Using a buyers’ agent to purchase real estate is becoming more widespread throughout Australia as investors and home buyers have come to appreciate the benefits they provide.
Buyers’ agents are specialists in searching, evaluating and negotiating the purchase of property on behalf of the buyer. They do not sell real estate. The key difference between a buyers’ agent and a traditional selling agent is who they represent. A buyers’ agent works exclusively for the buyer, whereas the selling agent works for the vendor (seller). By law, an agent cannot act for and accept a commission from both parties in the transaction. The buyer only pays the agreed fee at the point of property exchange. They receive no commissions or kickbacks from sellers or their agents.
Many think that using the services of a buyers’ agent is too expensive. This is not the case. Buyers’ agents can save a consumer money, time and stress, whatever their budget. In the US, over 50% of the population use a buyers’ agent to assist in the purchasing process.
Most buyers’ agents offer at least two levels of service:
- The full search service, whereby the buyers’ agent finds and shortlists properties meeting the client’s search criteria and then evaluates and negotiates the recommended property.
- The negotiation or auction bidding only service. This is where the client actively searches the market and engages the buyers’ agent to negotiate a private treaty or bid at auction.
Buyers’ agents can give a consumer the upper hand by their understanding of the auction process, bidding tactics and by not being emotionally involved in the auction or negotiation process. For investors, the buyers’ agent’s fees are tax deductible. Buyers’ agents generally charge an engagement fee before they begin the search. The fees are either a flat fee or a percentage of the property purchase price.
An important question to ask a buyers’ agent is whether they are truly “exclusive” or “independent”. If they accept sales commission from vendors or developers then they cannot be classified as “independent” as they are acting in the interests of the seller. Consumers should only deal with a licensed buyers’ agent. Consumers can check licences via the Office of Fair Trading in each state. Consumers should also check whether the buyers agent is a member of the state Real Estate Institute.
Here are 8 key reasons why you should use a buyers’ agent:
- Gain access to a wider choice of properties (many not even advertised) via the contacts/ network of the buyer’s agent.
- Leverage your time – instead of searching the newspapers and internet every weekend, get someone else to do the hard work short listing suitable properties.
- Use a professional negotiator to obtain the lowest possible price.
- Eliminate the stress and frustration of being shown inappropriate and unsuitable properties by selling agents that don’t listen to the buyer’s needs.
- Have an independent, professional buyer’s agent on your side.
- Source the right type of property in locations with good prospects for capital growth.
- Help investors build their property portfolio faster by buying in growth areas.
- Provide investors with additional confidence and due diligence information.
Buyers’ agents can also ensure consumers don’t pay too much by providing background information about the true value of the property they are seeking to buy, so that they can make an informed choice. If a consumer chooses a licensed, professional buyers’ agent, the saving they make on their next property could run into tens or hundreds of thousands of dollars, could be less stressful and is likely to take less of their precious time.