Is using a buyer's agent worth it?

If you’re familiar with what buyer’s agents do, you may associate them with affluent clients and high value properties. While a significant portion of their clientele may include wealthier buyers, a good buyer’s agent will be able to cater to a range of property budgets.

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What is a buyer’s agent?

Also known as a buyer’s advocate, a buyer’s agent is a licensed professional who searches and evaluates properties on behalf of their client who is intending to purchase. They also help negotiate the property purchase.

Buyer’s agents work in both residential and commercial real estate, and work with clients buying investment properties as well as buying homes to live in. In this article, we’ll mostly be focusing on buyer’s agents who work in residential real estate.

What does a buyer’s agent do?

Buyers’ agents can do a lot more than just search for properties. You can even get a buyer’s agent to help out with one specific service, rather than the whole package.

A buyer’s agent’s key responsibilities include:

1. To understand exactly what their client is looking for

A buyer’s agent will sit down with their client to go through everything like how many bedrooms they want, desired locations, what amenities they want to be close to, and of course their budget.

The agent will also be highly knowledgeable about the city or town and can provide guidance for a client who may be new to the area, for example.

2. Searching for properties

With the buyer’s needs and wants in mind, the buyer’s agent will commence the search for properties that fit the criteria.

Many buyers’ agents are well-connected with real estate agents and the property market as a whole. This means that they might get shown properties before they hit the market, as well as properties that aren’t advertised at all. If the client likes the property, doing this could result in a quicker, private sale with no competition.

3. Evaluating properties

A buyer’s agent might look at a dozen properties, but they won’t bother showing their client a property if it isn’t a good fit. They use their expertise and discretion to only highlight a shortlist of properties that they truly believe align with their client’s wishes.

4. Recommend inspections

They’ll do the due diligence for you and will suggest when a property needs a building or pest inspection and recommend an inspection service.

5. Negotiating on your behalf during a private sale

Once the client has expressed interest in purchasing a property, the buyer’s agent can represent their client in negotiations. They will try to get the best price and sale terms available, but they’ll also know when it’s not going to work out and when to withdraw from negotiations.

6. Bidding on your behalf at a property auction

Property auctions can be intense and intimidating. It’s easy to let your emotions get the better of you and impulse buy. Having an experienced buyer’s agent on your side can be greatly beneficial as they’ll represent you and make sure your budget is adhered to.

Other tasks a buyer’s agent might do include:

• Organising for documents and contracts to be reviewed by a relevant professional
• Helping you get access to the property before settlement (if needed)
• Representing you at the final inspection
• Recommending mortgage brokers
• Negotiating favorable settlement and deposit terms
• Analysing recent sales data and providing an appraisal
• Providing guidance on property management and leasing to investors

You can often hire a buyer’s agent for specific services if you don’t need them there for the whole process. For example, you may just want them to come up with a shortlist of appropriate properties and you’ll handle the rest. Alternatively, you might just want a buyer’s agent to bid on your behalf at a property auction.

Are buyers’ agents licensed?

Yes, not only must buyers’ agents go through specialised training in order to be qualified, but they must also be licensed through the Office of Fair Trading in their respective state or territory.

Why would a home buyer use a buyer’s agent?

There are a number of reasons to consider using a buyer’s agent if you’re planning to purchase a property. It’s not essential, but it can help for the following reasons:

1. If you’re time poor: buying a house can be time consuming at the best of times, but especially if you have a busy life. A buyer’s agent can handle the hard work, leaving you with more time to focus on other priorities.
2. Less stress: not only is property hunting time consuming, but it’s stressful too - particularly in a hot market. Having someone else do most of the work means you can avoid this pressure.
3. Having an expert on hand: the property sales industry is full of confusing jargon that can be tough to navigate if you aren’t an expert. You can also ask your agent questions about the property buying process, settlement, contracts and more.
4. Unfamiliar with a city: if someone is moving to Sydney, for example, from overseas or interstate, they likely won’t know much about what suburbs suit their needs and what the real estate market is like. A buyer’s agent will have lots of local expertise in advising new residents and helping them secure properties.
5. Investment property advice: maybe you want to buy an investment property, but are unfamiliar with the market. A buyer’s agent can give you advice on where to buy and what kind of property to purchase to get a good rental income and capital growth in the future.
6. Auction nerves: if the idea of bidding at a property auction scares you, it might be worthwhile to hire a buyer’s agent, even if it’s just for the day. Having someone else represent you means that your budget won’t be exceeded and you don’t need to worry about your adrenaline getting the better of you.
7. Access to off-market properties: you may have heard about private sales and off market opportunities. Most of the time, a buyer’s agent is the best way to get access to these properties before they hit the market (if they do at all).
8. Getting a better deal: as expert negotiators, buyers’ agents can secure you a better price, and fast!

How much does a buyer’s agent charge?

A buyers’ agent’s fee structure will vary depending on the agent, your location, and the level of service they provide. For example, if you just want a buyer’s agent to attend and bid on your behalf at an auction, their fee could be as low as $100 .

Naturally, the more you want them to do for you, the more their services will cost. If they will be doing a full property search, inspection, and negotiations, it’s common to charge a percentage of the purchase price of the property. This full service fee might be between 2-3% of the sale price.

So, for a $1,000,000 property purchase, you can expect to pay around $20,000 (2%) to your buyer’s agent if they’ve done the full service. There is often also an upfront fee that can be between a few hundred dollars, up to around $3,000. This may be reimbursed after a property is secured.

Other agents might charge a fixed fee, possibly based on a price range. For example, if you’re looking to spend between $2 million and $2.5 million, you might be charged a fixed fee for this range.

It’s smart to research and ask around - getting a number of quotes can help you get an idea of how much is normal to pay for your area.

How can I find a buyer’s agent?

Using a search engine, you can look up buyer’s agents in your area and take the time to read through reviews. If you know anyone who has used a buyer’s agent, it’s worth asking for their contact.

You can also browse through agents in your area on the Real Estate Buyers Agents Association of Australia website.

Are buyers’ agents only for the wealthy?

Buyers’ agents can work with a range of budgets, so they aren’t just for the super rich. A good buyer’s agent can be worth their weight in gold, so it’s up to you to decide whether you need their services.

Remember that you don’t have to go the full service route, if you just want a buyer’s agent to step in for you at auction, that won’t cost too much.

However, if keeping your property buying expenses low is a priority, it might be smart to skip the buyer’s agent this time.

Do buyers’ agents save you money?

Yes, a buyer’s agent can save you money. It’s not guaranteed, but their insider knowledge and expert negotiation skills can prove to be useful. If you want to be strict with your budget, you can inform your agent and they’ll eliminate potentially higher priced properties from their search.

The ways a buyer’s agent can save you money include:

Having access to off-market and pre-market properties where sellers may want to sell quickly. As a result, you may be able to nab a lower purchase price. As professional negotiators, their goal is to get you a desirable property within your budget (ideally leaving you with some money in your pocket). At property auctions, buyers’ agents bid on your behalf and know when to opt out of a potential sale. Through their experience, they may be able to advise you on whether they think a particular property is worth the asking price.

A good buyer’s agent can make the property buying process much easier. When it comes to securing a home loan, it’s a good idea to speak to a mortgage broker. Lendi’s Home Loan Specialists are on hand to provide you with free, expert advice.

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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.