The lowdown on buyer’s agents

The lowdown on buyer’s agents

Purchasing property can be time consuming and stressful, and a growing number of Australians are employing buyer’s agents to hunt and haggle on their behalf.

So how do they operate; how much do they cost; and what are the benefits of using one?

 

Licensed to buy

Buyer’s agents must hold a real estate licence from the Office of Fair Trading, in every state in which they operate. It’s the same licence as that required by sales agents, except in NSW, where a separate buyer’s agent licence is offered.

It’s not known how many individuals work as buyer’s agents across Australia. The Real Estate Buyers Agents Association (REBAA) is the peak body for the sector and has a membership of 75.

Most members are capital city-based and have a background in property sales or advisory services, according to REBAA president, Rich Harvey.

Typically, they’ll offer two types of service.

A full search service will include developing a brief based on client specifications, researching target suburbs, shortlisting and appraising properties, conducting due diligence, negotiating a price or bidding at auction and conducting pre-settlement inspections.

Alternatively, buyers who want to do their own househunting may opt to pay for appraisal and negotiation services only.

Counting the cost

Costs vary between agents, but will typically comprise between one and two per cent of a property’s purchase price.

Most buyer’s agents charge a retainer upfront and either a flat fee, or a commission based on the purchase price when a contract goes unconditional.

One Sydney firm, for example, charges a $1500 retainer and a success fee of $8400 for properties valued under $500,000. Charges increase according to the value of the property and buyers spending between $900,000 and $1 million will pay a $2000 retainer and a success fee of $17,900.

Meanwhile, individuals who just want help sealing a deal can pay around $2000 for negotiation services, on up to three properties.

Assessing the benefits

Do these sorts of sums represent a good investment? If you’re all over market values in the area you’re looking to buy, have time to attend showings and fancy yourself a gun negotiator, you may not think so.

If not, enlisting specialist help can provide several benefits.

It generally speeds up the buying process, for starters. Typical home buyers will take up to 12 months to purchase a property from the time they first start looking, according to Harvey. With a buyer’s agent on side, 30 to 50 days is the norm.

As well as being au fait with property types and values in the area, a well-connected agent should have access to properties that haven’t yet come on the market. This could mean you get first dibs on the dwelling of your dreams, before it’s advertised.

And having someone who’s not emotionally involved in the purchase handle the negotiations can reduce the chance of you paying over the odds. It’s hard to stick to your ‘Art of the Deal’ game if you’ve fallen in love with the lounge-room layout or the view from the deck.

“Even if the market is depressed, people can still overpay,” Harvey says. “Having someone in their corner can level the playing field.”

Professional help

Buying smartly begins with having finance organised before you begin your search. Your Smartline Adviser can provide you with information about your borrowing options and help you obtain a pre-approval.

DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.