Buying a new home or investment property is probably one of the most important decisions you’ll make in your life. That’s why you need someone to hold your hand and show you the ropes.
A buyer’s agent, also referred to as a buyer’s advocate, is a licensed real estate property professional who works for you and acts on your behalf. They help buyers search for, evaluate, and negotiate a property purchase.
The main aim of working with a buyer’s agent is to ensure you get the best terms out of a property purchase.
It doesn’t matter whether you’re a newbie or a seasoned investor. The truth is that the Australian market can be quite complex and you might not feel fully confident to take the big step by yourself.
That’s where buyer’s agents come in.
In this article, we’re going to look at what buyer’s agents do, why you should consider working with one, and generally what to expect when working with one.
What Does a Buyer’s Agent Do?
A buyer’s agent helps you find your dream property. They assess your needs and requirements, such as preferred location, property type, and budget, to determine what exactly they should look for. It also helps them narrow down their search.
Once they clearly understand what you’re looking for, they comb the real estate market to find properties that match your criteria and create a shortlist for you to choose from. They also arrange a tour for you to physically view the property.
In this process, the buyer’s agent provides insights into each specific property, including its true worth and potential issues or areas that might need fixing, to help you make an informed decision.
If the property you’re buying is purely for investment purposes, the agent can also inform you of market trends and forecasts.
Once you’ve found a home you’d like to invest in, the agent acts as a negotiator to ensure you get the best deal possible. Your agent can engage the seller’s agent to come up with an offer that suits your best interests.
They can negotiate on everything from the purchase price to the closing date.
If you’re buying the property at an auction, the buyer’s agent will bid on your behalf.
Once your offer is accepted, the buyer’s agent will accompany you through the home inspection and closing process. This process can be quite stressful, but having an agent by your side can ensure everything goes seamlessly.
How Is a Buyer’s Agent Different from a Real Estate Agent?
A buyer’s agent is different from a real estate agent. A real estate agent represents the property vendor or seller. Also known as the listing agent, their job is to represent the seller’s interests.
A real estate agent is responsible for marketing the property, arranging showings, and negotiating with the buyer’s agent. They work to get the best possible price for the seller.
On the other hand, a buyer’s agent represents the interests of the buyer and helps them navigate the complex homebuying process.
The difference is the client they represent. A real estate agent represents the seller of the property, while the buyer’s agent represents the buyer.
Why Hire a Buyer’s Agent?
Time Savings
The property search process can be time-consuming, especially the due diligence stage. If you’re in a competitive market, missing out on one property could mean starting all over again.
A buyer’s agent shoulders all the responsibility on your behalf. The agent handled time-consuming tasks, including property research, organising inspections, and coordinating with third parties, such as lawyers, agents, etc.
Since they have years of experience in the local market, they can expedite the process by spotting the properties that match your criteria faster. If you do it by yourself, you might waste time chasing the wrong opportunities.
This allows you to focus on your responsibilities while the agent takes care of the complex details.
Access to Off-Market Properties
Due to their access to networks and industry intel in the local market, home buyer’s agents often have access to exclusive, off-market properties that aren’t listed publicly.
This gives you an edge in finding properties you wouldn’t otherwise see, especially if you’re located in a competitive market when hot properties sell before listing. This helps you secure the best deals with minimal competition.
Expert Negotiation
A buyer’s agent is skilled in the art of negotiation. This helps you negotiate the best deal for your purchase.
Also, it’s not uncommon for emotions to break down the negotiation. We’ve also seen clients overpaying for property due to personal bias and emotional-decision making. By working with a buyer’s agent, you take emotion out of the negotiations since they’re impartial intermediaries.
For example, if you find a property you like but the listing agent tells you there’s stiff competition, your immediate reaction might be to make compromises. But a buyer’s agent keeps you on track and stops you from making decisions you might regret down the road.
Buyer’s agents use their market knowledge and understanding of property values to drive the negotiation in the buyer’s favour.
Reduced Risk
Property investments have a lot of potential risks, such as structural issues and unforeseen market shifts. A buyer’s agent’s job is to conduct thorough due diligence on the property to protect you from potential risks.
Your agent oversees property inspections, title checks, and other legal requirements to ensure there are no hidden issues.
This process helps buyers make informed decisions and avoid costly mistakes that could arise from overlooking critical details.
Stress Reduction
The property buying process is quite stressful due to its complex nature and the many variables involved. A buyer’s agent reduces the overall stress involved by handling all the complex tasks and paperwork. This makes the process smoother and less overwhelming for you.
You can rely on the agent’s expertise, helping you feel confident and supported throughout the journey.
How Does a Buyer’s Agent Work?
Initial Consultation
Working with a buyer’s agent starts with an initial consultation where the agent seeks to understand your needs, budget, property preferences, preferred location, and any other special requirements.
The main goal of this consultation is to help the agent develop a custom search strategy.
The agent may also explain their fees, services, approach, and timelines so you can know what to expect.
Property Search and Shortlisting
The agent begins the search for both on-market and off-market properties using their extensive property knowledge and experience. The goal is to shortlist properties matching your requirements.
This saves you time and ensures you only view high-potential properties matching your search criteria.
Due Diligence and Evaluation
After shortlisting matching properties, the buyer’s agent conducts due diligence. This process involves a thorough assessment of the property, including inspections for structural integrity, pest issues, and compliance with regulatory requirements.
Due diligence also includes market analysis and legal checks to ensure the buyer makes an informed decision.
This process helps the buyer understand any risks associated with the purchase or any repairs needed.
Negotiation and Securing the Deal
Once the property has satisfied your expectations, the buyer’s agent proceeds to the negotiation stage to secure the deal. Since their work is to protect your best interests, they seek to secure the best price and terms possible.
This process includes drafting offers, negotiating concessions, and navigating counteroffers.
If the property is being sold at an auction, the buyer’s agent also acts as an expert bidder and maximizes your chances of winning the bid.
Support Through to Settlement
The buyer’s agent’s job doesn’t end there. They also provide support through settlement. Once your offer is accepted, the agent coordinates various professionals involved in the transaction including solicitors, building inspectors, and mortgage lenders.
They also ensure all necessary is completed accurately and within the required deadlines. In short, they guide you until you take complete ownership of the property.
How much does a Buyer’s Agent Cost?
Some buyer’s agents charge a flat fee while others charge a percentage of the purchase price, usually between 1.5% and 3%.
Most agents will charge an engagement fee as a retainer, which is simply compensation for the amount of time and effort spent on consultation, property search, and due diligence. It’s also a way for the buyer to demonstrate commitment.
The engagement fee could range anywhere from $3,300 to 50% of the total fees payable.
The total buyer’s agent’s fee depends on your requirements, budget, search parameters, and level of complexity.
The percentage-based fee is a bit disputable since there’s less incentive for the agent to negotiate the lowest price possible. The higher the purchase price, the higher the commission. Rogue agents could take advantage of this to secure a larger pay.
Some agencies might combat this by setting a cap based on the lower end of your budget. For example, the agent could charge an engagement fee of $3,500 and a 2% commission on $1,250,000 if your budget was between $1,250,000 and $1,500,000.
Some agents may even waive the engagement fee if the purchase is successful. For example, 2% of $1,250,000 is $25,000.
Some property buyers may see this cost and decide to do it on their own. But you need to see the cost as an investment. The savings they provide through negotiation and avoiding costly mistakes often outweigh the fees
Who Should Hire a Buyer’s Agent?
First-Time Property Buyers
First-time property buyers often face steep learning curves in the Australian market. A buyer’s agent can help them navigate these murky waters by offering guidance and helping them understand property values, market dynamics, and the details of contracts.
They help first-time property buyers avoid common pitfalls, negotiate favourabe terms, and secure suitable properties without getting overwhelmed by the process.
Property Investors
Investors looking to expand their portfolios can benefit from a buyer’s agent expertise. The agents possess a deep understanding of the local property market and can assist investors find properties aligning with their investment goals.
In addition, the agent can help you conduct due diligence and purchase a property with high return and growth potential.
Auction Buyers
A buyer’s agent can provide vital insights into auction strategies and help buyers set suitable bidding limits. They also provide market advice and ensure the buyer doesn’t overpay. Their expertise also ensures that the buyer is confident when preparing for an auction.
SMSF Property Investors
Buying a property through a Self-Managed Super Fund comes with unique rules and regulations. A buyer’s agent familiar with SMSF investments helps the buyer identify properties that are SMSF-compliant, conduct thorough due diligence, and navigate the financial and legal complexities.
Property Developers
Property developers often require help sourcing land or properties for development, renovation, or subdivision. A buyer’s agent can offer a property developer insights into zoning laws, market demand, and potential development opportunities.
The agent can also evaluate potential returns, assess the property’s feasibility, and negotiate terms that align with the developer’s budget and goals.
Buyers Interested in Land Purchases
Purchasing land for commercial or residential use often requires specific expertise. A buyer’s agent can help with land evaluation, understanding local zoning laws, assessing the land’s potential, and determining future opportunities.
This ensures you buy land offering strong long-term value.
Commercial Property Buyers
Commercial investments are different from residential investments. A buyer’s agent specializing in commercial property understands tenant considerations, market trends, lease structures, and ROI calculations specific to commercial properties.
The agent can help you find office spaces, retail shops, or shopping malls that match your investment goals.
Key Considerations When Hiring a Buyer’s Agent
Experience and Credentials
Experience and credentials demonstrate whether the buyer’s agent can guide you through the property purchase process. Choose an agent with extensive experience with the specific property type and real estate market you’re interested in.
Also, check their licences and certifications. You can search a public register to ensure they’re a licenced real estate agent. The public register will include their licence number, status, and any issues or tribunals against their licence.
You can also check whether they’re a member of the Real Estate Institute of Australia. Membership in an institute means they’re highly experienced and committed to professional standards.
They should be a member of the Real Estate Buyers Agents Association (REBAA), which is the umbrella body for all buyer’s agents in Australia.
Local Market Knowledge
A buyer’s agent’s knowledge of the local market benefits you as the buyer. An agent with local market knowledge will give you insights into neighbourhood amenities, upcoming developments, market values, off-market opportunities, and so forth.
Such an agent is also well-versed in the relevant regulations and zoning laws that may affect your purchase. They’ll help navigate any legal complexities and ensure you stay compliant.
You can ask the agent for a list of their recent client purchases to evaluate their experience in the market you’re experienced in.
Fee Structures and Transparency
Understanding your buyer’s agent’s pricing structure before working together is important to avoid surprises in the future. Ask the agent for a breakdown of costs and understand whether they charge a flat fee or a percentage of the purchase price.
Avoiding Common Buyer Pitfalls
Here are some common pitfalls to be wary of when navigating the property market without a buyer’s agent:
- Overpaying for a property due to a lack of negotiation skills – Without a clear understanding of the local property market and extensive negotiation skills, you risk overpaying for a property.
- Failing to conduct thorough due diligence on property history, market value, or title issues – Many property buyers overlook the due diligence process, including pest inspections, zoning restrictions, and property title checks.
- Emotional decision-making during negotiations, leading to unfavourable terms – Emotions often cloud your judgement. This causes rushed decisions or overcommitting financially.
A buyer’s agent helps you avoid all these issues by offering expert, impartial, and objective advice and handling the complex tasks of due diligence and negotiations.
Ready to Find Your Dream Property? Let Wayfinder Help
There are many benefits of working with a real estate buyer’s agent. They include time savings, access to exclusive listings, and negotiation expertise.
Real estate buyer’s agents are more than just property specialists. While they should be aware of the tricks used by sellers and their agents, they should understand and prioritize what you want as a buyer.
That’s why you should work with tried and tested buyer’s agents like Wayfinder. We’re your trusted property matchmaker and we go above and beyond to deliver personalized and authentic services.
Contact us today and start your seamless property-buying experience.
Frequently Asked Questions About Hiring a Buyer’s Agent
Can a buyer’s agent help with auctions?
Yes, a buyer’s agent can guide clients through the auction process, from setting a budget to bidding strategies. On top of that, they can bid on the buyer’s behalf and ensure they don’t overpay.
Are buyer’s agent fees tax deductible?
No, buyer’s agent fees aren’t a claimable expense if you’re purchasing a home to live in. However, future tax deductions are possible if you’re purchasing an investment property.
While buyer’s agent fees aren’t tax deductible, they’re included in the calculation of your investment property’s cost base when you sell or dispose of the property. In short, the buyer’s agent fees will be included in the tax calculations when selling the property.
What should I ask a buyer’s agent before hiring them?
- Are you a licenced buyer’s agent?
- Are you a member of REBAA and other industry institutes?
- What’s your experience as a buyer’s agent?
- Are you representing any other party?
- How many off-market properties have you secured for your clients in the past 2 years?
- Is there any limit to the number of properties I can look at before buying?
- What’s your pricing model, and how much do you expect from the purchase?
