This was the heading of an article featured in Domain on Saturday June 7th 2013. This particular article was written with regard to the increase in buyers seeking professional advice when entering the Melbourne property market. The article was quite well balanced as it offered insight from Advocates, Estate Agents and also the REIV, who stated “choose an advocate that is not only a licensed agent but also worked as a selling agent” Good advice REIV! Fortunately for us at Infolio, we are of that breed and having had the experience of selling properties over a number of years there is little left that we haven’t seen before. This has also allowed us to develop strong relationships with the selling agents. If we don’t work cohesively with the seller, they won’t want to show us property “off market” or come together on negotiations.
It’s interesting that a buyer’s advocate is seen as a relatively new thing in Melbourne property when people in Europe and the US would rarely consider making any property transaction without consulting their advisor. You use a finance planner for finance, a mortgage broker for loans, a real estate agent to sell – yet when making the biggest purchase in your life you don’t put an experienced negotiator in your corner! It’s good to see that smart Melbournians are cottoning onto this “emerging” trend.
Some of the other comments in this article read like this:
“buyers are dealing with a new pricing paradigm in which some properties, particularly B and C grade ones – will generate little capital growth over 5 or 7 years”
“a buyers advocate does not confuse logic with emotion”
“quality advisors assist their clients to make the optimum property selection. They will evaluate a property and assist in assessing a realistic price for property by providing comparable sales data”
The article then moved over to the role of the vendor advocate – for those of you that do not know what this is, it’s when a vendor (seller) engages the services of an agent or advocate to assist them with the selling process, they would commonly help the vendor select an agent, negotiate commissions, select the best sale method and marketing campaign as well as assist with sale negotiations.
An “advisor” by the name of Peter had this to say in the article: “the service of the vendor advocate is riddled with anomalies, if a vendor advocate purports to be so competent that they are qualified to manage another real estate agent, why aren’t they performing the role?”. He then went onto say that “vendors advocates will have no positive impact on a properties sale price and that vendors can pay substantially higher commissions”. These comments were so inaccurate I actually don’t know where to begin so ill start from the beginning to make it easy:
- If a vendor advocate is so qualified to manage another real estate agent, why aren’t they performing the role? – As an advisor, we are again acting as an advisor to our clients. We offer this service as an extension to our buyers advocacy and property management core services. If you are a good adviser, your clients should want you involved in this process as you are in their corner and ensuring their best interests are always coming first; again acting as their advisor not their real estate agent. For our vendor advocate clients most often we have purchased the property for the client, managed the property, and when during the cycle they decide they want to offload the asset they elect to continue with our advice.
- A vendor advocate does little of the work yet claims a substantial proportion of the commission – When we act as a vendor advocate we are present at every meeting, refer all offers and are often there negotiating with the buyer before or on auction day. We take 30% of the agents commission; however, the agent has not had to go through the same listing process nor has he/she had to undertake most of the dealings with the vendor. The hardest part in selling a property is vendor management – this role is almost eliminated from the agent.
- Vendors using this service can pay substantially higher commissions – Again this is incorrect. The aim is to ensure that the fee is fair to both parties. If the agents commission is cut so substantially during negotiations then they are less likely to act in your interest or put your property first when dealing with one buyer interested in 2 similar properties. The advocate makes it fair play which is just as important as it is to ensure you get the best price. What a vendor advocate will also do is minimise cost when it comes to advertising and marketing. Many agents ‘marketing packages’ includes fees and charges for advertising that looks after the agent rather than the seller. So having a good eye and understanding for this process is important.
- Vendors advocate have no positive impact on the properties sale price – As we often partake in the negotiations, I know for a fact that is incorrect. I also know that when an offer has been submitted for our clients to consider, we have had the skill to find out if the agent was ‘holding back’ to get commitment to sell and if the agent had fully exhausted all avenues in extracting a better offer. How can we do this? Because we used to sell property!
An industry only arises from need – vendor advocates wouldn’t exist unless there was some need for it. Furthermore another reason why some people elect to use a vendor advocate is because they don’t want to be bothered with the process – they put it in their trusted advisors hands!