Major red flags; watch out for inexperienced buyer’s agents, REBAA warns
Industry experts warned buyers to do their due diligence as an increasing number of inexperienced buyer’s agents enter the real estate sector.
The Real Estate Buyers Agents Association of Australia (REBAA) has raised concerns over a rising influx of inexperienced and underqualified buyer’s agents, warning of a significant risk to consumer protection.
REBAA president, Melinda Jennison, said that while the growth of the buyer’s agent industry is promising, it has also led to challenges.
She indicated that the industry’s low barriers to entry and lack of specialist education are key vulnerabilities for property buyers that result in costly errors.
“This includes a lack of regulatory oversight and the prevalence of inexperienced operators who may have completed their real estate licence but know very little about buying property,” Jennison said.
According to Jennison, a major contributing factor to the rise in unqualified buyer’s agents is the variation in qualification and experience requirements nationwide alongside mutual licence recognition.
“Mutual licence recognition allows agents to obtain licences in states with lower regulatory barriers and then operate in unfamiliar states,” Jennison said.
She warned that hiring unqualified buyer’s representatives could lead buyers to overpay for properties or encounter serious legal issues due to poor advice.
“Imagine hiring someone for a $1 million purchase only to discover they lack knowledge of local laws or market dynamics? This is happening every day, and buyers are unaware,” Jennison said.
Jennison described the mutual licence loophole as a “ticking time bomb” for consumer trust and financial safety.
“Operators are cutting corners by getting licensed in states with fewer requirements and entering competitive markets without proper training,” she said.
Brisbane’s Stone Real Estate Aspley principal, Tristan Rowland, said that many buyers struggle to differentiate between competent and incompetent buyer’s agents.
“How do you know what a buyer’s agent has inspected or whom they’ve contacted? If they’re not presenting properties regularly, they’re not doing their job,” Rowland said.
To safeguard buyers, REBAA has urged consumers to be aware of the credentials of their buyer’s agent.
It recommended that investors check the licence of their buyer’s agent, ensuring that it was obtained through the standard licensing process, and the buyer’s agent is fully licensed to purchase in all states.
The peak body also advised that buyer’s agents should have Professional Indemnity Insurance, which is mandatory in NSW.
Jennison revealed that inexperienced buyer’s agents who lack market knowledge and industry competence are posing as obstacles to smooth transactions and frustrating sales agents.
“Sales agents have expressed frustration over the inexperience of some new buyer’s agents, which not only complicates their work but could also jeopardise buyers’ financial wellbeing,” she said.
Managing director of Cunninghams Real Estate Sydney, John Cunningham, said inexperienced buyer's agents disrupt the sales process.
“They hung around open homes and pounced on buyers, but they simply did not know what to do and could never get to the point of getting any sales done via our firm as they kept losing out due to inaction or absence,” Cunninghams said.
“Many buyers lost upfront fees before the agency folded within 18 months.”
REBAA urged buyer’s agents to join its peak body to receive guidance and advocacy, and avoid the consequences of not meeting professional standards and ethical codes within the buyer’s agent sector.