If Sellers Have Agents, Why Can’t Buyers?

More and more people are looking at the property market and asking themselves whether it’s all that fair. Practically every seller has an agent who works on their behalf to get them the highest price possible for their home, but the same is not true of buyers.

When you think about it, though, there’s a fundamental asymmetry here. The seller has a seasoned professional on their side using all of the tricks of the trade to inflate the value of their property while the buyer has nothing more than their own guile. Nobody represents them in the transactions or tries to get them the best deal. What’s more, estate agents get a commission based on the total sale price of the property, adding even greater incentive to inflate prices.

None of this means that buyers can’t necessarily have people on their side. Wealthy people have used so-called property search consultants to fight their corner for a long time. It’s just that most buyers see these services as being the preserve of the rich and not something that they could have themselves.

Is it still true?

With changes in fee structures and commissions, the answer is certainly not. The purpose of property search agents is to create value for their clients. They know all too well that buyers could easily go out into the market and find properties for themselves. Thus, there’s a pressing need for them to make their clients money.

Price Negotiations

The great thing about the modern property consultant market is how the fee structures work. Many only charge fees based on the amount of money that they’re able to save for their client. For buyers, it means that they can reduce the risks while at the same time, potentially saving money overall. Sometimes the savings can run into tens of thousands of pounds.

The reason that this happens is that property buying consultants address the fundamental information asymmetry in the property market. Expert property consultants have the knowledge they need to ensure that the price of a property reflects its fair value. Estate agents and sellers will always try to pump up the price of a home over and above what it’s really worth. Property agents acting on behalf of the buyer bring sellers and their agents back down to Earth by pointing out issues with properties, showing them why they’re not worth as much as they think.

Many buyers go into price negotiations with estate agents blind. Unless they happen to have a vast knowledge of the local property market, they often don’t have a foundation on which to base their arguments. Here again, property consultants can help. Many have years of experience negotiating with sellers and often have a sixth sense of when they might accept a lower price. For many first-time buyers, it’s not always clear.

Reducing Search Costs

Property search consultants also add value to buyers in another way. It turns out that most buyers don’t have access to the entire property market. A lot of sellers today choose not to use estate agents and prefer to sell privately to avoid commissions. Finding these properties, however, is a challenge. There are high search costs involved.

Property consultants, however, often have an extensive network that enables them to seek out properties for sale that the average Joe would never find on their own. Consultants, therefore, are in a position to help sellers widen the net, enabling them to find more properties that meet their brief.

Access to the private market brings financial benefits too. Sellers know that they won’t have to pay an agent’s commission on a sale, so they’re often willing to lower prices versus comparable properties on the market. Buyers, in turn, no longer have to accommodate these fees in the final sale price, bringing costs down further.

The problems for buyers, however, aren’t merely limited to knowledge or expertise, but also how sellers perceive them. There are thousands of people who appear actively involved in the property market who aren’t serious buyers at all. They give the appearance of wanting to buy a property, but deep down, they have no real intention of moving. For sellers, this is a problem: time-wasters are expensive. Thus, there’s a tendency for estate agents not to take buyers seriously.

Market Expertise

Having a property consultant changes all that. It’s a sign that you’re in the market for a property and you’ve got the money to make it happen. Property consultants were traditionally the preserve of the wealthy, but that’s now all starting to change. Typically, people would hire property consultants when buying homes in the £700,000 to £30 million range, but that’s no longer the case. Many buyers are now discovering that it makes sense to hire an agent, even when the sums are much lower than this.

What’s more, the fee structure is changing. The property agent market has become a lot more efficient and competitive, which is pushing fees down. Many buyer representatives charge only a tiny fraction of the money that they save their clients, bringing down the total cost substantially. Reputable property selling agents are members of the Association of Property Finders and Buying Agents which ensures that agents only act in the interest of the buyer.

Of course, it’s not all about the money. It’s also about the time that property consultants generate for their clients. Just as estate agents help sellers avoid the hassle of posting advertisements for their properties everywhere, a buyer’s agent in London does things like visit properties, create shortlists and negotiate with sellers.

CONCLUSION

Property consultants have had to find ways of adding value to their client’s lives and they’re doing a good job of it. The potential savings are enormous and, furthermore, they free up their client’s time, taking the hassle out of a property search.