Now more than ever, investors have access to unprecedented amounts of information to help them make their property buying decisions.
At the click of a button, you can review real estate sales data, capital growth history and rental statistic.
It makes it easy to justify being a lone ranger in the hunt for your first – or next – investment property.
But, while the information we can access is very beneficial, it doesn’t necessary mean you are well placed to make the best investing decisions.
Without a professional and experienced buyer’s agent on your side, you can easily make poor (and sometimes, very costly) decisions that ultimately create stress in your life, rather than marching you toward financial independence.
Here are some of the most common mistakes that investors tend to make:
1. They make emotional decisions
In theory, you know you should be unbiased but when that one property catches your eye and the decision comes down to you alone, it can be hard to stick to your convictions.
A buyer’s agent starts with your goals and long term plans in mind, and comes up with an unbiased short-list of properties that fit the bill; they’ll never be swayed by a beautiful kitchen or spacious outdoor area if the property doesn’t fit the bill in other ways.
2. They lack confidence
Amateur investors – and even many experienced ones – often lack confidence when it comes to negotiating terms and prices with real estate agents.
It is the job of the real estate agent to get the maximum price for their client, the seller – not you.
As a result, you could be walked all over, especially if you are buying from out of town and you don’t intimately know the market.
A buyer’s agent is an independent, professional negotiator who knows the local market inside and out and works on your behalf to get the lowest possible price.
They can also coordinate inspections and due diligence and attend closing to ensure all of your wishes and best interests are met.
3. They waste time
Property investors who go it alone can waste countless hours researching, browsing, driving and inspecting dozens of properties that are mostly unsuitable.
By working with a buyer’s agent, you are recruiting someone who knows the current market conditions of that local area inside and out, so you don’t have to do all the groundwork in figuring out the best and worst streets, cul-de-sacs and parks.
You may also get access to a wider choice of properties that may not even be on the market yet, thanks to the contacts and networks of your savvy buyer’s agent.
By having someone else do all of the legwork, you can focus on only the most important decisions.
4. They lack knowledge
You may have been to a seminar, read some books and spoken to other investors, but taking that final step to invest in real estate in real life is a completely different story.
The stakes are higher and the decisions much more confusing and stressful.
A buyer’s agent is often a successful property investor themselves, so you aren’t just paying for a finding service, you are paying for invaluable experience and expertise.
They buy property every day, fully understand current market conditions and can help you come up with an effective purchasing strategy.
They can also help you source the right property in a location with good prospects for capital growth and/or positive cash flow.
5. They have no idea what comes next.
You’ve found the property, settled on a price and taken possession of your new investment.
You have the keys in your and – but what’s next?
How do you source a good property manager or find tenants?
Should you renovate or rent it out as it?
A buyer’s agent can help you work through your options before you start handing over money in monthly mortgage repayments, and they can also suggest reputable partners and contacts in the industry once you’re ready to take your next steps.
But beware, not all buyers’ agents are created equally.
Asking a few simple questions up front will ensure you have found a reputable one who will meet your needs before you actually engage their services
Having an advocate on your side will not only save you time, it will also help you negotiate on price and provide an expert to discuss your options with.
Their advice can quickly save you thousands of dollars and bring peace of mind – and when you’re spending several hundred thousand dollars, this benefit alone is worth its weight in gold.
Here some questions a smart investor could ask their buyers agent before engaging them:
- Are you a fully licensed real estate agent?
Be wary of hiring someone who doesn’t hold a real estate license and hasn’t had years of experience in the property industry.
There are people out there calling themselves a buyers agent who are not licensed estate agents.
“Don’t risk putting what could be one of the largest purchases in your life in the hands of somebody who hasn’t had the years of experience necessary to negotiate on your behalf.
Don’t be tempted to engage somebody just because they offer lower fees.
If they provided great service and real added value to their clients, they wouldn’t have to win clients by offering low fees.
- Are you a member of the State Real Estate Institute?
This should give you the reassurance that they are operating to professional industry standards.
- Do you have current professional indemnity insurance?
If something goes wrong with your property purchase you will have absolutely no recourse if this is not the case.
- Are you a dedicated buyers agent?
Or are they just a division of a real estate agency or a one man band working from home or out of a post office box?
You can’t possibly offer a high standard of service when searching and negotiating for properties for your clients unless you have dedicated professionals purely focused on this process.
- Do you specialise in the geographic location and the price range I am looking at?
If the buyers agent doesn’t have a strong recent track record of buying in the area you are looking at purchasing in, we suggest you don’t engage their services.
Don’t be shy to ask them for at least 4 recent purchases in your area you are looking at buying in.
- Do you specialise in home buying or property investment?
Buying investment properties requires certain expertise and strategies to maximize the capital growth of your property.
Most buyers agents don’t specialise or even understand property investment.
If you are an investor, ensure your buyers agent has experience in purchasing property investments and a proven track record.
If you are buying your next home make sure your buyers agent fully understands your needs and your geographic territory.
- Can you provide a reputable team of professionals to help me make a more informed investment decision?
Do they have a proven team of solicitors, accountants, property managers, builders and pest inspectors to ensure you buy the right properties and maximize your investment returns?
- Does your buyers agent have access to “silent sales”?
At Metropole, many of the properties we purchase never hit the public market.
It is imperative that your buyers agent has years of personal relationships with all the real estate agents in the area you are looking at purchasing in, so as soon as properties come up for sale you have access to them before they go to the general public.Most of these properties are sold before they ever get advertised to general public.