Buying a home is expensive, with purchasers paying stamp duty, conveyancing, and legal fees, not to mention the huge deposit required. So would you really want to pay more for something you could do yourself?
Buyers agents work for buyers to find a suitable property according to the buyer’s brief and often negotiate the purchase on behalf of the buyer. Depending on the service needed, an agent may charge a set fee, starting from as little as $100 to attend an auction for you.
For a full search, inspection, and negotiation service, an agent may charge a percentage of the property’s sale price, which can be up to 3 percent, plus GST. When houses in Sydney are selling well over $1 million, that adds up to a lot of money. So, is it worth it?
What services do buyers agents offer?
Services that can be tailored to what buyers want, says buyers agent Lauren Goudy, a buyers agent from Rose & Jones in Sydney. ‘Sometimes people may only engage me to do the negotiating and due diligence side of things,’ she says. ‘Whereas a full search is looking at all of the off-market opportunities as well and a full assessment of what’s online as well.’
Buyers agents can also arrange pest inspections, strata reports and lawyers or conveyancers for a client. But it’s their skills, relationships with real estate agents and knowledge of their local market that clients pay for. Adrian Kelly, president of the Real Estate Institute of Australia, sees the value in buyers agents. ‘Many prospective purchasers are very time-poor and the use of a buyers agent solves this problem,’ he says.
Buyers agents have been particularly busy in recent months, with strong competition among buyers because of the low number of properties for sale. Many frustrated buyers have turned to buyers agents to help them find properties at their preferred price. Kristen Wild wanted to buy her first property in the south of Sydney, but was worried that her lack of knowledge and experience could be taken advantage of. She used a buyers agent to help her find her dream home. ‘It’s a lot of money, but I think it was worth the investment,’ she says. ‘I would have paid more and not got what I wanted. I was happy to pay for his expertise. I got more than what I hoped for.’
Are buyers agents’ fees tax deductible?
Investors can also take advantage of the time, knowledge and skill offered by buyers agents. Investor Kati Jones could see the benefits of using one to buy interstate. ‘We needed to use a buyer’s agent as we were so time-poor. We probably wouldn’t have bought an investment property at the time if we hadn’t have used one,’ she says.
Purchasing costs, including buyers agents’ fees, can form part of the cost base when buying an investment property, reducing the capital gains tax an investor would pay when it comes time to sell. However, owner-occupiers can’t claim any buyers agents’ fees as a tax deduction.
How to select the right buyer’s agent
Choosing the right buyers agent is very important, says Melbourne real estate agent Ryan Fisher from Follet & Co. ‘I think they’re very good at what they do, I think they’re very useful,’ he says. ‘I’ve met some that are great, some that are not so great. If you are going to hire one, it’s of value if you get one who knows what they’re doing.’
Consumer advocate Neil Jenman has seen what happens when a buyer’s agent hasn’t had the buyer’s best interests at heart. ‘I’m currently working with a retired police sergeant and his wife,’ he says. ‘They were bullied by a buyers agent into buying a two-story penthouse on a main road in Sydney’s eastern suburbs. ‘They paid $1.9 million, the same price as it was advertised on the internet. They had to fork out 2 percent, almost $40,000 for the buyer’s agent fee. Disgraceful.’
Buyers agents need to be licensed real estate agents and it’s important they have experience in the area you’re wishing to purchase in. Also, make sure they’re independent, and not accepting sales commissions from vendors or developers. Independent buyers agents don’t sell real estate or accept any fees for doing so.
‘Ask about their exclusivity, if they are independent or not,’ says Cate Bakos, president of The Real Estate Buyers Agents Association of Australia (REBAA). ‘Ask them to put it in writing that they receive no other commission or income as a result of the property they’re recommending.’
The REBAA has a directory of independent buyers agents who are accredited. Using a reputable buyers agent can give purchasers peace of mind, according to Goudy. ‘Having a professional on your side will protect your long-term interest in any property you decide to purchase,’ she says.
This article was sourced from Domain.com. and written by Melissa Gerke.
CHECK OUT THE BPS FAQs PLAYLIST ON YOUTUBE
- Michael Murray from Byron Property Search charges between 1 – 1.5% for properties over $1 million, capped at $28,000. Anything under $1 million is 2%.
- Bidding at auction is $750 plus GST.
- To research, market value, inspect, negotiate and follow up for a property you have found and are interested in buying – the cost is between $3 -5000.
Contact Michael@byronpropertysearch.com.au to be sent an agreement.