New real estate legislation in NSW is likely to make it more difficult for property buyers to ascertain whether a “buyer’s agent” is working for the seller or the buyer.
Among a raft of proposed changes in the Property, Stock and Business Agents Amendment (Property Industry Reform) Bill 2017 is a move to do away with the individual buyer’s agent licence by including it in an integrated licence model, which is likely to make the line between buying and selling agents extremely murky.
While many of the reforms are positive – including increased Compulsory Professional Development and education requirements, which will ultimately lift the standards within real estate – this one has the potential to confuse consumers and allow agents to cross an ethical line.
A buyer’s agent should only ever work for the buyer
Under the current legislation, a buyer’s agent means just that.
We work exclusively for the buyer and have no connection to any selling agent or sales agency whatsoever.
We are paid by the buyer only and we consider all properties for sale before recommending the best one for our clients’ needs and goals.
For example, if someone wants to buy a property in Manly or Mosman, we would investigate all the properties on and off the market, regardless of the real estate agency they are listed with.
With the Sydney market cooling, even before the proposed new legislation, there have been increasing instances of selling agencies offering “buyer’s agent” or advocacy services to try and increase their service offering.
Sometimes these services are being offered as “free” as the agent is still being paid by the vendor and sometimes they are being paid by the buyer.
The issue, in my opinion, is that if a “buyer’s agent” is operating within a selling agency there is a clear conflict of interest because which properties for sale do you think they’re more likely to recommend?
The ones that the selling agency has listed on its books, of course, because the agency is still being paid by the vendor to sell that property.
As a proud member of the Real Estate Buyers Agents Association (REBAA) whose accredited members follow industry best practice, our code of conduct requires that buyer’s agents are 100 per cent exclusive to the buyer and independent of any selling agency.
That means we act solely for the buyer and we don’t take any commissions from a selling agency, builder, developer or directly from a vendor.
We remain independent by searching every property on the market as well as off-market properties from any selling agency – therefore providing the very best opportunities for our clients.
Laws exist in every State and Territory that require all agents to act in the best interest of their clients, however, how can that happen when a “buyer’s agent” or similar is only recommending properties that conveniently happen to be listed by their agency – or worse by a developer who is offering commissions?
That is one of the clear differences between an exclusive buyer’s agent and someone within a selling agency who calls themselves a “buyer’s agent”, advocate or buyer’s liaison because they’re not beholden to the same code of conduct.
A buyer’s agent has a vastly different skill-set
The clear majority of sales agents and agencies do an outstanding job for their vendors as well as providing great customer service to buyers.
It’s just unfortunate that a few are offering services that are clearly just a masquerade of what a buyer’s agent would do.
There is also a significant difference in the skill-sets of a sales agent and a buyer’s agent.
As professional buyer’s agents, we have a strict process that we follow to ensure that we are always working in the best interest of buyers, not sellers.
We always consider which property, in which location, will be the best one for them for their long-term property strategy.
A buyer’s agent should be focused on the long-term outcome of the client and not just the immediate transaction that is taking place.
Without a clear definition being made in the new legislation, there is a distinct risk of conflict occurring with agents possibly acting for both buyers and sellers.
In fact, in Australia, it is illegal to operate on both sides of a transaction where the agent takes a fee from the seller and the buyer for the same property.
REBAA, in conjunction with the Buyer’s Agency Chapter of the Real Estate Institute of New South Wales (REINSW), is currently lobbying the NSW State Government to ensure that consumers have a clear understanding of whether they are working with a professional and exclusive buyer’s agent versus an advocate or buyer’s liaison who is being paid by the vendor.
The definition of a Buyer’s Agent
In our opinion there should be a clear definition of the term “buyer’s agent” in the Act, which describes an agent who is doing the following:
- Working on behalf of the buyer only.
- Being paid solely by the buyer.
- Has a valid exclusive buyer’s agency agreement in place.
Time will tell whether we are successful in achieving these important changes – I certainly hope so – but in the meantime, it is vital that consumers are wary of any double agents out there.
A buyer should always ascertain how an agent who is offering to help them is being paid.
Many selling agents provide great customer service to purchasers and do genuinely help them through the process but remember that they are still being paid by the vendor.
If they are acting as a “buyer’s agent” but say their service is free because they’re being paid by the vendor, then you should run a mile.
Buyers should seek the services of an exclusive buyer’s agent only as well as one that is a member of REBAA to ensure that they receive a professional and independent service.
STRAND Property Group is proud to be an exclusive and independent buyers agency based in Sydney. If you are a busy professional and would like to save time, stress and money with your next property purchase, please get in contact with us below: