Last week, we received a letter at our office from the Real Estate Institute of New South Wales (the main trade association body for real estate agents in NSW).
The letter was sent to all agents who have nominated themselves as ‘Buyers’ Agents’.
Essentially, the REINSW is starting to crack down on agents who advertise themselves (misleadingly) as Buyers’ Agents when they are in fact selling agents. You see, in Australia, the Government enforces a separation of roles between agents who sell and agents who buy. This is unlike many other countries (such as USA, Canada, Singapore, Indonesia, etc.) whereby so long as you are a licensed agent, you can represent either side of the transaction.
The reason for the distinction between Buyers’ and Sellers’ agents is to ensure that there is never a conflict of interest. So in NSW, if you are a Buyers’ Agent, you are supposed to be working 100% in the best interest of your client – the buyer, and no one else.
The problem is that because the Buyers’ Agents concept is relatively new to Australia, many agents are not aware of this distinction. In the course of our day-to-day property inspections, we meet many selling agents who proudly proclaim to us that they are also a buyers’ agent – but this is obviously not the case if they are standing at the door selling a property on behalf of their client!
Most agencies and agents that property buyers encounter are in fact selling agents. This includes agents from major franchises such as LJ Hooker, Ray White, Raine and Horne, Richardson and Wrench, McGrath, etc.
And whilst many selling agents at Open Inspections are helpful to prospective buyers, this is not a sufficient measure to qualify them as Buyers’ Agents from a legal as well as practical point of view.
So how can you distinguish between selling and buying agents? Here are three quick tips to help you:
- Follow the money trail. Find out who is paying the agent. Selling agents derive commission from the seller, whereas buyers’ agents should only receive remuneration from the buyer and never any money from the seller. Many project marketing companies claim to be acting in the best interest of the buyer. However, if you follow the money trail, you will find that they are being paid commission by the developers – and usually recommend properties which pay the most commissions.
- Exclusively buying. A proper buyers’ agent NEVER sell properties. They do not have any property listings.
- Full access to market. A proper buyers’ agent should be able to source properties for you regardless of who the seller is. Whereas a selling agent almost always only pitch their own listings or those of colleagues from the same agency. They usually do not recommend any other properties on the market listed by a competing agent or agency because they are not incentivised to do so. A proper buyers’ agent should also have access to all types of properties regardless of whether they are new or second hand.
About Oliver Stier
Oliver J. Stier is the Director of OH Property Group, a leading Sydney buyers agency. He studied Quantitative Economics and Finance at Cambridge University (UK), University of Toronto (Canada) and Princeton University (USA). In addition to being a licensed real estate agent, Oliver also holds the Chartered Financial Analyst (CFA) designation.