LOCKDOWN SERIES PART TWO: Buyer’s advocate
What does it take to be a first family home buyer specialist? For buyer’s advocate Emily Wallace, it’s been buying 25 properties in 25 weeks.
Since walking away from her corporate recruitment gig three years ago, Ms Wallace has been dealing with agents, and doing all the heavy lifting for clients looking to purchase homes – from sourcing, inspecting, qualifying, negotiating and bidding, buyer’s advocates handle the entire process.
Speaking to the ANZPJ’s Lockdown Special podcast series, she attributed her success is driven by her open access to off-market properties, which help eliminate competition and give hope to those tired of missing out on property.
“In June, we were up to 25 properties in 25 weeks – that’s one every week we bought for first home buyers and family home buyers here in Melbourne,” she said.
Ms Wallace contributes the statistic to a combination of current market trends and her personal business growth, with more people understanding how buyer’s advocates can help negotiate the property landscape.
“I think purchasing a minimum of one property per week for the remainder of year and into next year is highly likely,” she said.
“Keep in mind, we are a boutique agency, there’s only two of us and we only keep 10 clients at any given time. There would agencies out there, which would buy maybe one a day.”
Residential property is ‘madness’
Ms Wallace said she has found first home buyers reevaluate where they might park their money because the market is “madness”.
“The market trajectory has been crazy, we have seen people priced out of areas in a couple of weeks. There’s been cases where we have bought property in January and February this year and by June/July, there’s been an increase of $150,000,” she told the Lockdown Special podcast series.
“I’m not talking big property either – these are villa units in Thornbury and Preston, which have taken off like a rocket. It’s pretty mad out there.
“The biggest thing is, we were all locked in a bubble so long, so people who were planning on buying property last year are out there, plus people who jumped on the bandwagon of hype. It has definitely resulted in a perfect storm of people going to market and being competitive.”
ANZPJ’S ENTIRE LOCKDOWN SPECIAL:
PART ONE: ECONOMIC RISE OF CHINA AND PROPERTY
PART TWO: UNDERSTANDING BLOCKCHAIN AND PROPERTY
PART FOUR: APIV SCHEME – EVERYTHING YOU NEED TO KNOW
Ms Wallace believes there is now an issue where there’s not enough stock to meet market demand – including construction.
“Even if the market does drop, I don’t think that after such a big increase, it will drop drastically. People think waiting 12 months will be beneficial, but I really don’t think that will be the case,” she said.
“We will see some stabilisation with supply and demand equalising out, but outside of that, until interest rates really start to hike up and money becomes an issue for people, I don’t think we will see too much of an impact on the market.”
The role of a buyer’s advocate
The simplest way to describe the role of a buyer’s advocate is to give people reference to what they would know, according to Ms Wallace.
“Consider a court room with two parties – it’s highly likely those parties would have representation so everything is fair when the matter is heard,” she told the Lockdown Special podcast series
Ms Wallace said while this process provides an equal playing field during legal proceedings, the same fairness and transparency isn’t always the case in real estate.
“The vendor has the agent on their side, pushing for highest price possible – agents are literally engaged to get as much money as they can for the vendors – but who is representing the buyers? No one, unless you have buyer’s advocate,” she said.
“We bridge the gap and give them representation. We are the buyer’s eyes and ears – they don’t need to exchange details with an agent or deal with them directly because we are advocating for them to find opportunities and act on their behalf throughout the entire buying process.”
She said while she works closely with agents and considers them colleagues, she is aware their best interest sit with the vendor, not the buyer.
Where do buyer’s advocates save?
Ms Wallace said while there’s the obvious cost benefits to using a buyer’s advocate, the saving of time for professionals was also a quantifying benefit.
“The biggest saving when using an advocate for off-market sales is eliminating the competition,” she said.
Using a recent purchase as an example, Ms Wallace said she negotiated the purchase of a property for $1.2 million, with the bank later valuating the property at $1.254 million.
“It’s truly absurd that the bank calculated the property to be worth more than we paid,” she said.
While admitting this scenario was a rarity, Ms Wallace believes there is money to be saved with buyer’s advocates.
“At an absolute minimum, a good advocate who can access off-market properties and handle the process, should be saving the client between two – five per cent of sales price,” she said.
What are off-market sales?
Forget searching digital listings, you’re not going to find off-market listings anywhere online. In fact, you won’t find them advertised anywhere.
Ms Wallace said off-market property or blocks of properties are only held on an agent’s database, reserved for a quick sale to a set buyer for a certain price.
“[These types of listings] are only available to advocate’s who have relationships with the agent directly,” she explained.
“Sometimes a well-rounded agent who wants to service buyers will let general public know – maybe if they missed out on auction for something similar – but generally speaking, these sales often happen through buyer’s advocates.”
When the market has low supply and excess demand, the price is driven higher as people compete for limited housing stock. Selling off-market at this time can save the vendor money and can help the buyer secure the home without having to compete with multiple buyers.
However, the vendor does risk missing out on achieving a better result by listing on the open market.
There’s no shortage of sales happening off-market with Ms Wallace able to quantify from her own experience: Of the 25 properties Ms Wallace’s company had purchased in the first 25 weeks of the year – 18 have been off-market.
Why do people sell off-market?
Ms Wallace said there tends to be a misconception off-market properties are lower quality because they don’t have photos, floorplans or staging – saying this is removed to save the vendor additional money.
“The whole point of off-market sales is to save on marketing costs. A lot of people don’t realise how expensive it is to go-to-market – there’s property staging, advertising, printed brochures and advertising boards,” she said.
“Plus the agent’s commission is normally full price on-market, but is a little less with off-market because there’s less work involved.”
Ms Wallace said privacy was another key driver for people opting for off-market sales.
“People who don’t want others coming through their house at open homes three times a week, they are happy for a single buyer to walk through and buy,” she said.
LISTEN TO EACH EPISODE ON SPOTIFY AND APPLE PODCAST
EPISODE ONE: ECONMIC RISE OF CHINA AND PROPERTY
EPISODE TWO: UNDERSTANDING BLOCKCHAIN AND PROPERTY
EPISODE THREE: MELB WOMAN BUYS 25 PROPERTIES IN 25 WEEKS
EPISODE FOUR: APIV SCHEME – EVERYTHING YOU NEED TO KNOW
When to engage a buyer’s advocate?
Engaging a buyer’s advocate to negotiate off-market purchases without knowing what you are looking for is a bad idea, claims Ms Wallace.
“We don’t take on clients unless they have missed out on at least one property and for those sort of profiles, we have a 90 day service agreement,” she said.
“But our average time for the sub-million dollar market is 30 days and the plus-million dollar market – mostly family homes – is around 56 days from signing with us to a contract of sale to buying something. It’s pretty quick in terms of buying journey.”
Ms Wallace said she will often visit properties to record walkthroughs for clients, rather than making them attend each property.
“In terms of volume, the average client sees between seven – 10 properties. If it’s starting to get toward 20, they are probably too confused with what they are after – it could be too early in the piece,” she said.
“On the flip side, we have had clients who have found a property in their first week or have bought the first one we have showed them.”
For those not willing or unable to use an advocate, Ms Wallace stresses the importance of remembering agents are engaged by vendors.
“Try and keep a level head and don’t get emotional when buying a property – particularly at auction. Always remember to advocate for yourself,” she said.
How to find off-market property
As previously mentioned, you’re not going to find off-market listings advertised anywhere. So how exactly do people find these properties?
“There’s no universal centre point for off-market sales, but that’s the whole point,” Ms Wallace told the Lockdown Special podcast series.
“It’s a very manual task to find off-market properties because there’s no realestate.com.au backdoor – there are some platforms, but not everyone is using them.”
Ms Wallace said having a buyer’s advocate with a good reputation with agents is the easiest way to find off-market properties.
“There are spreadsheets that get shared – certain agents get spreadsheets with listings,” she said
“However, advocates shouldn’t be relying on automated off-market emails from agents they should be actively outbound emailing, calling and texting.
“A lot of it comes down to timing – say an agent walked through Monday, we talk to them Wednesday and there’s a window to get in there before it hits the market.”
Mr Wallace said leveraging social media was also powerful for buyer’s advocates. “We actually get a lot of properties through Instagram,” she explained.
How does one become a buyer’s advocate?
Ms Wallace had a background in education and was working in recruitment. She had just secured her first property investment and had fallen in love with the process when a sponsored LinkedIn post about “helping people buy property” grabbed her attention.
“I had just spent four months learning the terminology and loved it, I couldn’t wait to buy again,” she said.
“I followed up with the ad, did some training about what it takes to be a buyers advocate.”
Ms Wallace then quit her corporate job and launched her own boutique buyer’s advocate business, with Kobe Clarke-Jacobs.
“Kobe’s role is agent liaison, meaning she’s agent-facing and sources all our properties. I’m more client focused and negotiate deals,” she said.
“Kobe is one of those people who would go to open homes. She loves property and has her dream job – spending 24/7 inspecting property.”
Ms Wallace said the biggest issue for buyer’s advocates in Australia is a lack of education.
“If you think about real estate selling agents, you have lots of big national brands, but there’s not really an equivalent in the advocate world. There’s a lot of small fish with minimal education. I think there’s room for a bigger agency to go nationwide and deliver education in every state of the country,” she said.
Do rental advocates exist?
Buyer’s advocates help off-market property sales, but does the same exist for rentals? The short answer is yes.
“I know there are some around who help expats returning or those moving interstate, however I foresee them increasing over time as people see the benefit of outsourcing work they don’t want to do, to advocates,” she said.
As rental advocates are connected with agents, they can help fill a property in the 28 days before the tenants vacate.
“Pre-market rentals are fantastic – you just need to know the right people. They are great for the landlords too because there’s little to no vacancy, so the vendor doesn’t need to carry too much cashflow,” she said.