Why you need a Buyers Agent!

[Yamba Dave]

In the real estate world - which is more like a real estate jungle - property buyers have few friends. While you may be happy to make an offer on a home or bid at auction by yourself, do you really know what a property is worth? Many buyers think if they can get any reduction from the asking price they are master negotiators. This can be a costly mistake.
Let me explain . . .

When someone decides to sell their property, generally the first thing they do is start ringing real estate agents to get a few appraisals. The agents know they are competing against one another to win the listing and the home seller is usually only interested in two things: how much can you get me for my home and how much do you charge?

Many times the agent that quotes the highest potential list price is the one that wins the listing. While it is true that agents must justify their appraisal price and they do this by comparing what similar properties have sold for, it is a little bit like comparing used cars. Just because one car is about the same age as another and looks similar on the outside, doesn’t mean that they are worth the same on the open market. There may be vast differences in mileage, condition and added extras. The same is true for properties. You have to make sure you are comparing apples with apples.

The agent usually quotes the seller a price range in which they believe the property should sell. Then the opening list or asking price has to be worked out. This has no real bearing on the price range the agent believes the property should sell for. The list price may have what is commonly called ‘room for negotiation’ added on by the agent, or it may be the price the seller ‘needs’ to get before they will sell. There are many sellers out there who will only sell if they get ‘their price’ which has no real relationship with what the property is worth.

Many buyers walk straight into this minefield of pricing and think if they can get a $5000 reduction from the asking price then it’s a great deal. They have no real idea of the true market value of the property. Then there are other factors which many buyers never think about or investigate. What is the area really like? What are the neighbours like? How long has the property been for sale? Why are they selling?

A Buyers Agent specialises in buying property. Buying a property is one of the most significant decisions you will ever make. This decision may only be made a few times in a lifetime and can involve a significant amount of time, money and emotion. It is simply too important not to engage professional help!

Currently the majority of buyers go directly to a real estate agent for advice, however these selling agents are engaged by the vendor and may not act in the buyers best interests. At Home Buyers Advantage we represent you, the buyer, in devising and implementing appropriate strategies and tactics to successfully purchase a particular or suitable property at the best possible purchase price.

[bemetoday]

A Buyer's Agent represents the buyer and maintains a loyalty to the buyer to:
- Protect their best interest
- Protect their negotiating position
- Advise and give opinion to assist in the transaction
- Helps the buyer to get the best deal on the home

[Philip]

Does a Buyers Agent charge a flat fee or percentage of property value?

[Yamba Dave]

Some charge a percentage, but I use a flat fee which is negotiated before starting. It doesn't seem fair if your Buyers Agent makes more money if you pay more for the property. That's what happens with percentage fees.

[Philip]

It doesn't seem fair if your Buyers Agent makes more money if you pay more for the property.

Thanks. Yeah, that makes sense. Could you give me a ball park figure on what a (fixed) buyers agent fee would be on a 500k - 700k property? Not trying to put you on the spot, just get a rough idea of fees.

[Yamba Dave]

It does depend on the sort of property you are looking for. Obviously, finding the right property for some buyers is harder than others. That's why I like negotiating a fixed price. But as an average figure it would be around $7-$8k. Many buyers agents are charging 2% which would be $10-$12k.

[Philip]

Thanks for the info, Dave - much appreciated.

[jbocker]

I have thought that using a buyers agent might be a good idea for buying in an area where you dont have much knowledge particularly buying in the 'wrong part of town'.
But I must admit I have some reservations on costs.
Are you commited to a fee, regardless of whether or not an eventual purchase is made?
Are you alienated from doing any research and negotiation in the location, in other words can you find your own property - and what fee could you be subjected to.
I thought the 'fee' was the paid out of a share of the selling agents commission (for introducing a buyer). That is the buyer does not pay a fee.
Conflict of interest, agent is selling what they are offering to the buyer (I daresay there are rules about that??).

To me a buyers agent would be useful in this situation. You have an interest in a property, but are keen to purchase with some significant discount, and ask the agent to represent your buying, utilising their negotiation skills. The fee is a % of the discount attained.

The more I think of this the more it worries me, are there buyers agent guidelines (rules), like there are for selling?

[Yamba Dave]

Buyers Agents in Australia are licensed professionals that specialise in searching, evaluating and negotiating the purchase of property on behalf of the buyer. We do not sell real estate. The key difference between a Buyers Agent and a traditional Real Estate selling agent is who they represent.

A Buyers Agent works exclusively for the buyer, whereas the selling agent works for the vendor (seller). By law, an agent cannot act for (and accept commissions from) both parties in the transaction. Selling agents are obligated by law to obtain the highest possible selling price for the seller yet at the same time work hand in hand with potential buyers. Ultimately they have the seller’s best interest at heart.

Buyers Agents are subject to the Rules of Conduct (http://www.fairtrading.nsw.gov.au/Property_agents_and_managers/Rules_of_conduct/Buyers_agent.html) as set down by the Department of Fair Trading in each state. You can use a Buyers Agent to help you in any way you need. Many buyers are starting to realise that it's well worth having a professional on their side in the same way the seller does. After all, buying property is one of life's biggest investments. It's funny how most people will never buy a car without first getting it checked, yet the same people will purchase a home based on the knowledge provided by someone who is working for the seller.

Most Buyers Agents will quote a fixed fee for whatever level of service you would like. It can be a full locate, evaluate and negotiate service, or a comparative market analysis on a property you have found, or help with negotiating or bidding at auction. It's totally up to you. There is generally a deposit to get things going, but you are not up for the quoted fee until you are successful and happy.

Cheers
Dave

[jbocker]

Thank You Yamba Dave. I did not realise there was such an organisation. Good to hear that there is, I was under the false impression they were RE agents acting for the buyer.
I will look through the rules of conduct.
cheers
jb