (usually around one to two per cent). So, if you buy a property for, say, $600,000, a buyers' agent can cost you less than ten thousand dollars.
It doesn't really make sense, however, to pay a buyers' agent a percentage of the price of a property because that means the more you pay for the property, the more the buyers' agent will get paid. You are better off negotiating with the buyers' agent to pay a percentage of the amount they save you (plus a fee for searching for properties).
So, for example, if you buy a property for, say, $20,000 less than the price you were prepared to pay, you may split that with the agent and pay the agent $10,000. Always remember, whether it's a sellers' agent or a buyers' agent, fees are negotiable. Just make sure you that you negotiate the fee before you hire them.
For a long time, I have considered writing this article. I have held back because I have been worried that it will sound like I am advertising buyers' agents. But so what? I really do believe that many buyers' agents perform a really good service for buyers.
I am convinced that thousands of buyers could collectively save themselves weeks of frustration not to mention millions of dollars in savings off the purchase prices of properties if they hired a good buyers' agent.
Of course, like any business arrangement, buyers need to be careful. I haven't heard of many, but there are probably some dodgy buyers' agents around; after all, many (most?) of them are former sellers' agents.
But, if you're looking to buy a property right now and you are sick of the treatment of sellers' agents, you really should consider a buyers' agent. At the very least, give one a call and have a chat.
It could be one of the best property investments you ever make. I hope so.