All buyer’s agents are not the same. When I first started being a BA back in 1999 it was a very unknown entity. I must admit I was very inexperienced and had to learn on the job. But I did have behind me my own buying, renovating, or building experience over quite a few properties. Also being a long-term local already I had a lot of local knowledge.
These days the buyer agent industry is well established and an accepted way for buyers to buy a property. The BA industry has grown a lot – especially here in Byron Bay. After being the only BA in the area for most of this time there are now possibly ten or more. I don’t mind that and accept that competition is a good thing and wish the new players well. Unfortunately, the system that we currently have allows many new players in the market without first being fully trained or mentored sufficiently.
I am posting this article below which I thought was quite good at illuminating all you need to know before engaging a buyer’s agent:
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What’s the difference between a buyer’s agent and real estate agent?
In a nutshell, the difference is their client. A real estate agent’s client is the seller (vendor) of the property, whereas the client of the buyer’s agent is, as the name suggests, the buyer (purchaser). A real estate agent is paid by the seller to market and sell their place. A buyer’s agent is paid by the buyer to find a property or undertake a range of services associated with that.
What might a full-service buyer’s agent offer?
First up, the buyer’s agent should work with their client to discover exactly what sort of property they’re after everything: from location to number of bedrooms, closeness to shops, transport, schools and other lifestyle preferences.
The buyer might need a hand narrowing down their search, especially if it’s their first home. They might be new to a city, or unaware of emerging hotspots. If that’s the case, the buyer’s agent can introduce them to areas they might be interested in. If the buyer’s an investor, their agent would focus on potential capital growth or rental yield.
Once all this information’s gathered, the buyer’s agent can use it to form a buyer’s brief and formulate a strategy for finding ideal properties. Then the second stage, the property hunt, can begin. Ideally, the agent will provide a shortlist of properties for the client to look at: in ‘hot’ property markets they can notify clients as soon as a matching property becomes available.
If their client’s interested in one particular property, the agent will carry out extensive due diligence, supplying a thorough property appraisal and their thoughts on the current market value. Should they still want to proceed, the agent can negotiate the property purchase on behalf of the buyer. After a successful sale, if you like, they might even liaise with your conveyancer, do a pre-settlement inspection and introduce you to a property manager if you’re investing.
How much do buyer’s agents cost?
There’s no set rule as to what you’d pay. Some agents charge a fixed fee, others charge a percentage of the purchase price (generally ranging around 1.5%-3.5%), and some also charge an up-front retainer fee when you first engage them.
A good buyer’s agent might have years of experience in the buying process and auction bidding, and some even guarantee they’ll find a suitable property within a set time frame, say 6 months, or you pay no fee.
Testimonial – Dom’s experience
“We were first home buyers with a very young family, and after 18 months of looking for our ‘dream home’, a friend recommended a property buyer’s agent. So we did the numbers and signed an agreement: a 2% fee for finding and securing the right place within 6 months – no property, no fee. Our agent screened the week’s listings, did all the leg work, and emailed through their open house photos.
By month 5, our agent suggested an amazing off-market property that wasn’t even on our radar. He expertly negotiated the best possible price, and then raced across town between our lawyer and the real estate agent to deliver our deposit cheque – before a competing couple could. For us, getting the right property for the right price, as well as getting our weekends and sanity back, offset the buyer’s agent fee.”
Dom, Westpac home loan customer, Sydney.
Four reasons Australians might use a buyer’s agent
It takes a lot of time and energy to find the right place, with most buyers spending countless hours trawling sites and attending viewings. A buyer’s agent has the potential to add value, particularly if you’re a first home buyer who’s missed out on sales, you’re investing in an unfamiliar area, or you want professional help landing your next home.
- Experience
Understanding the tricks of the trade, local knowledge, and bringing expert negotiating and bidding skills to the table.
- Value
By achieving the best possible purchase price and saving you time, an agent can offer value in the long run.
- Early access
Established relationships with real estate agent, access to unadvertised properties, a focus on capital growth and rental yield for investment property buyers.
- Save time
Have an expert do all the time-consuming filtering, open home previews and negotiating for you.
Three things to consider
Although a buyer’s agent might potentially save you money, there really is no guarantee. So it’s a good idea to do your research upfront.
- Independence
Check your agreement to see if there may be a conflict of interest, as licensed buyer’s agents must declare if they’ll receive any commission from realtors or 3rd parties.
- Fee structure
Note that a percentage price fee structure can disincentivise your buyer’s agent from negotiating the lowest sale price for you – as they’ll receive less commission.
- Licenced
Ensure you deal with a licensed buyer’s agent, by checking with the consumer protection agency relevant to the state or territory the property’s in. In NSW, for example, they’ll need to hold a real estate license or have a Certificate of Registration to practice.
Choosing a Buyer’s Agent
Here are some questions you could ask prospective agents:
How many years of experience do you have and what are your qualifications?
Do you have good local knowledge of my search areas?
What are your most recent purchases?
Do you own any property yourself?
What’s your search and buying process?
Do you have good contacts and access to unadvertised properties?
Do you sell real estate?
Will you put in writing that you receive no other commission/income as a result of the properties you recommend?