We recently came across an e-newsletter from an agent who works at a reputable, nation-wide real estate franchise.
In this e-newsletter, the sales agency was introducing its free homefinder service (which is increasingly being offered by other sales agencies also). The agency claims to offer the services of their 2 full time home finders: “All they do is simply look for homes. To find that special property you are looking for.”
I thought this was most interesting and worthy of a blog for two reasons:
- The fact that many real estate franchises are now offering a buyer-dedicated service is a clear reflection of what we have been saying for a long time: that in Australia, the market is significantly biased towards sellers. There is obviously a strong consumer demand for a more equitable representation of buyers in a real estate transaction.
- That these homefinder services can be provided FREE of charge to buyers is quite problematic because of inherent conflict of interest. Afterall, how can an agency (or any of its agents) claim to work in the best interest of the buyers if it is being remunerated by the sellers?
It is precisely to avoid such potential conflict of interest that the NSW Office of Fair Trading stipulates in Buyers Agent Rules of Conduct #11 that:
An agent must not accept an appointment to act, or continue to act, as an agent if doing so would place the agent’s interests in conflict with the client’s interests.
Furthermore, the NSW OFT Buyers Agent Rules of Conduct #22 also stipulates that:
An agent is to use his or her best efforts to obtain the best possible purchase price, without breaching standards of ethical conduct or engaging in conduct that is contrary to good agency practice.
Clearly an agent who works for a sales agency (even if it may be in a ‘home finder’ capacity) is not in a position to be able to obtain the best possible purchase price for the buyer if he/she derives his/her commission from the seller!
The peak real estate industry body in the state, the Real Estate Institute of NSW has also been cracking down on agents who are employed by sales agencies, yet simultaneously promote themselves as Buyers Agents. To avoid any confusion by the public, the REINSW uses the title Exclusive Buyers Agents to refer to agents who are genuinely representing buyers on an exclusive basis.
So… how can you make sure that you are working with a legitimate Buyers Agent? There are 3 easy tips to quickly figure this out for yourself. Read more in our earlier blog post “Buyers Agent – The Real Thing”.
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.