Armed with a specific wish list and deep pockets, an increasing number of Australian house hunters are seeking out buyers’ agents to help find their dream homes.
Much of the heavy lifting is done behind the scenes as sought-after prestige properties and investments are traded quietly off market and never advertised for sale.
Enlisting the expertise of a buyer’s agent, or advocate, who negotiates on behalf of the home hunter, is a relatively fledgling sector of the Australian property market, having started in Sydney and Melbourne about 20 years ago.
But it’s a trend Metropole Property Strategists chief executive officer Michael Yardney said is gaining momentum in the capital cities of Sydney, Melbourne and Brisbane. The author and leading Australian property advisor manages one of the country’s biggest buyers’ agencies.
“Everyone does it in U.S. where there is an agent working on both sides of transaction representing the buyer and the seller,” he said. The practice is also seen in Canada and the United Kingdom.
“Here, many people think they know how to buy a house and they don’t need our services until they recognize the vendor has a trained negotiator working for them.”
When established in 2000, The Real Estate Estate Buyers Agents Association of Australia said there were 15 businesses operating in the industry, predominantly servicing high-net-worth individuals. There are currently 55 businesses listed as members registered with the association.
Their service comes as an additional cost, commonly between 1.5% to 2.5% of the purchase price.
What the agents do is “help level the playing field,” Mr. Yardney said of buyers’ agents.
Besides working on behalf of a buyer from a negotiating standpoint, the broker also may know of more properties that are available to buy—both those that are soon to come on the market, and those that are so-called “whisper listings.”
How Brokers Help Buyers
Having unprecedented access to properties not listed by conventional means—such as online listing sites — is one of the advantages of using a buyer’s agent. The other is their network of pro-active agents who have an equally long list of “A-list clients.”
Sydney prestige real estate agent Ben Collier, director of The Agency, sold just shy of A$130 million (US$97.1 million) worth of property off market in 2017 matching eager buyers with sellers not prepared to go through a traditional marketing campaign.
Representing about 40% of his overall transactions, Mr. Collier said off-market deals in the exclusive eastern suburbs of Sydney often occur when buyers who’ve been searching for a while had a specific type of property in mind but need help in finding the perfect home.
“Quite often an experienced agent will know a house that matches that description and can approach an owner,” he said, even if the home is not officially on the market.
“When you’re dealing with the top end, there are people who do not wish to be on the market because it’s quite a public process, but they’ll be open to the idea of selling or starting that conversation if you have a pre-qualified buyer.”
Sometimes, he said, “I might know of a house I sold 10 years ago that fits the [right] description.”
The prevalence of off-market sales in the Australian residential market is underpinned by declining buyer interest and sellers seeking a low-profile sale without publicity, at the same time avoiding marketing costs and open houses.
Mr. Yardney said that when Sydney and Melbourne property markets boomed two years ago, vendors were more likely to auction their homes because rising buyer competition allowed them to fetch higher prices.
However, the market slowdown over the past nine months has resulted in fewer buyers and knocked the wind out of the auction sails.
“More sellers are attempting to sell off market or pre-market, which is slightly different and means there’s usually a week or two before it’s advertised publicly, when agents will ring their A-Class clients and let them know what’s coming up,” Mr. Yardney said.
“We are getting more agents ringing us with off-market opportunities that in the good old days of the boom they would have put to auction,” he said.
Stuart Jones, director of buyers’ agency Rose & Jones, said they have maintained an Off Market platform since May 2017 which identifies more than 1,000 properties “quietly” available for sale with real estate agents. Of those 339 on the platform have sold between May 1, 2017 and May 1, 2018 for a total value of A$612,713,000 (US$448.6 million).
Rose & Jones
Off-Market Properties Reign
Mr. Jones estimates Australian off-market properties represented 50% more opportunities than were currently available via traditional online channels.
Last month Rose & Jones bought a property in Village High Road, in Vaucluse, on behalf of a client who was preparing to move back to Australia and wanted to purchase their “dream family home.”
Over seven weeks of house hunting, Rose & Jones presented the client with almost 50 potential properties—50% of which were not listed on the market.
“Previously, people were coming to us because they had a fear of missing out but now they don’t want to be caught out paying too much,” he said.
National Buyer’s Agent of the Year Cate Bakos, founder of Cate Bakos Property, purchased three to four properties a week for clients in 2016-17, totaling more than A$700 million worth of property.
She said that was due to strong market conditions and “unprecedented capital growth” which had since dropped away with tighter lending conditions and less competition.
The industry has “without a doubt” grown over the long term, she said.
“There are still a lot of people would perceive that a buyer’s agent’s role is about securing them a bargain or picking up a discounted property,” she said. “But we also contribute in a non-tangible way as well. Good buyers’ agents know their market well and the quality of an investment property. More people are starting to see that we’re able to help them avoid making a mistake or buying the wrong property.”
Metropole’s Mr. Yardney agreed and said more Australians realized the values of their services, not just experienced investors and time-poor high-net-worth individuals.
“Beyond looking for a house online, it’s our networks of people that provides money-can’t-buy opportunities, and it’s these relationships and networks we have that makes a big difference,” he said.
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