I’m seeing an increase in clients asking about buyer’s agents.
What is a buyer’s agent, what does a buyer’s agent do, how much do they charge, should I be using a buyer’s agent?
If you’ve heard the term on shows like ‘The Block’ but are unsure of exactly what a buyer’s agent is, then keep reading. This guide will answer all your common questions, helping you decide whether to go it alone or get some professional help for your next purchase.
What buyer’s agents do
When house hunting, many buyers feel that finding a suitable property is the hard part, but this is just the first step.
The main challenge is not finding a property, it’s actually buying it. This is where the hard work begins.
In order to complete the purchase, and avoid making costly mistakes a lot needs to happen in a very short period of time. Often anywhere from 1-7 days, including:
- Knowing the property’s true market value and making correct offers
- Negotiating with experienced sales agents
- Competing with other buyers in a hot market
- Organising pest, building and strata inspections, and knowing what to look for in these reports
- Pre-auction offers and bidding at auctions
This is where an experienced buyer’s agent can add a lot of value, saving the buyer time, stress and money.
In a game that often feels stacked against the buyer, it’s no surprise more people are turning to a buyer’s agent to help level the playing field in the property market.
7 Ways a buyer’s agent can make the property buying process easier
An experienced buyer’s agent can assist with any or all steps in the property buying journey, including:
1. Needs analysis
Working with you to help define the ideal property for your needs.
2. Property Search
Utilising online and off market access through their networks to find properties that match your specific requirements.
3. Accessing Off-Market Properties
Experienced buyer’s agents have extensive networks, and relationships with local real estate agents. This means having access to properties before they hit the market. Many of the best properties never even get listed publicly.
4. Property Inspections
A buyer’s agent can inspect properties on your behalf and provide their expert opinion.
5. Property Appraisals
Forget about auction guides and list prices, an experienced buyer’s agent will use their local knowledge, backed with the latest property data to accurately advise on what a property is actually worth.
6. Negotiation and Bidding
A buyer’s agent can negotiate with the selling agent on your behalf to secure your property. If the property goes to auction, your buyer’s agent can bid on your behalf, eliminating stress and emotional decisions.
7. Project Management
Generally, after the contract is signed, the bulk of the buyer’s agent’s work is complete. However, buyer’s agents will continue working closely with your mortgage broker, solicitor or conveyancer and other associated professionals to ensure a smooth settlement.
We can see, a buyer’s agent can save time, money and eliminate stress from the property buying process. This is particularly helpful for clients who are too busy, inexperienced in the property buying process or buying an investment property interstate.
The next question on people’s mind is, how much does a buyer’s agent cost in Sydney? Buyer’s agents will charge various fees, and these can vary significantly based on their experience, the services provided and the complexity of your brief.
Buyers Agent Cost in Sydney
You might be thinking, that sounds great, someone can handle the whole buying process for me, but at what price?
Some buyer’s agents charge a fixed fee, others will charge a percent fee based on the purchase price, or a combination of both depending on the work required.
A buyers agent’s fees will usually be determined by three service types:
- Full end to end service – they do all the work for you, including searches, inspections and negotiation to secure your property.
- Negotiation and bidding – you find the property you want to buy, the buyer’s agent negotiates with the selling agent or bids at auction for you.
- Combination – a custom scope of work based on agreed requirements.
So how much does a buyer’s agent charge in Sydney?
For a full end to end service, you can expect to pay an equivalent of around 1.5% – 2.5% of the purchase price. On a $1,000,000 property, that would be $15,000 – $25,000.
Negotiation and bidding services would be roughly half as much. However it’s important to note that the fees can vary significantly, so you need to clarify the fees with your buyer’s agent before signing the agreement to proceed.
A good buyer’s agent aims to provide value to their clients which far exceeds their fee. This comes in the form of savings off the purchase price, and buying a better home or more profitable investment, in a shorter period of time.
Most homeowners may buy 1-3 properties in their lifetime. A buyer’s agent might buy 1-3 properties per month or more.
Not only will an experienced buyer’s agent be an expert negotiator and often acquire the property for less than you’d be able to, they know what to look for when inspecting a house or apartment.
They’re also experts at valuing property and will ensure you don’t overpay or bid emotionally at an auction. Selling agents love working with a buyer’s agent, because they know as long as they agree on a price, it’s a definite sale.
Five Questions to ask your buyer’s agent before engaging their services
You’ll want to engage a buyer’s agent who is an expert in the specific market where you want to buy. If someone tells you they’re a “Sydney expert” then think twice about working with them.
There are over 650 suburbs in Sydney and NO ONE can be an expert in all of them. Here are five questions to help you pick the right buyer’s agent:
1. In what suburbs/cities/towns and what types of properties do you buy?
You want to work with a local expert, who knows the suburb(s) you’d like to buy in like the back of their hand. Ask how many years’ experience they have in these areas, and whether they regularly buy the types of properties you’re interested in.
2. What is your process → Set clear expectations, know what to expect
It’s important to establish clear expectations on both sides. If you have a deadline by when you want to find a property, let your buyer’s agent know and see whether they can meet the timeline.
The buyer’s agent will confirm with you what is a realistic schedule based on your requirements. The more specific your requirements, the less available properties there are, and the longer a search will take.
Get an understanding of the buyer’s agent’s process also. Additionally confirm how long they will run with your brief for the agreed fee, if no suitable property is found. A clear understanding ensures a smooth process.
3.What is your fee structure?
Ensure you’re clear on what the fees are based on your specific requirements so there’s no surprises. Also confirm when the fees will be payable, to ensure you aren’t caught short for settlement.
Communicate the buyer’s agent’s fee payment schedule with your mortgage broker, so they can ensure you have adequate funds to complete the settlement. There’s nothing worse than a last minute realisation that you’re short before settlement.
4. What qualifications and licences do you hold?
It’s critical to ensure you’re only working with a licensed professional. At a minimum, a buyer’s agent must hold a real estate licence (the same as a sales agent). Additionally, confirm the buyer’s agent is a member of REBAA (The Real Estate Buyers Agents Association of Australia). This is the peak professional body for buyers agents in Australia.
5. Do you work independently or as part of another business?
Property buying is a very specialised profession and it’s best to engage the services of a truly independent buyer’s agent. Some may work as part of another related business, which could lead to a conflict of interest.
What to do before engaging a buyer’s agent?
- Finance pre-approved: this is the critical first step, without knowing your budget a buyer’s agent can’t help you – start here to tick this off your list and establish a realistic budget for your next purchase.
- Speak to several buyers agents – you need to pick someone who you feel comfortable working with and who specialises in the type of property you want.
- What help do I need: decide if you would like a full service or only need help with certain parts of the process.
Who would benefit from using a buyer’s agent?
Most people could use some help in the buying process, however not everyone has the available budget to engage a professional.
We find people in the following categories benefit most from engaging a buyer’s agent:
- Busy professionals: when there’s not enough hours in the day, the last thing you’ll want to do is spend weeks running around inspecting properties and negotiating with agents.
- First Home Buyers: the first one is always the hardest. When you don’t know the process you’re prone to making mistakes. A buyer’s agent can save months of time, stress and thousands of dollars.
- Investors: it’s important to take emotion out of buying an investment property. A buyer’s agent will pick properties based on data, not the colour scheme or the wallpaper. Particularly if you’re wishing to buy interstate, it’s often not possible or cost effective to inspect properties yourself, so a buyer’s agent can prove invaluable.
- Upgraders: people looking to upgrade generally have larger budgets and longer wish lists. A buyer’s agent will run with your brief and find properties that closely match your requirements. Something that may take you months, could be achieved in weeks.
- Downsizers: people looking for a smaller and functional home, or a tree or sea change will benefit from local expertise to save them time and money. Many downsizers often have larger budgets and more specific requirements, so local expertise can be vital.
How to pick the right buyer’s agent for you?
There’s a lot to consider and many questions to ask. A trusted recommendation from a friend or family member is helpful, but often we won’t have anyone that can provide a recommendation.
A good place to start is a search on Google Maps. You’ll find buyer’s agents based on the suburbs you want to focus on, along with their reviews. Pick 2-3 that stand out for you and give them a call to get an idea of whether you’d like to work with them.
Feather Loans works with a number of trusted buyer’s agents that have proven to be reliable experts in their market. We can provide some recommendations.
Written in conjunction with Paul Siwek, from Logica Property, an independent Sydney North Shore based buyer’s agent.
