Unfortunately, there is a common misnomer that buyer’s agents are just ‘for the wealthy’ and not for the average Australian home buyer. An investment in a professional who’s been buying property for 10 or 20 years, who has the contacts and knows how to negotiate, is actually making you money and saving you money all at the same time. Generally speaking extremely wealthy people can afford to lose more money than your average first home buyer.
It comes down to a level of risk and the average Australian first home buyer is not able to take that level of risk without professional advice. You only have to look at the average house price 10 years ago to now to see how prices have jumped in every capital city around Australia. Hindsight shows what you would have made in capital growth versus the cost of engaging a buyer’s agent. Likewise by panicking and either overpaying or not doing anything at all, costs a whole lot more than engaging a professional.
Depending on the industry experience of the buyer’s agent you employ, for a full search, inspection, due diligence and negotiation service, the industry average fee is somewhere between 2% and 3% of the purchase price, plus GST and an engagement fee to get started, or a flat fee flat fee based on the purchase price and an engagement fee. You may also want to engage your buyer’s agent to negotiate only on a property you have found yourself, or attend an auction on your behalf and bid. These fees can be tailored depending on the level of service required.
There is a plethora of free information available on the internet and via mobile apps but the serious danger we see for buyers and investors is how this information is interpreted and acted upon. While an app can punch out a price estimate in five seconds, it can takes years of training and experience to understand property values accurately. If a property has been renovated, there is no way an online valuation tool can include the added value of that. Nothing beats physically inspecting a property and if you don’t have the time to do the legwork, then get a buyer’s agent to do it for you.
Engaging a buyer’s agent adds yet another layer of protection by analysing the data, negotiating on behalf of the purchaser and ensuring they make an informed decision rather than an emotional one. The buyers’ agents have access to real time data with the most recent sales and suite of other historical databases and predictive reports.
Consumers should look for the following five qualities when looking to engage a buyer’s agent:
Field and experience
Look for agents who have a minimum of 12 to 24 months’ experience in the particular area that you are interested in. It is worth finding out about their most recent purchases.
Check with the relevant state’s department of fair trading to ensure they are appropriately licensed and insured. They should also have the relevant qualifications.
Membership of the Real Estate Buyers’ Agents Association of Australia
If they aren’t a member, ask why not. REBAA is Australia’s only national professional association for buyer’s agents. In order to become a member, agents must go through a stringent process. Once an agent is a member, they have to adhere to a strict code of conduct.
A good agent will have a wide network of selling agents to access properties off-market and earlier than the general public. They should also be able to connect with you the representatives of complementary professions.
A solid track record
Ask for references from at least three recent clients who you can contact to discuss their experience with the agent.
The first thing that a buyer’s agent does is understand what the property is worth. They look at comparable sales in the same suburb in the same neighbourhood. Once you know what a property is worth you can move forward and negotiate with confidence. It helps you determine the best strategy on how to negotiate on a property. A good relationship with a selling agent can assist with inside knowledge and help with the negotiation by previewing properties before listing and understanding the real price the vendor wants. A selling agent is much more likely to deal with a buyer’s agent they know and trust, versus a buyer who they have never seen because they are more confident they will make the sale.
Buyer’s agents are specialist negotiators. We specialise in property. We understand how to deal with selling agents, how to price a property, and then we understand the various methods of sale and how to get that deal across the line. The important thing is getting the right property at the right price, not necessarily getting a ‘bargain’.
Selling agents generally bid in a very different way to how a buyer’s agent would bid at auction. Generally they bid the way they would like buyers to bid at their auctions (and push the price to the limit). Even though they may be not connected with the vendor, ask yourself if there is any vested interest? Ask yourself ‘Why are they willing to bid at auction for free?’ Usually it’s because they want to list your property for sale once you’ve bought. Beware and remember the golden rule: “Free advice is often more expensive than paying for the advice upfront”.
As a buyer you always need to ask if there is a vested interest in anything. Why are they wanting to act for you for free? Usually it’s because they want to buy developer stock or take their fee from the vendor – hardly exclusive or independent advice. Essentially, these “free buyers agents” are selling agents in disguise. They have a huge financial incentive to help you buy that property and that’s not necessarily in the investor’s best interest.”
Consumers should carefully check the credentials of any buyer’s agent and confirm they are firstly licensed and ask questions about their experience, time in industry, research methods, and how they are paid.
The most important thing is that a buyer’s agent won’t have the same emotions and inexperience that most buyers have. A buyer’s agent brings a level head and good solid guidance based on experience. A good buyer’s agent will be able to qualify what’s a good property fast and will have the ability to narrow down the field so you can act quickly and avoid buying a lemon.
All REBAA members are exclusive buyer’s agents which means they only act for the buyer – they are not taking money from the owner as well as a buyer. Make sure you look at your prospective buyers agents’ website to see if they sell any real estate and ask them directly ‘Do you sell real estate or do you receive any commissions or kick-backs?” Check your buyer’s agency agreement carefully as there are sections included from the Office of Fair Trading where they are required to declare if they are receiving any kick-backs or commissions from any third party.
The main regulatory body in each state is the Office of Fair Trading. REBAA is the only national body representing professional buyers’ agents. REBAA has worked hard to raise awareness of buyer’s agents over the past decade and to improve the standards of the industry. Our members are committed to offering services with stringent ethical standards and undertaking proper due diligence.
To be a REBAA member, agents should:
Get in touch today and we can answer your questions.