Buyer's Agents are a relatively new idea in Australia, but their presence in the property space is rapidly growing. Initially they specialised mostly in niche, high value markets such as industrial and commercial real estate; more recently they’ve moved into the residential space.
So what do they do? Essentially, they work on your behalf to buy a property. For many developers they're an important part of their "dream team" - a piece of the puzzle that can be outsourced to someone other than yourself.
Sounds great, right? Well, up to a point, yes. But there's a lot more to the decision of using a Buyer's Agent that you need to think about before picking up a phone and offloading a chunk of your property finding tasks to someone else.
First up, I want to make one thing absolutely clear, I am NOT suggesting you hand over sourcing development properties to someone else as the first thing you do in your journey to become a Property Developer. If you don't understand how to choose a site that's both developable and profitable, then how will you know if any properties a Buyer's Agent presents to you are good deals or not?
“But won't they know?” I hear you ask....
It would be nice to assume that's the case, but more on that in the Pros and Cons section. I'm actually talking about understanding what it is you're looking for, so that you can brief the Buyer's Agent appropriately. Just saying "I want a profitable development site" is basically saying "hey, here's a haystack, find me a needle". I'd be very suspicious of any Buyer's Agent that takes on that job.
A good Buyer's Agent is one who knows every piece of straw in their hay bale by name. They make it their business to be an Area Expert. They've built up relationships with Real Estate Agents in the area, they're across all recent sales, and they attend open houses and auctions in the area.
What they need from you is a clear, precise set of parameters, which you will know already if you’ve done the work of researching an area and what type of development is profitable there. "I want a property between 600-800sqm, in this zone, that has side access and room at the back to build a granny flat. This is my budget, and the property should be located south of the Highway. I don't mind if the house needs some cosmetic renovation, but I don't want a knockdown."
A word of caution here - Buyer's Agents are NOT miracle workers. Be reasonable in your request. If nothing that matches your criteria has sold for under a million in the last three years, then saying you won't pay over a million is a waste of everybody's time. There's nothing wrong with setting a price that's on the low side, mind you, just stay out of miracle territory.
With that information in hand, the Buyer's Agent will immediately kick into gear and start tapping into their network to find you the ideal property. Again - they're not miracle workers. You might be lucky and the perfect property will pop up in the first five minutes, but be reasonable in your timeframes.
Pros of Using a Buyer's Agent
So if you've already done all the learning and research and can tell if a property found by a Buyer's Agent is a good one, why bother engaging one? The first and most obvious answer is almost always time.
We're all busy. Family, friends, a job, running other development projects - the list is long and there's only so many hours in the day. Finding good development deals takes time and effort. So outsourcing the task to a Buyer's Agent is definitely a timesaver. And if you can only devote a few hours a week versus the agent working many hours a week, chances are they're going to find you a deal a lot faster.
If you've chosen a Buyer's Agent who specialises in your area, then you also have the benefit of tapping into their existing network of Agents and perhaps even vendors in the area. Potentially they will hear about properties before anyone else, giving you the chance to snare a development deal before it's on the market.
A Buyer's Agent is also objective. They're not going to fall in love with a deal - they're only interested in finding one that fits your parameters. They're not going to let FOMO (Fear of Missing Out) cloud their judgement, so they can negotiate with a clear head and not get carried away.
And now that you're almost bursting with enthusiasm to use a Buyer's Agent to find your next deal...
Cons of Using a Buyer's Agent
Okay, reality time! There are Buyer's Agents and then there are GOOD Buyer's Agents - and they're a lot rarer than you might think. Far too often I see Buyer's Agents who cast far too wide a net in their attempts to be all things to all people, instead of specialising in a few chosen areas. The end result being that they don't know the numbers, they don't have a network to tap into, and so although they may have more hours to devote to the task of finding you a deal, you're not gaining in any other way.
In a hot market, too, they may have very little advantage. Every man and his dog is fighting over the same properties, and if they're not an area expert with a network, there's no reason for an agent to give them priority over a dozen other people - particularly if the others are willing to pay more.
Many Buyer's Agents deal mostly in residential property, not development sites. So their skill in looking at numbers and first level due diligence may be non-existent, leading to them wasting your time with properties that may be developable, but not profitable.
Even worse, some Buyer's Agencies are really property spruikers in disguise. If you're interviewing a potential Buyer's Agent, it's important you ask questions about what type of properties they source to make sure they're not just going to sell you whatever’s in their marketing folder this week.
And the big killer - they cost money. A LOT of money if you're looking for a multi-million dollar site. Paying out a hefty fee may just be the straw that broke the camel's back - or in this case, pushes the profit on your project down to a level where it stops looking quite so appealing. This is particularly true of smaller developments.
Bottom line is that a good Buyer's Agent can be a really important member of your Development Dream Team. But a bad one can cost you time, money and in the end, not even find you a development deal that's worth pursuing. So do your due diligence before choosing to work with one!
So what do they do? Essentially, they work on your behalf to buy a property. For many developers they're an important part of their "dream team" - a piece of the puzzle that can be outsourced to someone other than yourself.
Sounds great, right? Well, up to a point, yes. But there's a lot more to the decision of using a Buyer's Agent that you need to think about before picking up a phone and offloading a chunk of your property finding tasks to someone else.
First up, I want to make one thing absolutely clear, I am NOT suggesting you hand over sourcing development properties to someone else as the first thing you do in your journey to become a Property Developer. If you don't understand how to choose a site that's both developable and profitable, then how will you know if any properties a Buyer's Agent presents to you are good deals or not?
“But won't they know?” I hear you ask....
It would be nice to assume that's the case, but more on that in the Pros and Cons section. I'm actually talking about understanding what it is you're looking for, so that you can brief the Buyer's Agent appropriately. Just saying "I want a profitable development site" is basically saying "hey, here's a haystack, find me a needle". I'd be very suspicious of any Buyer's Agent that takes on that job.
A good Buyer's Agent is one who knows every piece of straw in their hay bale by name. They make it their business to be an Area Expert. They've built up relationships with Real Estate Agents in the area, they're across all recent sales, and they attend open houses and auctions in the area.
What they need from you is a clear, precise set of parameters, which you will know already if you’ve done the work of researching an area and what type of development is profitable there. "I want a property between 600-800sqm, in this zone, that has side access and room at the back to build a granny flat. This is my budget, and the property should be located south of the Highway. I don't mind if the house needs some cosmetic renovation, but I don't want a knockdown."
A word of caution here - Buyer's Agents are NOT miracle workers. Be reasonable in your request. If nothing that matches your criteria has sold for under a million in the last three years, then saying you won't pay over a million is a waste of everybody's time. There's nothing wrong with setting a price that's on the low side, mind you, just stay out of miracle territory.
With that information in hand, the Buyer's Agent will immediately kick into gear and start tapping into their network to find you the ideal property. Again - they're not miracle workers. You might be lucky and the perfect property will pop up in the first five minutes, but be reasonable in your timeframes.
Pros of Using a Buyer's AgentSo if you've already done all the learning and research and can tell if a property found by a Buyer's Agent is a good one, why bother engaging one? The first and most obvious answer is almost always time.
We're all busy. Family, friends, a job, running other development projects - the list is long and there's only so many hours in the day. Finding good development deals takes time and effort. So outsourcing the task to a Buyer's Agent is definitely a timesaver. And if you can only devote a few hours a week versus the agent working many hours a week, chances are they're going to find you a deal a lot faster.
If you've chosen a Buyer's Agent who specialises in your area, then you also have the benefit of tapping into their existing network of Agents and perhaps even vendors in the area. Potentially they will hear about properties before anyone else, giving you the chance to snare a development deal before it's on the market.
A Buyer's Agent is also objective. They're not going to fall in love with a deal - they're only interested in finding one that fits your parameters. They're not going to let FOMO (Fear of Missing Out) cloud their judgement, so they can negotiate with a clear head and not get carried away.
And now that you're almost bursting with enthusiasm to use a Buyer's Agent to find your next deal...
Cons of Using a Buyer's Agent
Okay, reality time! There are Buyer's Agents and then there are GOOD Buyer's Agents - and they're a lot rarer than you might think. Far too often I see Buyer's Agents who cast far too wide a net in their attempts to be all things to all people, instead of specialising in a few chosen areas. The end result being that they don't know the numbers, they don't have a network to tap into, and so although they may have more hours to devote to the task of finding you a deal, you're not gaining in any other way.
In a hot market, too, they may have very little advantage. Every man and his dog is fighting over the same properties, and if they're not an area expert with a network, there's no reason for an agent to give them priority over a dozen other people - particularly if the others are willing to pay more.
Many Buyer's Agents deal mostly in residential property, not development sites. So their skill in looking at numbers and first level due diligence may be non-existent, leading to them wasting your time with properties that may be developable, but not profitable.
Even worse, some Buyer's Agencies are really property spruikers in disguise. If you're interviewing a potential Buyer's Agent, it's important you ask questions about what type of properties they source to make sure they're not just going to sell you whatever’s in their marketing folder this week.
And the big killer - they cost money. A LOT of money if you're looking for a multi-million dollar site. Paying out a hefty fee may just be the straw that broke the camel's back - or in this case, pushes the profit on your project down to a level where it stops looking quite so appealing. This is particularly true of smaller developments.
Bottom line is that a good Buyer's Agent can be a really important member of your Development Dream Team. But a bad one can cost you time, money and in the end, not even find you a development deal that's worth pursuing. So do your due diligence before choosing to work with one!
