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The Real Estate Buyers Agents Association (REBAA) has raised an alarm about volume-based buyers’ agents who are focused more on upfront fees than providing a professional and objective service to their clients.
REBAA noted that there has been a noticeable increase in such buyers’ agents, whose business models are all about client volumes instead of helping clients strategically buy a home or invest in properties.
In a statement, REBAA President Melinda Jennison said she has heard of a sales agent who received a “shopping list” from a volume buyer’s agent. The list simply outlined the types of properties they needed to secure to satisfy clients they were supposedly representing, Jennison said in a statement.
She added that such a case is not uncommon, adding that those buyers’ agents are more interested in “nabbing upfront fees” from their clients while “doing the absolute minimum to fulfill the briefs.”
According to Jennison, it is standard practice for buyers to pay retainer fees for service that involves agents assessing the best properties catering to their clients’ needs and budgets.
“Buyers caught out by unethical buyers’ agents probably have no idea that the person they have already potentially given thousands of dollars to is doing very little work on their behalf and is often just approaching sales agents to see what listings they have on their books,” she said.
Jennison also acknowledged that it is not easy to identify a “quality buyers’ agent over a quantity one” but there are questions that should be asked when looking for a property. She added that buyers must do their due diligence before they ask an agent to assist them in purchasing a house or an investment property.
Jennison warned that an agent having a strong social media presence or “cutting-edge marketing” does not mean they are the right fit or have buyers’ best interests at heart.
One of the most important questions to ask is about the number of buyers an agent is currently representing, and the answer to this should not be more than four or five per agent at one time, she said.
She also said the best buyers’ agents do not work with buyers who have conflicting briefs at the same time.
“Working with clients who have the same briefs is unethical because how on earth would they determine which buyer deserves which property – unless it was influenced by who has paid the highest fee, or who is prepared to make the quickest decision,” she said.
Another question to ask is how an agent sources properties for their clients. Those who say it is always “off-market” are a big red flag, Jennison said, explaining that such a case is “not only highly unlikely” but also because those properties often require a premium to be paid.
An agent promising to fulfill a property brief within a fortnight is also a red flag, Jennison said, because there are times when it would take a month or two for an ideal property to be found for a client.
Jennison also warned consumers about pressure tactics such as “missing out on an off-the-market opportunity” or a “special” retainer fee unless buyers signed up immediately.
“Ethical buyers’ agents not only provide a high level of service to a limited number of clients,” she said, noting that they would also never resort to winning businesses through “cheap marketing tactics.”
Jennison also said the best agents are appropriately licensed in states they buy in and are members of industry associations like REBAA. They are also more than happy for their potential customers to speak with their current or former clients to give objective testimonials, Jennison said.
