Is there a role for buyers agents?
The distinct impression I was left with on reading this recent article in the NZ Herald "Frustrated house-hunters turn to experts" was that real estate agents and the general real estate industry are not too keen on the role of buyers agents, the sense was that they saw this "professional buyers-agent service" as a minor niche and neither offering anything new, nor likely to grow.
That view appears to me to reflect a certain degree of fear. Surely the more advice and support both buyers and sellers get, the more that they are provided with professional services to ease what is an incredibly complex and intense process and ensure that this major financial transaction is undertaken with full knowledge.
The fact is the real estate industry in NZ is well served from a vendors perspective as this is the role of the traditional agent. They are contracted to act entirely in the best interests of the vendor to seek to market and sell the vendors property as speedily as possible for the maximum amount. The agent receives their compensation largely in the form of a commission on the final sale price.
The agent is the process has to and naturally seeks to assist buyers as without buyers there are no likelihood of a sale, however buyers always need to be aware that their interests are not uppermost in the minds of the agent for the house they are looking to buy.
Given the enormity of the process, the financial obligations and the infrequency of the experience it is not surprising that many buyers are asking the question "who can I trust to help me through this process - who can be on my side and have my best interests at heart". This plea has been heard by the likes of these new "buyer agent" services such as Erskine+Owen or Auckland Home Finders who offer a range of services. In my opinion given the access to all property listings online the primary skill and value of these services is in the advice, negotiation and representation these companies offer. They will be fighting on behalf of the buyer to get the best deal - perfectly matching the sellers agent seeking to get their client the best deal. Surely that is something that benefits all parties in the real estate industry?
It is often cited as was the case in this article that buyers agents are common in other countries. That is actually not the case in most similar markets with the exception of the US. The US market is unique, for every transaction there is a buyers agent and sellers agent involved in the process and their roles are tightly defined. The sellers agent simply takes the listing and markets the property and then handles negotiation, that negotiation is mopst frequently directly with the buyers agent. The buyer appoints a buyers agent who through a complex (and largely archaic system called the MLS - Multiple Listing System) sources properties to be inspected by buyers. The buyers agent guides buyers through options of properties and then goes into negotiation. The US system add more resources which certainly enable both parties to be well served by professionals, but it does come at a cost as the commission paid by the seller (an average of over 5%) is split evenly between the seller and buyers agent.