Both are real estate agents, so apart from the obvious, that one represents the seller and the other looks after the purchaser, what sets them apart?

Well, most selling agents have never been buyers’ agents and a lot of buyers’ agents have never been selling agents, but I have been both and there are some key philosophical and practical differences.

Now, believe it or not, selling agents have a bit of a reputation for over-paying for property. John McGrath, probably Australia’s most famous real estate agent, has a particularly stellar record for losing money on his real estate transactions. Only the other weekend, it was noted in Title Deeds that he “copped a loss on Tallowwood, his weekend retreat at Duffys Forest”. Over the 12 months in which he owned the house he managed to lose nearly $700,000 plus renovation costs. When you add in the stamp duty, whch would have been over $240,000, that’s a million dollar change of mind. Adding insult to injury, he sold another property earlier this year, this time in Walsh Bay, for $45,000 less than he paid for it in 2009. If my memory serves me correctly he also took a bath a few years ago on a Potts point apartment that he “unimproved” by converting it from a three bedder into a giant bachelor pad.

Selling agents simply aren’t as critical as buyers agents. Why is this?

Bryce Holdaway, my partner in crime on Location Location Location Australia, sums up the differences in this way: a selling agent is skilled in marketing and negotiation, a buyers agent is skilled in property selection and negotiation. I can take it a step further. The selling agent doesn’t get to choose what they have to sell. In some cases they list a property that will be very popular but often they list something that is a bit of a challenge. So a good agent will be very skilled at objection handling. They become very adept at seeing the positives and glossing over the negatives. Consequently, they have a cup half full approach to buying property. On the flipside, by casting a critical eye over a prospective purchase, a buyers agent will be more objective when determining what is a good property and then establishing the right price to pay.

Careful of free advice from your friendly agent.

We come across quite a few people who have such a good relationship with their selling agent that they seek out their advice when it comes time to buy. They recognize that they need expert help, which is a great thing, but the selling agent is not the expert that they need. Apart from the fact that their favourite agent views property through different lenses, they are usually receiving free advice. And free advice is worth what you pay for it...

Not that I charge my friends and family for my professional opinion, but I can’t help but notice that those who benefit from our free pearls of wisdom are much less likely to actually take the advice. But our clients, on the other hand, who have made a commitment and paid upfront for access to our expertise, always place a high value on what we tell them.

But, I digress. It is about getting the right person for the job. Let the selling agents stick to selling and the buyers agents stick to buying. That way, when you sell you will get the best price and when you buy, you are more likely to have a property that will be easier for a selling agent to market down the track. That is, there will be less objections that need to be handled.

I have a real issue with property spruikers claiming to know the next hot spot, the inference being that if you buy in these areas you will automatically be making a great investment decision. Particularly as there are so many would-be investors who are trying to identify the next big location in their hopes of striking real estate gold.

The thing that is so rarely talked about is risk. Now don’t get me wrong, there is a time and a place for taking risks in the hope of big capital gains. But this is the realm of serious investors who are educated and experienced (or pay for advice) and who already have substantial equity to back them up. It is not an investment strategy that we advise for first time investors or those with a large debt to equity ratio.

There are two main elements to capital growth. There is the location and there is the individual property. Many people providing property investment advice will focus on buying in the next hotspot to the point where the actual piece of real estate becomes secondary. In fact many of their clients purchase property sight unseen, with decisions made solely based on “the numbers”. We believe that this is the riskiest strategy of all as every suburb and town has a median growth rate, which means that 50% of properties in that area will under-perform. If you are not focused on the actual property and it’s attributes then you run a very real risk of missing out on the opportunity for good capital growth, let alone maximum returns.

The thing that I love about buying real estate is that on one hand it is so simple, the fundamental principals are pretty basic. But on the other hand it is a very complex game, largely because human beings are involved and we often have to be lay psychologists to make sense of it.

One of these fundamental principals applies to capital growth. It is this simple: for a property to grow in value above the median rate for the area it needs to appeal to buyers. So the key to capital growth is understanding what sells well. Brooke and I spent many years as selling agents, and we have stood at the front door of open houses and dealt with often brutal buyer feedback, or lack of feedback as the case may be. As a result we know what sort of property sells well. And we can see when there are simple ways to create buyer appeal as opposed to features that cannot be changed. And we can also see when buyers are being seduced by great presentation and overlook a property’s down-sides.

For this reason, when we are providing property investment advice to our clients, we firstly cast a fairly wide net in terms of location (within our preferred 10km radius of the CBD) and then actively seek the best opportunities within that area. And what makes a good opportunity comes down to the actual property and it’s future saleability.

There is little benefit in filling your head with statistics about projected population growth, infrastructure development, job creation projections etc in order to determine WHERE to buy if you make mistakes in choosing WHAT to buy.

When you read a strata report that documents a litany of building issues it can be easy to be scared off a property. And sometimes it is a warning of impending inconvenience and cost.

However, it can also indicate a pro-active strata manager and an owner’s corporation that cares about maintaining their investment. In addition to the list of problems, look for a concerted and continued effort to address the issues. And keep an eye out for potential special levies. This is a sign that there has not been sufficient sinking fund levies in the past to cover these expected repairs.