APFBA

Tim Hammond, our Chief Executive explains why now is the right time for the APFBA.

The first question many people ask is what is a buyer's agent?

Buyers' agents are professionals that represent home buyers, investors and developers in purchasing residential or commercial properties. They are otherwise known as, Property Finders or Property Search and Acquisition Agents.

A Buyers’ Agent specialises in searching, evaluating and negotiating the best possible price on behalf of the buyer. They do not sell properties.The key difference between a buyers' agent and a traditional estate agent is who they represent. A buyers’ agent works exclusively for the buyer, whereas the estate agent works for the vendor (seller). Any estate agent claiming to represent both sellers and buyers has an inherent conflict of interest and is not going to be operating in your best interests as a buyer.

UK property buyers (whether buying in the UK or overseas) have been somewhat disadvantaged when compared to their US counterparts. In the US, well over 50% of the population use a buyers’ agent to assist in the purchasing process, and regulations have long been in place there to protect the buyer and eliminate the conflict of interest which exists when one firm attempts to represent both buyer and seller in the same transaction.

For UK buyers there are no such regulations and estate agents have been free to act as the intermediary between vendors and buyers. 

During the 'sellers market' of the past decade (and before the current house price crash) estate agents competed fiercely with each other to win instructions from vendors, their main tactics being to offer to 'sell the property at the highest possible price'. In the boom times, estate agents couldn't lose. They would overvalue the properties to win the vendor's instruction (over the other agents in the area), and in doing so drive up the general market asking prices of properties in their area.

Vendor's expectations had been raised and greed had set in with many sellers believing the over-priced valuation the estate agent had told them. That was until their property didn't sell and the agent, predictably, advised the vendor to reduce the price to attract a buyer, and all because they were overvalued by the estate agent in the first place. Property buyers were in a precarious position, not knowing how to possibly gauge the 'true value' of the properties they were viewing and seeing advertised 'asking prices' rocket in their area this helped the canny estate agent seduce them into buying the property at a 'good price' before property prices went up any higher.

Conflicts of Interest

The truth being that the estate agent had already built in the ability to shave off £10k from the asking price, as they had overvalued the property by much more than that in the first place, and they knew the vendor would accept the offer because if they didn't do then the agent would advise the vendor the following week that it was not selling as it was overpriced, and hence reduce it. Whichever way the story went the estate agent has always had a conflict of interest sitting in the middle of the real estate transaction, playing buyer off against seller and vice versa, so long as they made the sale and their commission. Now of course, times have changed.

The property bubble has been well and truly burst and estate agents have been desperately discounting the asking prices of properties they have had on their books for a year, or more. Or at least trying to (and in the most part failing) because they have failed to manage their client's expectations. Their vendor clients having been seduced into going with their estate agency in the first place with such a high overvaluation are left with 'brick-a-mortis' not being prepared to drop the price to a more realistic price (that may find a buyer) but instead chasing the market down and wondering if they are ever going to find a buyer, at any price.

A Buyer's Market

Although we are technically in a 'buyers market', there are very few buyers out there partly because of the lack of confidence in the credit markets but also I believe, largely because prospective buyers have no way of gauging what the 'real values' are of properties they are seeing. They don't believe the estate agent anymore, and they only have the media's worst case scenarios to go by, which is that 2009 will see further double digit percentage drops in house prices and anyone buying at today's asking prices would suffer a considerable loss on their investment within a year.

However, the savvy (and perhaps more informed) property investors are buying, and in their droves. They are snapping up repossessed properties at auction that have been reduced by the mortgagee to more like their real value in today's market, knowing that the discounts they are getting will cushion them against any further falls in house prices in 2009/10.

Professional Advice Needed for Property Buyers

The better informed property buyers are investing in property today. They know where to buy, how to buy and what price to pay. They know that the time to buy is when everyone else is sitting on their hands, and they have the knowledge and experience to make the right offers on properties they see as investments and they are not emotionally attached as often consumers are when they are afraid of losing the property of their dreams. What is needed now, and I believe more than at any other time is a structure for professional advice for property buyers.

Buyers need representation in the deal, they need a professional agent to work for them and help them research, plan and negotiate on their property purchase. We all know that buying your home is likely to be the largest single purchase you will make in your lifetime, so why leave yourself exposed to the risks and consequences of buying privately and without any professionals backing your corner?

You wouldn't fight a legal battle without a lawyer so why should you look to negotiate on your property purchase without a 'buyers agent' when the vendor has their own 'sellers agent'?

This is why it is now vital for buyers to have the protection of an industry body for buyers agents and to ensure that the conflict of interest that estate agents have is eliminated by buyers having their own representation in real estate transactions in the same way as they are in the US and Australia.

Buyers' Agents represent the Buyer

Estate Agents represent the seller of the property and are contracted by the seller to get the highest sale price for the property. They do not work for the buyer and hence the buyer is disadvantaged. A professional buyers’ agent can provide you with all the knowledge you need to make an informed decision about the value of a property without all of the sales “hype” often generated by estate agents and their glossy brochures.

If you would like to find out more about the work of the APFBA or would like to book an interview with Tim Hammond, Chief Executive of the APFBA, please email This e-mail address is being protected from spambots. You need JavaScript enabled to view it .