When hunting for the perfect property, it’s not what you know, but who you know that determines success. In an increasingly secretive property market, buyers’ agents are striking deals between buyers and sellers before homes are even listed for sale.
Facing cutthroat competition at auctions, Aussies are turning to buyers’ agents in unprecedented numbers. As a result, the number of agents has increased from a mere 15 in 2000 to an estimated 300 today.
Buyers’ agents must be licensed real estate agents, and typically charge between 1.5% and 2% of the purchase price if they find a home and negotiate a successful deal.
David Morrell, a Melbourne-based buyers’ agent, said luxury properties are increasingly being sold via third parties without being listed for sale.
“In the upper end of the market, those houses that are priced above $5 million are not even being advertised, it’s more a case of who you know rather than what you know,” Morrell said.
“It’s very competitive out there. In Melbourne, with the top properties, it’s becoming popular to sell them through an expressions-of-interest process. That has, essentially, created a situation where there are no rules so it’s very confusing for buyers.
“For a buyers’ agent, it’s their job to get the right price, plus the right property. We spend more of our time talking people out of buying a property than we do doing deals for them.”
Homeowners contact agents without listing their homes for sale. Many homeowners do this for privacy reasons, as they may not want everyone to know they’re selling their homes, or because they don’t want strangers traipsing through their homes.
According to Veronica Morgan, Good Deeds Property Buyers principal, the surging demand for agents is a response to market competition. “We are seeing a situation, especially in Sydney, where buyers are motivated and money is cheap so it’s creating a perfect storm,” she said.
The situation could worsen after Christmas as new buyers will be on the hunt.
“In January, traditionally, we see the fresh blood come into the market and are active for the first half,” Morgan said. “But given there’s very little stock on the market right now, we could see prices escalate.”
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