31 Jan Why selling agents like buyers agents – Bryan Loughnan
Some agents say it is easier to work with another licenced real estate professional such as a buyers agent, than it is dealing with a DIY buyer and Brian Loughnan from Propertyology looks at it from the buyers point of view with some thoughts behind the growing popularity of using an agent who works for the buyer.
Kevin: Have you ever wondered why sales agents prefer to deal with buyer’s agents? It’s not necessarily that they’re lazy, but I tell you what, they find it to be very, very efficient. That’s the conversation I want to have with Bryan Loughnan who is the head of property acquisitions at Propertyology.
Good day, Bryan. How are you doing?
Bryan: Good, Kevin. How are you?
Kevin: Well, thank you, my friend. Yes, it’s quite common now that sales agents will be coming to buyer’s agents, but I guess not all buyer’s agents are the same, Bryan.
Bryan: No, absolutely not. Every buyer’s agent is different. I suppose we have our little niches, but yes, we often get feedback from sales agents that they really enjoy us working with another licensed real estate professional rather than just a DIYer in off the street.
Kevin: When their seller’s agent actually goes through a buyer’s agent, do they run the risk that through a lack of competition, they might not get top dollar?
Bryan: I suppose that’s a decision that they need to make with their sales agent around a marketing strategy, just like anyone. I suppose what they do, though, is when we’re working with a buyer’s agent, we can give some real certainty. We’re not just walking in off the street; we are working with a prequalified buyer who is genuinely interested in making a firm offer to purchase a property.
And then once that’s done, we’re working with our clients and really holding their hands through the whole process, all the due diligence. This contract is not going to fall over; we can give them that confidence.
Kevin: As a buyer’s agent, would you prefer to buy property that way as opposed to going and bidding at an auction?
Bryan: How we buy property doesn’t really bother us. I suppose I would much prefer to be dealing with a sales agent than trying to buy from a vendor who’s trying to deal directly by themselves. So, I suppose that’s why sales agents similarly prefer to deal with buyer’s agents from time to time.
Kevin: When you go in, you’ve obviously got a very firm strategy on what a property is worth. Do you have several prices in mind, like “This is the price I’d love to get it at, but this is the price I’m not prepared to go over?”
Bryan: Certainly a price that we’re not prepared to go over, absolutely. As you are aware and probably many of your listeners are aware, Kevin, we work exclusively for investors, so it’s trying to be as emotionless as possible and understanding that “This is a number that is going to make it work for us as an investor,” and really making sure that our clients aren’t paying a dollar more than that. If they start spending too much or falling in love with a property because it looks pretty, that’s when property investors can never really achieve their maximum.
Kevin: Opportunity bonus: this is where you have an opportunity to do something special with a property. It sometimes leads sellers to have an over-inflated expectation of price. Are you willing to pay for opportunity cost, or is that just a bonus of the sale?
Bryan: Generally not for us. I suppose we’re looking for low maintenance, structurally sound properties. Where there’s an opportunity cost – if it’s a potential to subdivide or a potential to do a bit of a renovation, if they’re the sort of things you’re referring to – we’re not going to be the only ones who can see that; somebody who walks in off the street can see that. Depending on what needs to be done, we might pay a little bit, but general we’re setting ourselves “This is what we would expect this property would sell for in the market, and let’s do everything we can to get it at or below that price for our client.”
Kevin: Bryan Loughnan is my guest, head of property acquisitions at Propertyology.
Can I take you in another direction now – dealing with your clients, the buyers? How often do you have to walk them through a building and pest inspection that can on the surface look quite scary, Bryan?
Bryan: We walk every single one of our clients through every single building and pest inspection that we get done, Kevin. Every now and then, things will pop up. There will certainly be times where any other buyer who looks at it… Building and pest reports, let’s be honest, they’re negative reports. A building inspector doesn’t walk in and say “Oh, that’s a pretty wall,” or “That’s a pretty kitchen.” They’re defect reports, so they are going to be very negative reports.
It’s about understanding what all that information means, what are major concerns, and what are more minor concerns that might be more cosmetic, and making sure that we’re still making an astute investment decision.
Kevin: From your experience, Bryan, what are the reasons you see that sellers would allow their agent to go through a buyer’s agent? In other words, why do they sometimes want a quick sale?
Bryan: There can be many reasons for that. Depending on their financial situation, it might be “Look, it’s time, we need to sell.” I suppose a big one going through a buyer’s agent without taking it to an open market is that a lot of sales agents will then allow a vendor not to pay the marketing cost. Marketing can sometimes be $5000, or it can be more than that, so they might be willing to accept a slightly lower offer if they don’t have to go through the marketing costs, they don’t need to tidy the house up, do the garden up, do a coat of paint, get it ready for open homes. Let’s just make it a smooth, quick transaction.
It might be a family reason that they need to sell it. It might be a financial reason. It might be that they just don’t want to go through that process.
Kevin: Has there been a situation where a seller has come directly to you to see if you have a buyer?
Bryan: There have been a couple of instances, yes. Obviously, the style of property that we look for in each location is quite specific, so it is quite rare that we would deal directly with a vendor. There have actually been times where the property may suit what we’re looking for and we would actually encourage them to deal with a sales agent and go through a sales agent.
We find that unfortunately, more times than not, if something would come up in a building report for example, and I then need to try and step my client through that and also be stepping the vendor through it, that actually works out to be more time and harder work for me.
It’s actually much better for the whole process and for making sure that everything runs smoothly that we have two licensed professionals, a sales agent on one side of the fence and a buyer’s agent on the other side.
Kevin: Good. You’ve answered a lot of questions for me, mate. Thank you so much. Bryan Loughnan is the head of property acquisitions at Propertyology. Thanks for your time, mate.
Bryan: Have a good day.