Principals have been warned to steer clear of diversifying into buyer’s agency work despite the industry enjoying phenomenal growth.
There are now more than 100 specialist buyer’s agency businesses in Australia, compared to just two a decade ago, according to the Real Estate Buyers Agents Association of Australia (REBAA).
Its president, Jacque Parker, said the buyer’s industry is still maturing and therefore has a lot of room for growth. However, she said real estate agencies should resist the temptation to add a buyer’s agency business in the same way they might branch into property management.
“It’s actually a clear conflict of interest,” she told Real Estate Business. “You can’t represent two parties in the same transaction.”
Propertyology buyer’s agent Simon Pressley, who was recently inducted into the Real Estate Institute of Australia hall of fame, said expertise is just as much an issue as ethics.
“Bolting on a buyer's agency service to a traditional real estate agency is a concept that will always concern me,” Mr Pressley said.
“Promoting features and benefits to dispose of an asset requires a completely different skill set to working through a needs analysis, establishing a clear selection criteria, gathering information and selecting an asset to buy.”
LJ Hooker opened a buyer’s agency last month, although according to the office’s director, Kiril Ruvinsky, there is no conflict of interest because it focuses exclusively on buyers.
Mr Ruvinsky said the dramatic rise of the buyer’s agent industry represents an opportunity rather than a threat to real estate agents.
He said part of the reason that top sales agents do so well is because they focus on the buyer’s needs, even when it doesn’t appear to provide them with any immediate benefit.
One way to look after frustrated house hunters and earn their respect is to refer them to specialist buyer’s agencies, Mr Ruvinsky said.
Ms Parker also said sales agencies stand to benefit from the ongoing rise of the buyer’s industry.
“A good sales agent provides buyers with information they need and the more knowledge you have in any market, the better prepared you are to purchase,” she said.
“Buyer’s agents are effectively bringing committed purchasers to the purchasing process, so in one way buyer’s agents are seen as a good thing by real estate agents because they’re not dealing with time-wasters or tyre-kickers.”
Mr Pressley said buyer’s agents increase the efficiency of the real estate process, which ultimately benefits the entire industry.
However, he said that although the buying industry had significant room for growth, most consumers would probably retain their “retail therapy mentality” to buying property and prefer to go it alone.