Is A Buyer’s Agent That Important?
Over the years, I have met up with people from all walks of life. Some will tell me that they don’t need my help in helping them find a property. They are perfectly comfortable to transact on their own. These buyers prefer to engage with the seller’s agent directly. There are a few reasons why these buyers prefer to do it this way.
- The buyer can get “direct” information readily instead of passing through another party.
- All the buyer’s agent does is to make phone calls and arrange for appointments. Not a difficult job to do.
- The buyer’s agent may have other objectives in mind and push recommendations that don’t fit your requirements. There is a perception of a conflict of interest from the buyer’s point of view. I have written about this conflict of interest in my article on “Why the real estate agent is one of the most distrusted professions in the world?”
Then, others partner with me to achieve their objectives. So, the question is this. Is a buyer’s agent necessary? Or is he/she someone who is merely a disposable personal assistant in your search for real estate? Can a buyer’s agent add any value to you?
Perceived Value of a Buyer’s Agent
I believe most people don’t attach a high value to the buyer’s agent because when you look at it from a transactional angle, they don’t seem to be doing very much. To put it into context, how do you justify the value of someone who
- Calls and arrange for viewing
- Do paperwork
The only “high value” income skill is probably the negotiating portion. But for most people who can afford a condo, they would likely have a similar or an even better skillset when it comes to negotiating(How you get a higher pay is by negotiating right?). Furthermore, for direct developer’s units, prices are set and negotiating with them is very similar to talking to a brick wall. After all, how can a developer justify profit margins to their shareholders if they cannot keep a consistent price?
Real Value of a Buyer’s Agent
While the transactional work does look insignificant, the real value of a buyer’s agent lies in their ability to achieve their client’s objectives.
For example, you are looking at a property for investment with a budget of $1mil with excellent rental yields. You decide that you don’t need a buyer’s agent and can do your calculations to find what makes a good deal. You went ahead with the purchase and realised that five years later, the property has devalued to $900k. Whatever “high” rental returns are wiped out by the interest charges, stamp duties and capital deprecation. On the other hand, if you have worked with us to purchase another condo with a lower yield, prices might be gone up instead.
Then, of course, some buyers are purchasing for their consumption. These buyers have already zoomed into a locality and know what they want. Because they are so familiar with the locale, they also know that there is an incredible supply of housing that is going to come up in the vicinity. With the thinking that oversupply will cause prices to collapse, these buyers decide to react only when the market corrects. However, a few years later, they found out that prices instead have gone up 20% and is now impossible to purchase their dream home. If you have worked with us and had the necessary knowledge and confidence to purchase that property, you could even refinance, cash-out, and use the proceeds for other purposes.
What Can a Buyer’s Agent Do to Achieve Your Objectives?
I’m sure you have read some of my other in-depth analysis where we cover a wide range of topics. These subject matters range from enbloc sales calculation, shoebox analysis, new launch versus resale, financial calculations, etc. By engaging us as a buyer’s agent, not only do you have the benefits of someone doing the transactional portion for you. You would also have access to years of accumulated knowledge you will never find on the internet. Besides, we engage the real estate market daily, and unless you are in the same trade, you can’t know as much as us.
If you want to understand what we do as a buyer’s agent for our clients, here’s a typical schedule of how we work
Session 1: Understanding Objectives And Basic Price Movement Patterns
We will meet up with you and have a discussion on your objectives and how to achieve them. During this session, we will also run through the basics of how prices patterns happen using historical examples. In addition, we will cover the mechanics of capital appreciation/depreciation referencing portions from Homer Hoyt’s property cycle. The first person who came up with the property cycle. Total time will take around 2 hours.
Session 2: Managing Risks.
In the 2nd session, we will cover a more in-depth study on any shortlisted developments. While you already have a basic understanding of capital appreciation, this session deals more on topics related to risk management. Firstly, nobody can predict the future. That’s also the reason why there isn’t a consistent analyst that is always right on the housing market. Secondly, a lot of people don’t realise that real estate is a high-risk investment. While there is a possibility that you can double your money, there is also a likelihood that you can lose your entire investment. Topics like why some undervalued properties may not be a good buy and why some new launches cannot appreciate will also be covered. Total time will be around 2 hours.
Session 3: Financial Calculations
The 3rd session is more of an optional one where we carry out financial calculations on TDSR and the total costs of owning a property. Although we are not able to loan you any funds or approve your loan but being a Singapore Accredited Mortgage Planner means that we are capable of doing a similar job as what a mortgage broker does. We would be able to advise on any tax planning if you require. Time taken would be around an hour.
Session 4: Site Visits
After shortlisting a development, further in-depth analysis on the unit facing, stack location and floor level will be analysed. Common questions include “Are high floors better?” “Should I pay more for a pool view?” or “Layout A is better than layout B?” Time taken may vary significantly notably for those purchasing for own consumption. Interesting fact: Some unit types make money while others suffer losses within the same condo development.
Do I Still Need A Buyer’s Agent?
If you are reading this article, you are probably considering the value that a buyer’s agent can bring to the table. If you feel that we can add incredible value to your real estate needs and is the perfect partner who is capable of fulfilling your objectives, fill in the contact form and we will get back to you shortly. Engaging us is not just a one-off transaction but rather a lifetime buddy for all your real estate needs.
Article contributed by Jerry Wong
Jerry Wong is a realtor with Propnex Realty. He loves coffee, cookies and condos. Most importantly, he loves connecting people to properties and gets enormous satisfaction when they acquire their dream home. Or making well-informed decisions that see their assets grow.