Why buyers are now calling in the 'professionals'
Entering the realm of the hired home hunter in search of prized properties for clients
Property market themed programmes and TV news clips on the housing crisis are ripe with disillusioned home hunters and prospective buyers who are worn out with weekends spend plodding from one viewing to the next only to be beaten in the bidding every time.
So why don't they get someone to do the plodding and bidding for them?
The phenomenon of buyers' brokerage – already widespread in the US and UK – is now beginning to catch on in Ireland too thanks to the squeeze in supply and the increased competition for what's left.
Prior to the boom, this service was sometimes provided by a small handful of known agents who tended to specialise in bidding at buying at auction. But the services of such experts faded from demand as the market became awash with homes through the noughties.
However with competition heating up for city property and supply in tight demand, the well known city and country homes estate specialist Ganly Walters has become the first mainstream estate agency to to appoint its own buyers' agent specifically to act for purchasers.
Having fulfilled this role in the booming London market for several years, Eleanor Bourke was recently poached by the Dublin based outfit. So far she hasn't been representing investors at all, just private home buyers.
"I've got a mixture of clients. For example there are expat buyers, there are empty-nesters who are downsizing and there are young professionals who work long hours and don't have the time to do the running around. I had a lot of young professional clients in London and definitely I could see that market growing here too."
Bourke's clients pay commission at 1% on properties valued at over €500,000, and there's a minimum fee of €5,000 on houses below that.
Some estate agents purport to offer a buyers' agency service, but in practice they will draw buyers' attention only to those properties on their own books. But Bourke works independently and exclusively for the buyer, contacting a range of estate agents beyond her own walls.
She says there is no potential conflict of interest in cases where, say, her employer, Ganly Walters, is representing a vendor and she is representing a buyer.
"I'm in a separate division and we have an ethical barrier, or Chinese wall. All my files are locked away!"
Hiring a buyer's agent makes sense – particularly for the tranche of overseas based wealthy Irish born emigrants who are planning to return home and want to avail of prices while the market is still moving off the bottom.
At the top end of the Dublin market, overseas based buyers have accounted for as much as a quarter of the sales on some of the most exclusive streets through the last two years. It's an obvious market for professional buyers.
A buyer's agent also makes sense for property speculators, who aren't choosing a place to live but are just looking for a return on investment.
Eleanor Bourke plus two other buyer's agents who have made a career of searching for and buying property for other people say that most if not all of their clients are 'ordinary people looking for ordinary homes'.
As the pioneer in this market – she set up the Buyer's Agent Ltd back in 2002 – Karen Mulvaney is an experienced negotiator will a long record of successful purchases.
She is adept at making use of her client's strengths – often this can be their readiness to conclude a deal fast – an important factor which can sometimes trumps price, she says.
"My biggest group of clients are second-time-rounders – people looking for their happy-ever-after house. They're families that are so busy between work and kids and who are nervous about bidding themselves. They're the ones that come to us more than anybody."
Mulvaney emphasises that it's not just high-end houses either. "Generally speaking the people we look after are looking for family homes probably between €800,000 and €1.5m. But we do look after people with much lower budgets as well."
When clients sign on with The Buyer's Agent, they pay a €500 retainer, deductible from the final invoice. The commission rate is 2% on purchases under €500,000 and 1% above €500,000. Having sounded you out on your needs and preferences, a buyers' agent will search for houses matching your specifications including, in some cases, properties that aren't on the open market. They'll accompany you to viewings and attend auctions on your behalf.
They'll also handle the bidding process – which many buyers find intimidating. An experienced buyers' agent will probably have a better idea than a starry-eyed client as to what a house is actually worth. Mulvaney says a seasoned negotiator in your camp provides you with a vital equaliser against the skills of the vendor's agent.
"For years, buyers had a misconception about what exactly an estate agent was," says Mulvaney. "But over the last couple of years they've certainly realised that estate agents are there to wring as much money out of them as possible."
Carol Tallon established Buyers' Broker Ltd in 2006 for precisely that reason. "It just seemed bizarre that buyers would have no access to independent advice." Buyers' Broker charges a flat fee instead of commission. "We stopped charging commission two or three years ago because a client with a budget of €60,000 arguably needs even more help than one with €450,000."
Clients pay €5,500 plus VAT for properties worth less than €500,000, €7,500 up to €1m, and €9,000 on properties worth over €1m. There's also a retainer of €500 when you sign up.
Tallon, author of the annual 'Irish Property Buyers' Handbook', also represents a mixture of clients, from first-time buyers to established investors. However, she points out that most of the demand from private buyers is coming from the same place.
"It's a really narrow brief at the moment. It's three- or four-bed semis in the area of south County Dublin from Rathfarnham over to the coast and down as far as Blackrock."
So overheated is the Dublin property market that Tallon advises buyers to think carefully about renting for a while.
"We're ending up in bidding wars weekly, in fact probably daily. I would see the value as being very much sucked out of Dublin already. It's like a boiler room at the moment and it's going to continue like that for the next 24 months."
Top tips from buyer's agents
1 The right research: Get off the internet and visit the areas you're interested in. Know the pros and cons. Write a wishlist in order of priorities.
2 The right vendor: Steer clear of vendors who are still clinging to Celtic Tiger valuations. Find someone who's serious about selling.
3 Be ready: Have everything in place – your solicitor, your surveyor and your deposit. This gives the vendor confidence that you're committed.
4 Know your values. Keep an eye on the property price register; it may give you an idea of how high you should bid.
5 Do the numbers: If you're buying a house that needs work, factor the refurbishment costs into your budget.
6 Bid low: The only way to go is up. In Dublin, you'll almost certainly be bidding against someone else, so know your budget and stick to it. Don't be bullied.
7 Bid fast: Don't sit on the fence. Be proactive. And avoid the growing tendency to bid on properties you don't want in case they're the best you can get. It will damage your credibility as a buyer.
8 Discover who you're bidding: If you're a cash buyer and the rival bidder is debt-financed, you're a better bet. You don't necessarily even have to counter offer. But if you're bidding against people who've been in the market for the same type of property for as long as you have, chances are they're willing to overpay.
9 Avoid sealed bids: The only way to win is to overpay, so you either miss the property or pay too much, it's a lose-lose situation.
10 Don't cry: If you don't secure the house you want, there will be another one along in a minute.