What could a buyer’s agent do for you? ALASDAIR DUNCAN
In a competitive housing market, when there are many other buyers with their eyes on the prize, could a buyer’s agent help you seal the deal? We take a look at what a buyer’s agent is, and what role they play when purchasing property.
In a competitive housing market, when there are many other buyers with their eyes on the prize, could a buyer’s agent help you seal the deal? We take a look at what a buyer’s agent is, and what role they play when purchasing property.
What is a buyer’s agent?
A buyer’s agent is a licensed professional who represents the interests of a prospective home buyer, and who may be able to negotiate the purchase of a house for them. Their job, in short, is to represent the interests of a buyer in a real estate transaction.
What does a buyer’s agent do?
A buyer’s agent can do as much or as little as a prospective buyer needs, from simply helping them determine what and where they want to buy, through to acting on a buyer’s behalf through every stage of the purchase process. A buyer’s agent may be able to:
Help determine what type of property you need
When you’re in the market for a home, you’ll likely have a number of specific needs and requirements. A buyer’s agent can work with you to help you determine your requirements, from the location of a house to its size to its proximity to schools or its possible rental yield.
Create a shortlist of homes for you to look at
Once a buyer’s agent knows your specifications, they may be able to search out a series of homes that fit your particular needs, that you can then inspect. They may even have insight into homes that have not yet come up on the market.
Negotiate with a seller
If you find a home that you wish to make an offer on, a buyer’s agent can make an offer on your behalf and act for you in negotiations with the seller. They may be able to apply their skills, experience and knowledge of the market to help secure a more favourable deal than if you were to negotiate the deal yourself.
Bid for you at auction
If you do not wish to bid at auction or you are unavailable to do so, a buyer’s agent can also do this for you. Once again, you may feel they have the skills and experience necessary to secure a more favourable deal than if you yourself were to bid, or to remove emotion from the bidding process.
What does a buyer’s agent cost?
Buyers agents may charge a flat fee for their services and/or a percentage of the purchase price of the property their client buys, but this can depend on the type of service the buyer wants and the conditions of the agreement between the buyer and the buyer’s agent.
For example, a ‘full service’ buyer’s agent, who takes care of all aspects of the process, from searching to negotiating, may charge up to 3% of a home’s purchase price, according to Domain. Hypothetically speaking, if you were to purchase a $1.5 million home with a buyer’s agent who charges 3%, this would mean an additional $45,000 in fees.
On the other hand, if you engage a buyer’s agent to take care of specific parts of the buying process, they may charge a smaller flat fee. You may, for example, engage a buyer’s agent to bid for you at auction, or negotiate with a vendor, in which case, they may charge a flat fee for this one-off task, which may well be less than you would pay if you engaged them throughout the whole process.
It’s important to read any agreement or contract a buyer’s agent presents to you before signing up. This should set out the fee schedule, when you need to pay it, and under what conditions you must pay. For example, it could be a requirement that, during a certain period of time known as the ‘period of agreement’, you pay the buyer’s agent fee even if you were to find a property and buy it without their help.
Is it worth getting a buyer’s agent?
A buyer’s agent is a professional who is likely to have insight, connections and know-how in the world of real estate that a buyer might lack. Depending on your needs, a buyer’s agent may potentially be able to:
Save you time
The house-hunting process can involve a lot of steps, from browsing listings that constantly update to creating shortlists of properties and keeping track of inspection times, not to mention the fact that when you turn up to an open home, the place might be a dud. A buyer’s agent may be able to save you time and potential stress by taking care of the search for you and finding properties that meet your specific needs, while eliminating the need to spend a chunk of your weekend visiting those houses that don’t fit the bill.
Help you buy interstate
If you want to buy a property interstate, but are not familiar with the area you’re moving to, a buyer’s agent may be able to help educate you on suburbs, school catchments and the like, and seek out properties on the market that meet your particular needs. Similarly, if you can not travel interstate for inspections or an auction, a buyer’s agent may be able to take care of these things for you, meaning your move can be a seamless one when you are eventually ready to relocate.
Take some of the stress out of bidding and negotiating
You may relish negotiations and get a thrill out of bidding at auction, but if you dislike these parts of the home-buying process or find them particularly stressful, a buyer’s agent can do them in your place.
Alert you to properties before they come to market
An experienced buyer’s agent will likely have a network of industry connections, including real estate agents. They may, therefore, have knowledge of properties before they come to market, and may be able to gain you access to them ahead of other competing buyers.
Are there any downsides to using a buyer’s agent?
While a buyer’s agent can provide convenience, there are some potential downsides to using one, including the potential to be charged high fees, the potential that your needs will not be communicated, and the possibility that someone may represent themselves as a buyer’s agent when in fact they are not.
Nothing beats doing the research, leg work and viewing yourself.
High fees
As mentioned, a buyer’s agent can charge up to 3% of the purchase price of a home for their services, and in the current housing market, with houses selling for high six if not seven figures, this can mean tens of thousands of dollars. There may also be other fees involved, even if you are not successful in finding a property or if you find one yourself (these should be listed in the buyer’s agent agreement).
Potential for miscommunication
Buying a house can be a very personal process – only you will know what feels right to you when you step into a home, and only you will have a sense of the kind of house that you’d be happy to live in. When it comes to communicating your needs to a buyer’s agent, you may not necessarily be able to communicate the feeling you want from a home, and this could lead to them showing you unsuitable properties.
Potential for misrepresentation
Property Mavens warns that the term ‘buyer’s agent’ is frequently misused, and that someone may portray themselves as this when in fact they are “marketers in disguise.” They warn that a genuine licensed buyer’s agent must act on behalf of their client exclusively, and must never accept commissions or rebates from vendors or developers. They caution that, if you are concerned that the person you are dealing with is not a licensed buyer’s agent, you are free to ask such questions as how they get paid and by whom, who they are legally obligated to represent in the transaction, and whether they are a licensed real estate agent.
How do you find a buyer’s agent?
A number of buyer’s agents advertise their services on the internet, but in general terms, word of mouth can be valuable. If you’re seeking one out, it may be worth asking friends and family who have recently purchased a home if they used a buyer’s agent, and if so, what their experience was like.
According to the Real Estate Buyers Association of Australia (REBAA), individual buyer’s agents need a real estate licence to operate in Australia, and companies require an agency license. Property Mavens says that, if someone who is actually a selling agent represents themselves as a buyer’s agent to you, and you believe they are not, you may be able to report them to the relevant Consumer Affairs body in your state.