If sellers have agents, why can't buyers?
Hiring a helper can make purchases easier and cheaper, report Alessia Horwich and Julian Knight
Sunday 21 February 2010
Where the re-invigorated property market means smooth sailing for sellers, for buyers it means prices and competition are heating up, making the task of completing a purchase even more daunting.
Paying for someone to do the legwork for you, taking on greedy estate agents and fending off other buyers, was previously something only the rich could afford. But lower fees and new commission structures are bringing buying agents within reach of the middle market, giving many the chance to have their own personal Phil and Kirstie from Channel 4's Location Location Location.
A buying agent's role is to find suitable property based on their brief, ensuring finance is in place and that you're ready to buy quickly and efficiently. The agent then conducts a search and shortlists properties. Chosen properties will be thoroughly researched to reveal any deficiencies that could affect the price. The buying agent will negotiate the sale, deal with all the administrative and legal aspects and ensure you move is happy.
But why pay for something you can do yourself? "Our competition is actually people doing it by themselves for free so fundamentally we have to add value," says Peter Mackie, a director of buying agents Property Vision. The main advantage, he says, is access to the market. Unlike the centralised listing system used in the US, properties in Britain are listed with only a few vendors. So a buyer in London would have to contact more than 140 agents, developers and individuals to see everything on offer. A property agent will cover this ground and have personal contacts. "We have access to 98 per cent of the market where the average Joe only has access to about 30 per cent," says Mr Mackie. Buying agents also deal with homes that have yet to come on to the market, as estate agents can anticipate instruction by keeping tabs on home information pack applications. Sellers often go directly to buying agents to avoid estate agents' fees. As much as 30 per cent of Property Vision's transactions are happening "off market".
The second key advantage of buying agents is they should be able to judge the real value of a property. Property Vision, for example, was recently involved in the purchase of a house near a quarry, which it discovered had been licensed to extend the area of digging. The agent was able to negotiate a 20 per cent reduction in price.
A buying agent demonstrates you are serious about the purchase. "If you are prepared to spend what in the current climate is an important sum of money to find a property, you are not just playing around," says Peter Bolton King, group chief executive of the National Association of Estate Agents.
Buying agents are traditionally the preserve of the wealthier buyer. Property Vision, which deals with properties valued between £700,000 and £30m, charges an up-front fee of £2,500 and a commission of 2.75 per cent of the purchase price. This includes an unlimited search period, mini surveys of shortlisted properties, after-sales care, including changing the name on utility bills and the locks, and complete project management of the sale.
There are, however, agents that offer fewer services for a smaller fee. Sourcingproperty.co.uk deals with properties from £300,000 to £1.5m and charges a £500 retainer up front for a three-month search period and a commission of 1.5 per cent of purchase price. "It's the same result; it's just the delivery is slightly scaled back with fewer extras," says director Jo Eccles.
Even better, some agents are charging 15 per cent of the amount they save the client. "The buying agent is incentivised to make savings for the customer," says Tim Hammond, chairman of trade body the Association of Property Finders and Buyers Agents (APFBA) and director of buyersedgeuk.com. "This avoids commission based on purchase price which could lead to collusion with the selling agent. We don't charge any up-front fee, just take 15 per cent of what we save the client."
To become a member of APFBA, buying agents must sever any direct affiliation with selling arms to ensure they are solely representing the interest of the buyer. This new type of fee structure brings the cost of a buying agent in line with that of estate agents. "I believe the mass market buying agent is a new breed, but it's here to stay," says Mr Hammond. "What was once for the rich is now for the general homebuyer."
Quick fix: 'I needed a home in a hurry, so went to a buyers' agent
Fiona Marshall, 36, a people and development director, wants to move quickly as she has accepted an offer on her current home: "I have a busy job and a short time frame, so I really feel I need help securing the right property."
Fiona's choice of home – a two-bedroom central-London flat – is in relatively short supply, so she has employed agents Buyers Edge to find one for her. "It's a bit of rat race and I keep hearing about a shortage of property so the idea of employing a buying agent is to have someone on my side, doing the legwork and the negotiations. What's more, as they are paid a percentage of how much they save you, rather than an upfront fee, this gives them a real incentive to work hard on my behalf."
Before deciding on Buyers Edge, Fiona looked at several agency websites: "I felt that some were geared towards the expensive part of the market and wouldn't be interested in me, but that wasn't the case with Buyers Edge."
As for the reaction of estate agents to Fiona's choice, she says: "Buying agents are sufficiently rare to make agents curious. But they do know I am a serious buyer as I have gone to the trouble of employing an agent. I hope now we can find the right property."
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