Buying a home does not make you a property buying expert
More than 90% of property vendors across Australia will engage a real estate agent to represent them in the sale of their property. On the contrary, less than 10% of buyers will engage a buyers' agent to represent them in purchasing a property. Personally, that equation has never stacked up to me or made sense. If the large majority of vendors require help in the sale of their property, you would naturally think that buyers would require the same expert representation when looking to purchase.
As it has never been common practice to engage a buyers' agent in Australia, buyers have been led to believe they are now experts and completely competent when buying property. Much like the financial markets, it is common practice to engage a broker for their expertise to buy in and sell out – this principle is now beginning to develop at a more rapid rate in the property game.
With any professional service where you are not experienced, you engage a specialist expert for their advice and representation. I have always been intrigued why inexperienced property buyers do not believe they require an agent to represent them when looking to buy property. It's fascinating how people who have never bought property before or who have bought only a few times are confident in their ability to execute in searching/buying property. It's absolutely amazing. In my experience, even property buyers who are qualified solicitors who do not specialise in conveyancing, will engage a conveyancing lawyer to review their contract of sale. In most cases buying a property is a person(s) biggest financial investment and ongoing mortgage commitment of their life. So what makes inexperienced property buyers experts when looking to buy?
Unfortunately buyers forget that real estate agents work for the vendor and they are committed to getting their vendor the highest price so they will do whatever it takes to play the buyer. Welcome to the art of sales.
Buyers also underestimate the real estate agents ability to negotiate and seem to value their own negotiation skill with more credit – the reality is that real estate agents negotiate on property daily so the probability to get the buyer to pay more then required is very high. Also, buyers don't seem to have any idea with the amount of transactions that take place off market (property not advertised) that to rely on property that is advertised in the paper and online, especially in this market, is completely limiting your ability to source property.
Understanding property values is another interesting part of the process that buyers believe they can grasp all of a sudden – if the property next door sold for X or the apartment downstairs in the building sold for Y, buyers then believe they are expert valuers. If only it were that easy.
Similarly, like any profession, it takes hours and hours to master your craft with continuous improvement, which is why you engage an expert in an area out of your depth for specialist assistance. Malcolm Gladwell, the author of Outliers, repeatedly mentions the "10,000-Hour Rule", claiming that the key to success in any field is, to a large extent, a matter of practicing a specific task for a total of around 10,000 hours.
If you are not purchasing properties consistently, negotiating price with agents daily, inspecting on/off properties daily, then possibly you should consider seeking professional advice when buying property.
Ben Handler is a Sydney-based entrepreneur. Ben is the co-founder and director of CohenHandler - an exclusive buyers agency in Double Bay, Sydney. CohenHandler is one of Sydney's leading buyers' agencies since inception only two years ago. Ben is a buyer specialist in the eastern suburbs, being involved in residential transactions up to $15 million.
