Buyers Advocacy - what can they do that I can't do myself?

Buyers' advocates or Buyers Agents offer a service to their clients, which enables these clients the ability to assess the real value and potential of Property acquisitions which in general would not be available to them as laymen. Different people have different reasons for enlisting the services of licensed Buyers Advocates; some of these are mentioned below.

  • Lack of time to research and conduct a purchase of a new property.
  • Not sure what the real value of a property is.
  • Whether to buy before or at Auction.
  • Not having access to the necessary data to evaluate the worth of such properties.
  • Not having access to all the available properties on the market.
  • You may not have the negotiating skills necessary to acquire a property for the best price.

The most common reason clients approach most buyers advocates is not that they don't know what they want or alternatively don't have the negotiating prowess to buy at a fair price; it is because they don't have the time in this new cash rich time poor age to research all the available data properly. They want the reassurance of an expert.

Most Buyers advocates have access to historical sales data bases so sales history and capital growth can be monitored historically with real figures. When buying any property we find that 99% of purchasers are happy to pay "Fair and Reasonable Market Value" and that 99% of sellers or vendors are prepared to sell for "Fair and Reasonable Market Value"; the important thing here is to educate the buyer and the seller as to what this figure is. This is achieved buy compiling the aforementioned data and being fair with your negotiations.

In the current 2008 market it would be foolish to think that there are many properties out there that you could buy for a "nick" or substantially under there real market value. This is a value that a buyer who is wanting to buy but not desperate to buy will pay and one that a seller who is wanting to sell but not desperate to will accept. This is quite often determined by putting a property to public auction as the sale result generally comes from competition from 2 or more buyers and it can be said that the "winner" is only about $1000- above the 2nd place bidder.

Through various databases like localwise, the Valuer General and Property Data online Licensed advocates can research and conclude a "fair market value" by adding this data to their local knowledge. Some buyers advocates have become so large buying 30 plus properties a month for clients that they actually become counter productive as they have more buyers than there are properties available and have to buy at "any cost" as they don't get paid until they satisfy the client with a purchase.

Some agents have even taken to phoning the Advocates first when they list a new property especially when it comes to investment properties as it is known this is where to get the best result, especially when the property is offered "off the market" or prior to it being advertised to the general public. When being given the opportunity to buy before Auction you must take into account virtually the only reason someone sells before Auction is that the vendor believes you are going to pay more than what they will get at Auction or that you are the only buyer. This is a good indication of the real feed back the Agent and Vendor have been getting from the people who have viewed the property.

It also must be remembered that the reason buyers buy before Auction is that they think they are getting it for a better price than they would otherwise have to pay. With the current rises in interest rates I believe that buying at Auction is generally the best thing and that whilst "bargains" are few and far between, you will if you have the patience buy at a better price if a property is passed in and negotiated after Auction.

At the moment a lot of the 70% success rate at Auction is from properties that have passed in and negotiated and not "sold under the hammer". A lot of Advocates tell you that they acquire property that is "off the market", this is generally inaccurate, and they are referring to property that is not openly advertised. You will have access to the same properties if you phone the agent and ask the question - "do you have anything which meets my criteria that is not being advertised"?

Finally and importantly it must be remembered that selling Agents have a responsibility to their vendors to achieve the best price the market is prepared to pay although this must be achieved by fair means. There are many methods used by agents which walk a fine line as to whether they are fair. When employing an experienced and Licensed Buyers Advocate you are usually dealing with a person at some stage who has been on the "other side"; this will actually help you as they are more likely to be versed with the tricks that may be employed to maximise the price you pay and the urgency with which you think you need to act.

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Published on March 3-th, 2008 in Property Investment
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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