Working with inexperienced or unqualified self-styled “property experts” can result in buyers purchasing a dud for an overinflated price, according to the Real Estate Buyers Agents Association of Australia (REBAA).
REBAA President Cate Bakos said an increasing number of so-called “property experts” – including those on the new season of Location, Location, Location Australia – were potentially putting buyers at risk of paying too much for an inferior property, including eight ways in the first two episodes alone.
“Just because someone has a media profile or tens of thousands of followers on insta does not make them a licensed, experienced, nor professional buyers’ agent,” Ms Bakos said.
“A professional buyers’ agent will evaluate recent sales data and provide a written appraisal on a property’s potential market value; oversee and arrange due diligence such as building inspections, pest, survey and engineering reports and – most importantly – negotiate the property purchase price and terms to name but a few services.
“There was no evidence of any of this during the first two episodes of the latest incarnation of Location, Location, Location Australia – which formerly had two actual professional buyers’ agents helping homebuyers, but not anymore it seems.”
Ms Bakos said there was a litany of problems with the supposed “guidance” that homebuyers were given during the first two episodes of the show:
- No negotiation with the vendor and selling agents. Instead, buyers were simply encouraged to offer up to their maximum budgets or the vendor’s asking price – regardless of whether this figure was above the potential market value of the property.
- No recent comparable sales analysis appeared to have been used to determine the potential sale prices of any of the properties.
- Lack of any kind of due diligence such as whether the properties had any structural issues or flood impacts.
- Poor asset selection, such as being on busy roads, and no discussion with buyers on what this might mean for potential future capital growth. Examples include buyers purchasing a home on a busy road next door to a commercial building in episode one and a property ‘recommendation’ in episode two that was situated on a busy road that carries a huge volume of trucks daily.
- Encouraging buyers to bid on a property at auction the next day – and also allow them to go over their budget – without any time to undertake the necessary due diligence. This timeframe is utterly insufficient for legal reviews, building inspections, and full due diligence.
- Suggested converting the downstairs area of one property to a private retreat but neglecting to note or point out whether it was legal height or not – perhaps because they didn’t know.
- No discussions generally around building and pest clauses, due diligence, or conditions of the offers.
- Stating at one point that they need to talk to the real estate agent to get more research on a property. Aside from the fact that in Queensland there is no disclosure obligation for sellers, asking the selling agent for research is a terrible approach by any buyer.
Ms Bakos said it was disappointing that the producers of the latest season of the show had not chosen to use professional and experienced buyers’ agents as hosts to assist people who are investing hundreds of thousands of dollars.
“Buying property – as a homebuyer or an investor – should never be for entertainment purposes,” she said.
“We are talking about the most money that many people will generally pay for anything in their entire lives, plus, it will play a big part in their future financial position during retirement.
“This very fact means homebuyers deserve an appropriately licensed and experienced operator assisting them to ensure the property that they purchase suits their current and future lifestyle as well as their budget – and will not be a drag on their finances in years to come because they unknowingly paid through the nose for a real estate lemon.
“While reality television may be entertaining, it is far from reality.”
Ms Bakos said professional buyer’s agents are licensed real estate professionals that specialise in searching, negotiating, conducting due diligence, and purchasing property on behalf of buyers and hold professional indemnity insurance.
“By choosing a REBAA member, buyers can be confident they are dealing with an experienced and professional buyer’s agent,” she said.