Commission vs Fixed Fees for Buyer's Agent Services: Which is Best?

Many buyer's agents charge fees on a commission basis.  What this means for buyers is that the more they pay for their property purchase, the higher their fee will be to their buyer's agent.

I have often wondered - as you might - whether this approach is fitting for a buyer's agent service.  You see, a buyer's agent service is very different to a traditional sales agent in many ways.

Incentives

A sales agent should be incentivised to get the HIGHEST price for their vendor, whereas the buyer's agent should be motivated to get the LOWEST price for their buyer.  A buyer's agent's fee structure ought to reflect this incentive, in the same way that a sales agent's fee structure reflects their incentive.

A sales agent provides an outcome; a buyer's agent provides a service.

To explain further, a sales agent is engaged to sell the home.  For most people, the decision to sell is final, and the only variant that may alter a vendor's final decision to sell is the sales price.  Assuming the vendor is realistic about the market and the likely sales price and that they are motivated to sell, a sale is a reasonably foreseeable outcome.  In this sense, the sales agent provides an outcome, provided the vendor is motivated to sell and has a realistic expectation of the likely sales price.

However, the same cannot be said of a buyer's agent service, which I argue is not a provision of an outcome, but rather, the provision of a service.  The service is the time and frustration that is saved, the research and advice provided, the knowledge and experience that is used, the negotiations and the legwork.  The final decision to buy is not always going to flow from the work that the buyer's agent has provided, for many reasons:

1. Many people who are moving have another alternative (renting) in the event that a suitable new home cannot be found.

2. Securing the right home for someone at the right price is not always a given, because we cannot control what other buyers may be willing to pay for the home that is of most interest to the buyer's agent's client.

3. A standard buyer's agent agreement runs for 6 months. In 6 months, life happens, and sometimes this means that people decide they will not buy. This decision may happen 5 months into the agency agreement and after considerable work has been undertaken by the agent. While an outcome (purchase) has not been achieved, the service has none-the-less been provided: time has been saved, research and advice has been provided, negotiations have been had, experience has been used, and the legwork has been provided.

Therefore, while the  buyer's agent may present many suitable homes to the buyer, the final outcome (the purchase of the home) can never be guaranteed because other buyers may always be willing to pay more (than what the buyer's agent's client wants to pay / than what the property is worth etc), and buyers may decide not to buy after all.  The buyer's agent's role is to protect the buyer from over-paying and from buying a "dud", so in the case of another buyer entering who is willing to pay more than what the property is worth, or in pointing out that the property of interest has many flaws, the buyer's agent has actually done the right thing by their client if they don't continue to recommend the property.  Now, if this means that no purchase occurs, the service has still been provided.  If a buyer's agent was only ever paid on commission for a result, you can appreciate that buyer's agents would be ensuring that all of their clients purchase (regardless of purchase price or the health of the property) - just to ensure that the buyer's agent is rewarded for their efforts.

Fixed fees for Buyer's Agents

Fixed fees work better for both the buyer and their agent.  The buyer can be reassured that the agent is not incentivised to have their client  pay more than necessary for their property.  The buyer knows up-front what the fee will be and when it is due.  The buyer's agent can potentially offer lower fees as the fee is based on the number of hours estimated to complete the service, and all service hours are paid.  Most of all, the buyer knows that their agent has absolutely no incentive to recommend a dud or an inflated home, in order to be rewarded for their efforts.

Melissa Maimann is a licenced Buyer's Agent in Sydney. She assists home owners and investors alike with an affordable service that empowers you to make smart purchase decisions. Melissa's service is fast, efficient and accurate. If you need a hand with your next purchase, don't hesitate to make contact.

Is Your Buyer's Agent Independent? Why Does it Matter?

Buyer's agents are licensed real estate agents.  Some buyer's agents are restricted to working as a buyer's agent, while other buyer's agents can work in property sales and property management as well.  Either way, the person who is acting as your buyer's agent ought to be independent.  But what does this mean?

Essentially, it means that the agent should only ever receive fees from one party: either the vendor, or the buyer.  The waters become very muddy when an agent receives fees from both the buyer and the seller.  This occurs in several settings:

1. The buyer's agent assists with the sale/purchase of new developments / off-the-plan developments by introducing the buyer to the developer - and then receives a fee from the buyer who has retained the buyer's agent to act in their interests; and also a fee from the developer, for making the introduction of a buyer for the new development.

2. The buyer's agent who works with a selling agent and receives a portion of the sales commission as a fee for introducing the buyer to the property / vendor

3. Buyer's agents who recommend properties or developments in which they have an interest. Something similar occurred in this case here.

It's imperative that people who use buyer's agent services ensure that their buyer's agent is impartial and independent.  In short, the best way to know if your buyer's agent is independent is to know that the buyer's agent is paid by one only one person: the buyer.  If the agent is receiving income from other sources, be they developers or selling agents or any other source, the agent may have a conflict of interest and may not be acting in the buyer's best interests. 

Melissa Maimann is a licensed Buyer's Agent in Sydney. She assists home owners and investors alike with an affordable service that empowers you to make smart purchase decisions. Melissa's service is fast, efficient and accurate. If you need a hand with your next purchase, don't hesitate to make contact.

Purchasing a Property? Consider the Big Picture.

Many people base property purchase decisions on numbers, data, facts and so forth.  And with good reason, too!  You'll need to know such things as vacancy rates, median prices, suburb features, population drivers, rental yield, capital growth and so much more.

However, you can’t go into your next purchase based on data alone.

The problem with data is that it has passed.  No-one can predict the future.  Even the "current" data is not current because it becomes "past data" as soon as it is published.  For example, sales prices might not become available for some 6 or even 12 weeks following a sale.  And if you've ever looked at several data sources to follow movements in median prices, you will have noticed that they all display different median prices and different movements in the median prices.  This is because property data portals collect information in different ways, resulting in variations to the data.

Nothing replaces "feet on the ground" and actually physically viewing the property, the street, the surrounding area and so forth.  Know the important property fundamentals and apply them, but always remember that people live in homes; data doesn't.  Consider the data, but always remember it is not 100% accurate, it does not predict the future, and a real live person will live in the home.  Explore the home, the street and the area with feet on the ground - or better still, engage a buyer's agent to do so on your behalf.  You'd be surprised the number of homes that look perfect on paper and the numbers stack up, but when you go to view it and the street and the neighbourhood, you quickly realise it is a not investment-grade.

Melissa Maimann is a licensed Buyer's Agent in Sydney. She assists home owners and investors alike with an affordable service that empowers you to make smart purchase decisions. Melissa's service is fast, efficient and accurate. If you need a hand with your next purchase, don't hesitate to make contact.

Buyers agents and selling agents working together?

Buyers agents and selling agents working together?

Before clients engage my services, they often ask me how buyers agents get along with selling agents, or more specifically, how a buyer's agent is perceived by the selling agent and whether the buyers' agent's presence is viewed as a help or a hindrance.

In my experience, selling agents have been more than happy to deal with buyer's agents.  While naturally one agents works for the buyer and the other agent works for the vendor, both agents bring positivity to the transaction.

A selling agent knows their vendor well.  They know their vendor's price expectations and what is important to them around the sale of their property.  They of course know the property very well, not to mention the real estate market in that given area.

My experience has been that selling agents love it when a potential buyer is represented by a buyer's agent for the following reasons:

1. Not all buyers that the selling agent comes across are ready to purchase now. Some have not arranged their finance, some are intending to buy, but not for 6 months or so, some are just out and about and thought they'd pop into this lovely home that's open for inspection and so on. However, when a client has engaged a buyer's agent, they're serious and committed to purchasing the right property now and a buyer's agent is very skilled in determining that the property they are inspecting is the right home for their client. In other words, when a selling agent has a buyer's agent coming through an open home, they can be fairly sure that a sale is likely to happen.

2. Buyers agents know the market well and have prepare their clients for the reality of the market by ensuring that the client has a realistic and achievable brief before agreeing to work with the client. The selling agent is not needing to educate the buyer, motivate the buyer and respond to exclamations about the property being far too expensive. When a client is represented by a buyer's agent, the buyer's agent has already ensured that the client's expectations are realistic in the market that they're considering, and the selling agent knows that the buyer's agent's client is highly likely to purchase, provided that this is the right home.

3. The collaboration between buyers' agents and selling agents means that off-market property transaction can occue seamlessly, and this saves time and money for vendors. A vendor who is happy with their agent is good news got the selling agent! But off-market sales depend on clients being represented by buyer's agents.

4. Buyer's agent knows the regulations around property purchase and can guide and support their client through this process. The buyer's agent can arrange building and pest / strata reports, contract reviews, due diligence on the property, property inspections etc - relieving the selling agent of this work. The buyer's agent can debrief their client about the outcome of all of these reports and inspections and help them to make sense of this new information. This relieves the selling agent of this process and allows the to focus ore fully on their vendor.

Melissa Maimann is a licenced Buyer's Agent in Sydney.  She assists home owners and investors alike with an affordable service that empowers you to make smart purchase decisions.  Melissa's service is fast, efficient and accurate.  If you need a hand with your next purchase, don't hesitate to make contact.

Why Savvy Buyers Have Their Own Agent

Why Savvy Buyers Have Their Own Agent

A recent report has shown that as many as 27% Sydney property buyers spend more than they had planned to spend when they buy a property.  Frighteningly, 10% exceed their budget by over $150,000!

The reasons cited include:

• Falling in love with the property: most people are prepared to pay more for a home they love

• Underestimating the budget needed to purchase the home

• Being impatient or frustrated with the property search to date

• Falling victim to under-quoting (it still happens despite the laws around this area, because under-quoting can be hard to prove)

• Falling prey to bidding wars in an auction

Of those who went over their budget, 64% were impacted negatively, 28% saw an effect on other financial goals, 27% had to change the way they spent money and 24% suffered emotional stress.  There is clearly an important impact in people's lives when they spend more than they had budgeted for.

Purchasing a property is undoubtedly one of the biggest and most emotional purchases people ever make - and they purchase very infrequently.

The most common issue I find when I speak with prospective clients is that they have unrealistic expectations of what they will be able to purchase with their budget.  With this in mind, it's no wonder that so many Sydney-siders end up spending so much more than they had anticipated.

My service helps these people in several important ways:

1. I ensure that all finance is ready before we start the search process

2. I ensure that only those properties that will sell within my clients' budget are i the mix. This protects my clients from falling in love with the home that is going to sell for more than their means.

3. I ensure that my clients' budgets are adhered to and I keep my clients accountable.

4. I am here to help my clients through the emotional turbulence of a property purchase: I keep clients calm when they are despairing, I use logic and wisdom to reassure, I am sounding board and I help my clients make savvy purchase decisions.

Melissa Maimann is a licensed Buyer's Agent in Sydney. She assists home owners and investors alike with an affordable service that empowers you to make smart purchase decisions. Melissa's service is fast, efficient and accurate. If you need a hand with your next purchase, don't hesitate to make contact.

Property Secrets Your Buyer's Agent Can Tell You

Property Secrets Your Buyer's Agent Can Tell You

Many savvy buyers wonder why - with all of the information they can access online - they would benefit from engaging a buyer's agent.

There are generally two types of information available: information that is available free of charge (which is often limited and incomplete) and information that is available on paid subscription (this information is used by banks and the Government to set policies, monitor the market and so forth).  This is the information that a professional Buyer's Agent will have access to.  Even then, there are two main professional data portals: APM PriceFinder and CoreLogic RP Data.  Each portal obtains information at different times, from dufferent sources, and uses different algorithms to determine median prices, price movements, suburb demographics and so on.  So it is useful to actually use both data portals, which is what I do at Melissa Maimann Buyer's Agent.

What information can I find for a client?

In the course of attending property research and due diligence, I review all of the following:

1. Listings that have been withdrawn from the market and properties that have even on the market for a while: these are properties that my clients may be able to secure under market value.

2. Rental history: this is not revealed in strata reports and is essential for investors to know. It means something when tenants never stay longer than a few months!

3. Sales history: how often has the property turned over? High turnover hints that something may not be right about the home; how long has it taken to sell in the past in comparison to the average for the market?

4. Sales and rental history of the other units / apartments in the block: this hints of issues within the building, disharmony between occupants, or signals a brilliant block that people are happy to live in.

5. Previous photos of the property: guides us as to renovations, both cosmetic and structural, to aid in our knowledge of the property and potential issues that may result, eg has a mould problem been concealed? Is there something that indicates there may be a structural issue?

6. Floor plans

7. Suburb demographics and median prices ... where does this home sit in comparison to the median and recent sales?

8. How this property has performed against the suburb's market average?

9. And so much more!

The value of this information is priceless.  It saves people from buying the wrong home and potentially losing thousands or hundreds of thousands of dollars.

It saves people from buying the wrong home and needing to sell it again soon, for a loss.

It saves people time and money on unnecessary building and pest reports / strata reports because my research clearly identifies which homes ought to proceed to the stage of ordering reports, and which homes ought to be removed from our search.

Melissa Maimann is a licenced Buyer's Agent in Sydney. She assists home owners and investors alike with an affordable service that empowers you to make smart purchase decisions. Melissa's service is fast, efficient and accurate. If you need a hand with your next purchase, don't hesitate to make contact.

The 6 Things you Need to Know Before you Buy a Property

Don’t buy the first property you fall in love with

Especially if you are new to your property search.  Take some time to find out what is on the market, get a sense of prices and then start to make some harder decisions.

Keep your emotions in check and look beyond the beautiful home styling and presentation.  Ensure a comprehensive and thorough inspection - you can engage a buyer's agent to come with you if you like, for an objective view.

Can't see the forest for the trees?

Sometimes people have a hard time looking beyond the colour of the paint or carpet, or perhaps the layout of the home, or even the odour of the property.  These are all things that can be changed.

Sell before you buy

Avoid the headache and bridging loan!  You will never know what you can get for your current home, until you sell it.  Agents may give inflated appraisals simply to get the listing, and you may be worse for wear if you do not achieve the price you need to achieve for the sale of your property when you have already purchased a new home.  Where ever possible, sell your home first and then buy.  Consider Find My Rental Property to assist in finding yoy a rental property in between selling and buying: it takes the stress out of finding a rental home and ensures you won't rent a property you come to regret.

Deposits

If you borrow more than 80% of the property’s value, you may need to take out lenders’ mortgage insurance, however you can absolutely get a loan with less than a 20% deposit.  Speak with your mortgage broker.  It may be possible to get a loan with only a 5% or 10% deposit.

Buyer beware

Buyers need to do their due diligence - and do it well!  But let's face it: how often does the average person buy a property?  A better option might be to engage a buyer's agent to conduct due diligence on the property you are seriously considering buying.  I say "buyer beware" because you buy a property in the condition in which it is sold.  If you find faults at a later date, that were there at the time that contracts were exchanged, you can’t get a refund or compensation or back-out of the contract.

Other fees?

Don't forget the other costs associated with purchasing: stamp duty, solicitor / conveyancer, insurances and removalists.  Then, once you've purchased, expect to pay for water, strata (if it's a strata unit), council and possibly land tax.

Melissa Maimann is a licensed Buyer's Agent in Sydney. She assists home owners and investors alike with an affordable service that empowers you to make smart purchase decisions. Melissa's service is fast, efficient and accurate. If you need a hand with your next purchase, don't hesitate to make contact.

What Costs are Associated with Buying a Property?

Buying a property can be a costly exercise!  Did you know that as well as the purchase price of the property, there are some other costs to be considered?  Read on to find out more.

Stamp Duty

Stamp Duty is a State Government tax based on the purchase price of the property.  It is usually around 4% of the purchase price of the property, and is paid just before settlement.  Some mortgage brokers are able to increase your home loan to accommodate this amount. First home buyers may be exempt from Stamp Duty or may be entitled to a rebate or concession. 

Strata searches / building and pest reports

These can be arranged through your Buyer's Agent; they record the condition of the property and alert you to any issues you should know about before to purchase the property, for example the structural integrity of the property, disharmony in the Strata Committee and so on. 

Lenders Mortgage Insurance

This is a charge that is applied to your loan if you are borrowing more than 80% of the value of the property.  It is rolled into your home loan and is not generally a direct cost to you at the time of taking out your home loan.

Buyer's Agent Fees

A buyer's agent saves you time and money across the duration of your property purchase.  A skilled buyer's agent advises on the best properties to purchase based on your needs and goals, and helps you to avoid making poor choices for your purchase. A buyer's agent provides accurate appraisals of properties, preventing you from paying too much for your property, and saves you money on unnecessary building and pest / strata reports.  A buyer's agent prevents you from over-bidding at auction and does all the leg work for you in searches and inspections.

Legal fees

Legal fees are incurred for transfer of title, property and title searches and contract reviews.  Many conveyancers structure their fees as a flat fee for the purchase (including one contract review), and additional fees for additional contract reviews.

Need a hand?

At Melissa Maiman Buyer's Agent, we are used to stepping our clients through the maze that is buying a property.  Click here to enquire about our service.

Tips to Make a Small Home Feel Larger

tips to make a small home feel larger

As property prices increase, many people are wondering how they can do more with less.  In my every-day conversations with clients, room size comes up a lot and I often find myself sharing tips with my clients for ways that they can make a smaller space feel larger, or make a smaller space more functional.

Here are a few tips I'd like to share.

White paint

Painting walls white gives an impression of greater space, while darker colours can make a room seem more closed-in.  White paint also reflects all of the sun's light, whereas darker colours will absorb the light.  A brighter room feels more spacious. 

Storage options

Storage that is not built-in is a great option as it tends to be cheap to purchase and install and you can move it around where you need it to be, for example something that is on wheels can easily be moved between the dining room and kitchen if both the kitchen and dining room are small.

Consider using wall space as storage space by installing built-in draws, cupboards and shelves.  Consider fold-down wall beds in rooms that can also be used as a study.

De-clutter

A regular sort-out every 12 months or so will ensure that you live with the essentials that you need.  You might like to consider storage options for the items that you want to keep, but no longer have space for in your home.

Melissa Maimann is a licenced Buyer's Agent in Sydney. She assists home owners and investors alike with an affordable service that empowers you to make smart purchase decisions. Melissa's service is fast, efficient and accurate. If you need a hand with your next purchase, don't hesitate to make contact.

Landlord's Insurance

landlord's insurance

Property represents an excellent investment option for most people.  Its value lies in two parts:

1. Rental return

2. Capital growth

In order to generate a rental return, a landlord must take some risk.  The risk that you will be without rent, or the risk that your investment will be damaged. 

Tenants are people, and life happens to all of us.  The excellent tenant who has always looked after the home and paid their rent can come into some bad times in their life and suddenly lose their job, have their marriage break up, fall into depression and so on.  Sometimes the person who was thought to be an excellent tenant is not so excellent, and attempts to terminate their lease are met with retaliatory behaviour.  Almost every landlord will have a story to tell.  And so landlord's insurance exists.  But it's important to ensure that you have the right policy in place because not all policies are created equally.

Here are some aspects of landlord insurance to consider

1. Understand what the policy covers and what it doesn't cover. I suggest selecting a few policies and comparing them all: what do they cover and how much will they pay out against each risk? Some policies will pay out as little as 6 weeks' rent while others will pay out 52 weeks of rent. There's a big difference.

2. Consider a policy that does cover damage by pets. There is ever-increasing demand from tenants for pet-friendly homes, so allowing your tenants to have their pets will increase your pool of tenants. However, you should also confirm that your policy will cover damage from pets.

3. Cyclones and floods: if you are in an area that is prone to this, ensure that you are covered.

Melissa Maimann is a licensed Buyer's Agent in Sydney.  She assists home owners and investors alike with an affordable service that empowers you to make smart purchase decisions.  Melissa's service is fast, efficient and accurate.  If you need a hand with your next purchase, don't hesitate to make contact.

Real Estate and Property Reforms

The Property, Stock and Business Agents Amendment (Property Industry Reform) Bill 2017 was passed by the Legislative Council on Wednesday 7 March 2018.  It represents one of the most significant changes in the real estate profession in a long time!

The aim is to improve licensing and qualifications of agents and provide definition around the roles that can be undertaken at different levels of qualification / experience. 

The changes impact initial qualifications and entry to the profession, progression through the profession and continuing professional development (CPD) requirements.

It is anticipated the qualification, licensing and CPD changes will commence late in 2018.

Some of the changes that we may see are:

1. An increase in the number of subjects that a person will need to undertake to enter the profession

2. Stream-lining of progression through the workforce: the entry level will be a Certificate of Registration which a person must hold for a minimum of one year, and a maximum of three years; a License will require the person to hold a Certificate IV and a License-holder must have industry experience before they can obtain a License; finally, a new category (Licensee-in-Charge) will be created with additional qualification and experience requirements.

3. Continuing Professional Development requirements will be increased and will stipulate a certain number of hours needing to be devoted to regulatory versus elective units.

This is all in the interests of professionalising the industry, increasing consumer confidence in agents and reducing the number of complaints.  It is a very positive move!

Is Property Really All That Expensive? Then and Now.

A recent article has highlighted that, in reality, property is more affordable now than that it was thirty years ago.

Housing affordability depends so much more on purchase price.  Interest rates are an incredibly important factor, as if rental yield, rental vacancy rates, income and lending policies.

As can be seen from the above table, the percentage of an average person’s income needed to meet the mortgage repayments has actually come down over time.  Of course, the sweet spot was around 1995-2000; alas, we often only know the sweet spots in retrospect.  It's certainly more affordable to buy now compared with 1990.

Melissa Maimann is a licensed Buyer's Agent in Sydney. She assists home owners and investors alike with an affordable service that empowers you to make smart purchase decisions. Melissa's service is fast, efficient and accurate. If you need a hand with your next purchase, don't hesitate to make contact.

Ever Considered Rentvesting?

Rentvesting.  It's a new trend in property investment / lifestyle. 

Rentvesting is where a person buys an investment property in an area that they can afford and where the fundamentals are ripe for the home's investment potential, while the person rents somewhere they love, in a home they can afford.  A typical scenario might be someone who wants to live in a 3 bedroom house, but they cannot afford to buy a 3 bedroom house, so instead they buy a 2 bedroom unit in a great area and rent it out, while they rent a 3 bedroom house where they want to live.

Other reasons to rentvest?

Rentvesting can allow people to make savvy investment decisions.  Rather than purchasing the home you want - which may not have good property investment fundamentals - you can purchase a home that represents an excellent investment while you live where you want.

Some people rentvest for tax purposes as it allows you to purchase a home and tax deduct the mortgage interest, cost of repairs and maintenance, levies, council and water rates.  Please seek advice from your accountant as to whether this makes good financial sense for you in your situation.

Purchase sooner.  It generally takes less time (particularly if you work with a Buyer's Agent) to buy an investment property than the time it takes to buy a home to live in.  This means that while striving to buy a home to live in, you lose the benefit of capital growth in a rising market.

Downsides to rentvesting

The main downsides to rentvesting are the downsides of being a tenant:

• Property inspections

• Lack of long-term security: your landlord may later decide to sell, move in or renovate and decline to renew your lease

Melissa Maimann is a licensed Buyer's Agent in Sydney. She assists home owners and investors alike. If you would like a confidential discussion about purchasing your next home or investment, don't hesitate to make contact.

How to Buy Affordably in Sydney

Many people believe that Sydney is not an affordable city in which to buy a home, but did you know that there are several options to consider that can make buying in Sydney affordable for you?

Consider buying established properties

New homes sell for a premium, whereas an established home can usually be purchased for less.

Consider homes where you can add value

Your new home might need painting, new carpet, floor boards to be polished, new door handles, or perhaps even a new kitchen or bathroom.  While this may seem daunting, you can often purchase homes that need renovating for less money than what it costs to purchase a home that has been recently renovated.  The other plus of renovating the home yourself is that you can control the quality of the work.

Homes on main roads are more affordable

Some main roads are not too busy, and it me be possible to install double glazing to cut out most of the noise.

Can you go without parking?

Parking does add to the purchase price of the home.  If there is reasonable parking on the street, can you go without dedicated parking?

Use a Buyer's Agent

Melissa Maimann Buyer's Agent is an affordable buyer's agent solution to help you find your next home.  Different packages ensure that help is available whatever your budget or service needs.

What Exactly Does a Buyer's Agent do?

What Exactly Does a Buyer's Agent do?

In many circles, people seem unsure what a buyer's agent actually does.  If we don't sell property, what do we actually do?

There are two parties to a property sale/purchase:

1. The vendor (owner of the property that is being sold) - who is usually represented by a selling agent AND

2. The purchaser - who is often unrepresented by an agent

Most people don't consider SELLING their home without an agent to represent them.  The agent prepares the marketing campaign, confirms instructions from their vendor (client), attracts potential buyers, arranges and conducts open home inspections and private viewings, negotiates the sale price to ensure the highest possible sale price and the best possible terms for their vendor (their client), emphasises the positive attributes of the property they're selling (and perhaps downplays the negatives) and generally acts to ensure the highest possible sale price in the shortest period of time, always acting in the best interests of their vendor, who is their client.

Traditionally, buyers rely on the information that is given to them from the vendor's agent.  Does this seem absurd to anyone??

In any other situation where we have an advocate acting for us - the most obvious one coming to mind is legal representation - do we EVER use the advocate for the other party?  No!  We don't.  Why do we do this in real estate? 

The argument for using an agent to SELL your home is to maximise the sale price, get the best deal etc .... it's a huge amount of money after all.  Likewise, it's a huge amount of money for the purchaser too ... and they DESERVE and need their own advocate, who is on their team, helping them get the best home for the best price and with the best terms and conditions.

Buyer’s Agents are licensed real estate agents and property professionals who act solely for purchasers of property.  A buyer's agent does not sell property or represent sellers in any way.  A buyer's agent prepares a detailed property brief in conjunction with their client, and searches, researches, inspects, evaluates and negotiates the purchase of a property on behalf of the buyer (their client).

In a world where everything is geared towards helping the vendor achieve the best possible price and terms, many buyers are left wondering who is actually looking out for their needs.  This is where a buyer's agent comes in.

At Melissa Maimann Buyer's Agent, I offer three different services:

1. Full Service – This is great for people who are purchasing a home or an investment property.  The service includes taking a detailed property brief, conducting searches: online, off-market and pre-market, inspections, background research, due diligence, negotiation of the purchase, settlement, recommendations for property managers and rent appraisal (investment properties).

2. Property Coach – this service is an affordable buyer's agent service that let's you lead the way, but with full access to all the advice and information you need to make an empowered property purchase decision.  Suitable for home owners and investors alike. More information here.

3.  Evaluate and Negotiate Service - this service is only available to home purchasers.  If you’d like to source and inspect your own homes, you can identify up to six key properties and I'll inspect them, conduct background research and due diligence and negotiate the purchase for you.

Smarter Property Investing

Property investing is on the minds and in the conversations of many Australians.  Property is one of the best options for investment, but it also carries some risks.  

Whether you’re investing for the 1st or 10th time, it’s important to invest wisely as investment mistakes are costly in property.  In fact, almost everyone knows of someone who has been significantly worse off for investing in property.  When I hear their stories, I can appreciate what it was in their strategy that appealed to them (usually a form of get-rich-quick scheme) and where perhaps the same $ investment might have seen drastically different results for those people.

At Melissa Maimann Buyer's Agent, I'm all about helping people be smarter property investors and home owners.

Understand that Property is a Long-Term Strategy ... and it's boring!

Yes!  You read that right.  The best investment involves exceptional due diligence on the property you wish to purchase (ie, use a buyer's agent to do due diligence on the property you're purchasing, if nothing else), effective property management so that the right tenant is selected to rent your home, and then .... nothing!  That's right, if you've ought the right home and have the best tenant in it, you'll have steady rent, no expenses other than the usual repairs and maintenance, your mortgage and rates etc, and that's it - for years.  It's a set-and-forget approach, and it's boring.  This is the best investment.  If followed correctly, in 10 year's time, you ought to have doubled your investment and this is where the fun begins as you'll now have a good amount of equity, no matter what type of loan you had or which lender you choose. 

The truth is that most newbie investors think that investing in property should be more work, more exciting, and come with more action.  The reality is that short-term gains in real estate are speculative and risky.  These are not the choices that a strategic investor will make.  Buy-and-flip, subdivision etc - these are all risky options.  Yes, they can work and make you a lot of money: they can also fail miserably.  The primary reason that real estate is a long-term investment option is that it lacks liquidity.  Asset classes that are less liquid are best suited to a long-term approach because they cannot easily be converted to cash.  Hence, the short-term investment approaches are actually at odds with the asset class of property.

Consult Professionals

The vast majority of people consult a professional when they are making big decisions.  We readily, easily and without thought consult accountants, lawyers, doctors, stock brokers, plumbers, builders, conveyancers, mortgage brokers etc.  Buyer's agents are not new in Australia, but awareness of buyer's agents is still growing.  If you’re buying a property - whether to live in or to invest in - at the very least, a due diligence report from a buyer's agent is a very small sum to pay to be sure you're on the right path. 

Understanding property markets takes time.  Sydney is not one market.  Sydney has many markets within markets.  Many people have some knowledge of property and property markets, but this knowledge must be combined with the intimate knowledge of the property of interest.  The market might be brilliant, but the property not so.  Or vice versa.  You'll have a conveyancer look over your contract for sale/purchase ... will you also have a buyer's agent do the due diligence so that you can move forward with confidence?

If you'd like more information on our unique and AFFORDABLE buyer's agent service that lets you lead the way with full access to all the advice and information you need to make an empowered property purchase decision, contact me today by scrolling to the bottom of this page

Housing reforms to help you enter the Sydney market

The State government has announced several measures to improve housing affordability, assisting first home owners to enter the market.  Measures include scrapping stamp duty for certain properties purchased by first home buyers, and increasing the taxes foreign investors in order to reduce competition (and thence prices).

A comprehensive package for first home buyers will abolish stamp duty on new and existing homes valued up to $650,000, and provide stamp duty relief for homes up to $800,000.  In the Sydney market, this is of limited help for purchases in the Eastern Suburbs, but is helpful for certain property purchases in the Inner West, North Shore, and of course for properties further out such as West, North-West and South-West.  It seems that this is the strategy: to encourage housing in the outer-Sydney areas and reduce demand on the Inner-City areas that have no more land available.

Stamp duty on lenders' mortgage insurance will also be abolished.

The surcharge on stamp duty for foreign buyers will double to 8%, and the surcharge on land tax will increase from 0.75% to 2%, making Australia a less attractive place for foreign purchasers to purchase in, reducing competition and potentially lowering prices for local purchasers.

The Government has also changed the foreign resident capital gains withholding (FRCGW) rate and threshold.  Formerly applicable as a 10% tax on properties selling for greater than $2M, now when the

contract price is $750,000 and above, the FRCGW withholding tax rate will be 12.5%.

The government also announced measures to help first home buyers gain an advantage over investors, who the Govt (perhaps erroneously) perceives to be a source of strong competition for home owners.  I do not share this view, because home owners are typically emotional buyers who are willing to pay more for the property they love, whereas investors are rational buyers who place a ceiling on the purchase price, ensuring that the property meets its purpose of providing a certain calculated return.  

The Government has also outlined plans to boost housing supply and infrastructure across the greater Sydney area.  Unfortunately for the people who will live thee, this also means fewer trees which provide natural beauty to the environment in which we live, as as supporting our wildlife and ecology.

Purchasing this side of the budget?

For many people, purchase decisions prior to the budget are fraught with uncertainty.  Yes, there might be changes coming with the budget, however those changes would only impact purchases that occur after the budget comes out.  Most certainly, there are also changes to lending, and in terms of lending, people are much better purchasing now than down the track when those changes come into effect: http://www.reinsw.com.au/Web/Posts/Latest_News/201704/APRA_tightens_lending_rules.aspx.  The push is for a 20% deposit for investors, and for the loans to be principal and interest, rather than interest only.  This will certainly impact the investor market, however the investor market does not drive property prices: it is home owners that drive the prices because they are more emotional buyers who are willing to pay more for the property they love, whereas an investor puts a rational $ cap on the purchase price and walks away after that point.

With the budgetary changes, they will apply all over Australia, not just Sydney.  If the market takes a hit, Sydney is better protected than any other City, and has always re-bounded and risen within a full property cycle (7-10 years).  In the current market, an Eastern Suburbs purchase is recommended as there is always strong demand for rental properties in the east, regardless of what the market conditions are like for buyers; in fact, the harder it is to purchase, the stronger the demand for rental properties, and if interest rates increase gradually, so too will the rents.  In terms of the purchase price, where people are concerned about potentially over-paying today as compared with after the budget comes out – these sorts of fluctuations do even out over the longer-term (7-10 years). 

In summary, on the one hand, yes the budget will likely bring changes, however the lending policies concern me more as it’s harder for people to get a 20% deposit, whereas they’d more easily forego say negative gearing in a rising market (I don’t believe prices will fall).  The option that some consider is investing in shares which are more liquid than property, but over-all, property out-performs shares in the long-run.

Melissa Maimann is a licensed Buyer's Agent in Sydney. She assists home owners and investors alike. If you would like a confidential discussion about purchasing your next home or investment, don't hesitate to make contact.

Are Buyers' Agents Driving Prices Up?

A recent news article suggests that it is actually buyers' agents who are responsible for pushing up our housing prices!

A buyer's agent is a licenced real estate agent who works for the buyer, rather than representing the seller.  A buyer's agent gives advice on properties and property types, helps you work out a budget, searches for suitable properties that meet your brief, inspects those properties for you to save you time, helps to evaluate the property - including suggesting a fair price for it - and negotiates the purchase so that the buyer doesn't have to.  The buyer can be as involved as they would like to be - inspecting as many properties as they like - or they can just inspect and consider the handful of properties that the buyer's agent has identified as being totally suitable.

Buyer's agents are becoming increasingly popular, and this is related to our busy lifestyles, the time and cost required to fully investigate and consider properties of interest, perhaps a lack of market knowledge and the demands of work / family. 

Not to mention, the average person takes at least 12 months to find a property, whereas a buyer's agent generally reduces the search time to only 2 months.  Ie, with a buyer's agent, a buyer can buy 10 months sooner, on average.  Considering the way prices move in the Sydney property market, a property will go up far more in 10 months than what it will cost to engage a buyer's agent, making a buyer's agent a very cost-effective option for savvy buyers.

However, in recent times, there has been much discussion about the manner in which buyers' agents structure their fees, and in particular, question over whether the fee structure actually plays a role in pushing prices up.  This is of course a major concern, because first and foremost, a buyer's agent has a fiduciary duty to the buyer to do the very best by the buyer.

Generally speaking, buyer's agents charge a % commission of the purchase price.  This commission is usually 2%, but for lower priced properties, this commission can be as high as 3%.

This means that as a buyer's agent, I get paid more as the purchase price increases.  Ie, I am best served by having you - the buyer - pay more. 

But wait - that's not why you would engage my service!  You would engage my service because you want to buy a property at the best price, not the highest price.

In my business, I have only ever charged a set fee for services.  This fee is generally in line with 1% - 2% commission equivalent, except that it is not a commission-based fee: rather, it is a fee that is established up-front and a fee that does not change with the purchase price.

The other challenge with a commission-based fee structure is that the buyer's agent is only paid if and when a property is purchased.  Herein lies the second issue: if I can get a buyer to buy quickly, I am paid sooner.  This is also not consistent with a buyer's agent's fiduciary duty to the buyer.  The buyer's agent is meant to be advising on the best property for the client's needs and ensuring that the property is a good purchase - and purchased at the right price.

A commission-based structure - where the buyer's agent is not paid unless there is a purchase - and where the higher the purchase price, the more they are paid - does not reflect the duty owed to a buyer by their representative.

The only fair and honest solution is a fixed fee that is paid regardless of the outcome.  Ie, a fee for service.  We pay a fee for service for all other service businesses: we do not pay our solicitor only if we win our case; we do not pay the accountant only if we get a tax return of $x amount; and we do not pay the vet only if our pet is cured.  We pay a fee for a service provided, we do not pay for a result.  Similarly, a buyer's agent service can be viewed as a fee for a service, where the result or outcome is a by product of the service.

A fee-for-service buyer's agent model ensures that meeting the buyer's needs is in line with the buyer's agent's remuneration.  This is the fee model I use here at Melissa Maimann Buyer's Agent.  The fee may be scaled according to the property type, the ease or difficulty of the search, or any other parameters.  This fee is established and known ahead of time, and the retainer ensures that the agent is remunerated even if the buyer chooses not to proceed with a purchase.

Buying Off the Plan?

As a buyers agent, people often ask me if I recommend new / off the plan, or established properties.  I will generally recommend established properties most of the time.

Although off-the-plan purchases can offer some significant cost savings and inducements, often times, this approach does not pay off in the long-term.

First and foremost, you should ask yourself why the developer needs to make such cost savings and offer such inducements if the property is so good.  Next, you need to ask yourself: if these cost savings and inducements are necessary for you to purchase the home, what will you need to discount to a future buyer, in order to sell the home?

Contrast this with an established property - and you rarely find the vendor offering cost savings and inducements to the buyer.

The best property to buy is the one that is hotly contested.  The one where you can hardly squeeze in the front door of the open home, because there are so many people in there.  The one that sells prior to auction for a great price: that is the sort of property that will appreciate well, and the one that you will eventually be able to sell - for an excellent price.

Many investors and home buyers make costly and regrettable mistakes when they buy a property off the plan, particularly when their decision making process was influenced by inducements and cost savings.

The best option, in my professional opinion, is to buy a home that you can see, feel and learn about: a property that has a history.  With an off-the-plan property, you never really know what it will end up like.  Will there be building defects?  How significant will they be?  Will the fittings and fixtures be in accordance with what was agreed? In one case, the property ended up being short of a bedroom, and there was nothing the purchaser could do about it!  The developer had the right to modify the plan, and they exercised that right.  In many other cases, significant and costly building defects negate any cost savings and inducements offered.

The best advice I can give any property buyer is to source independent and objective advice from a licensed, independent buyer's agent.  NB: there is a difference between a buyer's agent, and in independent buyer's agent.  An independent buyer's agent works solely for you, the client.  They are not employed or engaged by a developer to "sell" their stock, and they do not work with a selling agent.  They are paid directly and solely by the client - to maintain their Independence and impartiality in the property purchasing process.