In Australia, the concept of a Buyer’s Agent is not as popular as it is in some other parts of the world. We invite you to explore this area of a property transaction with us, so you can see whether engaging services of a Buyer’s Agent can be a suitable option for your property hunt.
Why use a Buyer’s Agent?
Before making an important decision, such as choosing a loan or investing in the share market, most people tend to seek professional advice first. So why not many people recognise the value of having a Buyer’s Agent represent their interests when buying property? Good question.
Perhaps, the most obvious factor is the cost: services of a Buyer’s Agent can cost anywhere between $5,000 and $20,000, depending location and service scope. Under other models, buyers will pay a fee based on the final purchase price. In this already expensive process, it is no wonder that many people see this service as a luxury.
At the same time, if you think about all those countless weekends spent searching for the right property, dealing with pushy sales agents, showing up for auctions where an opening bid is higher than your entire budget, having professional support sounds like not such a bad idea after all.
What does a Buyer’s Agent do?
In simple terms, a Buyer’s Agent finds, researches and evaluates properties and negotiates the purchase on behalf of a property buyer.
Usually, the process begins with the Buyer’s Agent spending time with their client to work out exactly the sort of property they need now and into the future, based on their individual circumstances. Is it a house or an apartment? Is the client planning to upsize or downsize? Things like location, proximity to shops and other lifestyle factors are taken into account.
In some cases, where the buyer is not clear on some aspects, the Buyer’s Agent can provide valuable advice and help determine what would work best. If the buyer is an investor, the Buyer’s Agent will also consider factors such as potential capital growth or rental yield.
Once the search criteria are established, the property hunt begins. A good Agent will then provide the buyer with shortlisted properties to look at and then, should the buyer be interested in one them, the Agent will arrange all essential inspections for that property and commence the negotiation process.
Benefits of engaging a Buyer’s Agent
Local Market Knowledge
Regardless of how well you think you know or have researched the market, you probably still can’t compete against the years of experience of a Buyer’s Agent. These professionals tend to specialise in certain geographical areas and have a much deeper understanding of a local property market. They have sound knowledge when it comes to property value and whether it aligns well with their client’s needs and objectives.
Often, Buyer’s Agents also have prime access to off-market property opportunities as they are more likely to have established relationships with local real estate agents. This can potentially put you in a favourable position as you may have access to deals unavailable to the wider public.
Saving Valuable Time
And here we are talking about dozens of saved hours spent looking at various properties, attending open homes, sending enquiries and so on. A Buyer’s Agent can do all this ground work for you, exposing you only to those properties that fit well with your needs.
A good Buyer’s Agent can also help you organise all necessary property checks, such as Strata Records Inspections or Building & Pest Inspections, enabling you to make an informed decision about a particular property.
Polished negotiation skills will certainly fall in your favour when it comes to securing the fairest possible purchase price. A Buyer’s Agent doesn’t form an emotional connection with the property as many buyers tend to do and remains objective in this sensitive environment. This puts them in a better position to negotiate better terms on your behalf and save you from paying more than the property worth, especially at auctions.
Saving You from Buying a Wrong House
Buying property is an emotional process and it’s common for buyers to form an emotional attachment to a property they like and buy what they want but not what they need. Your Buyer’s Agent will help you stay on track and not let you get yourself into a “lemon” property by reminding you of your needs and asking critical questions you may have not considered.
Avoid Common Mistakes
Unfortunately, there are plenty of mistakes that can be made when buying property: from being lured into making pre-auction offers to buying a property that doesn’t match your needs.
A good Buyer’s Agent will help you navigate throughout the process and identify any potential red flags before it’s too late.
Are there any cons?
If your Buyer’s Agent charges a commission based on the eventual purchase price, they have an incentive to push for maximum price to earn more commission, thus not really saving you much if anything at all.
While you will definitely be saving time and effort involved in searching for suitable properties, it is important to remember that in “hot” locations, where there are more buyers than properties for sale, sellers are highly unlikely to move much on price.
Therefore, if your main reason behind involving a Buyer’s Agent is financial saving, you have to be very clear on how exactly your Buyer’s Agent is proposing to do that.
Practices such as double-dipping and receiving commission from vendors and selling agents exist, and you may find yourself being pressured into buying a particular property for wrong reasons. This can be avoided by choosing a well-respected Buyer’s Agent.
A lot of Buyer’s Agents are trained to move quickly on transactions (which is usually the whole point of getting them engaged), but you may feel rushed into a sale.
If you are not 100% sure about what type of property you want or your Buyer’s Agent doesn’t understand your property needs, they may come back to you with a list of properties that are not suitable or make incorrect recommendations, wasting your time and money.
Upfront payment may leave you out of pocket and property-less if your Agent hasn’t successfully done their job. Commission-based payment may mean you haven’t saved anything on the property purchase.
How to choose a Buyer’s Agent?
As with everything in this industry, not all Buyer’s Agents are the same and there are a few things for you to consider.
When it comes to a property purchase, deep knowledge of the local area and property market is invaluable. So, when you are ready to engage services of a Buyer’s Agent – go local! An Agent specialising in buying property in your desired location will be able to tell you more about the neighbourhood, the quality of schools in the area, which streets are better than others and, basically, leverage their insider knowledge and expertise to your benefit.
It’s also worth checking how many years they have been in this business. There are many enthusiastic amateurs who decided to turn their hand to buying property in the current market conditions.
Are They Licensed?
Every state and territory in Australia has different licensing requirements, so don’t be shy to ask for your Buyer’s Agent’s credentials upfront. You can also check whether they are a member of Real Estate Buyers Agents Association of Australia (REBAA) and Property Investment Professionals of Australia (PIPA). REBAA in particular has strict admission criteria and all members are accountable to a professional code of conduct.
Professional Indemnity Insurance
It’s a legal requirement for all Buyer’s Agents or Agencies to have a minimum of $1 million in PI insurance, which will help protect you in the event that something goes wrong. Make sure to check that your Buyer’s Agent or Agency hold such insurance.
A buyer’s agent should be impartial and independent. In other words, they need to work for and be paid by you only.
REBAA advises checking your prospective Buyer’s Agent website to see if they also sell property and asking them if they receive any other commissions. Make sure to also check your agreement with them carefully as it is a legal requirement to disclose if the Agent/Agency is receiving commissions from a third party.
It is quite common for amateur property buyers to buy the wrong property, in the wrong location, at the wrong price. And sound professional advice that will help you avoid these common mistakes can be priceless.
But before engaging services of a Buyer’s Agent, you have to be really clear about what you are looking for – otherwise you won’t get the right property or the right support. If you don’t communicate exactly what you want to your Buyer’s Agent or keep changing your mind – the whole process can go pear-shaped.
Ultimately, if engaging a Buyer’s Agent is making you feel more stressed, then weigh up the pros and the cons. After all, they are there to make you feel less stressed and not the opposite.
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The EYEON Property Inspections Team
At EYEON Property Inspections, we help you buy and sell with more confidence.