Should I engage a buyer’s agent?
Should I engage a buyer’s agent?
The way we purchase and invest in property has changed over not just the years, but the decades. Not too far long ago we would browse the local agent’s windows or newspapers for available properties, then the huge success of online portals made browsing on your couch a daily habit. Now we have online auctions, investor clubs and buyer’s agents.
Buyer’s agents can provide advice and knowledge about property and investment options to identify high potential investment opportunities tailored to your investment goals. They should be your trusted partner in communicating and guiding you through every aspect of the buying journey through to settlement and beyond.
A Buyers Agent is experienced in sourcing and presenting suitable properties, be that an investment or their dream home, highlighting both positive and negative features that a buyer should be aware of. They may assist in minimising risk through carefully conducted due-diligence and thorough review of contracts and inspection reports; and can negotiate terms of purchase or bid at auction on your behalf.
This service can be particularly suitable for foreign & interstate investors, expats wanting to purchase property when they are still abroad, seasoned investors wanting an extra pair of ears and eyes and first-time purchasers that want the assistance and expertise a Buyer’s Agent can offer.
Investing and purchasing property is probably one of the largest purchases you will make in your lifetime. If you do decide to go down the path of engaging a buyer’s agent there are a few things you should consider.
Ideally your buyer’s agent should have at minimum five years of experience to ensure you receive the expertise and skills to identify good investment opportunities and execute a purchase from research to settlement. Because as the age old saying predicts, ‘you’ve got to spend money to make money’ and ‘you get what you pay for!’
Peace of mind
It’s a legal requirement for buyer’s agents and agencies to have Professional Indemnity Insurance. This is to help protect you as the purchaser if in the event they are negligent in their duties, that you are covered. Don’t be afraid to ask the level of insurance they have.
Agents will likely belong to relevant industry associations and institutes, a registered buyer's agent works solely for the buyer, and should never in any circumstance accept commissions or referral fees from another agent.
Is your buyer’s agent well connected in the industry? Do they have networks with real estate professionals, developers & builders that can offer opportunities before they hit the market?
Ask for or seek client testimonials and case studies from their recent clients.
Your personal assistant
It’s important to know the difference here. Buyer’s agents work exclusively for the buyer, like your own personal assistant. They are paid by the buyer and have the buyer’s best interest as the sole purpose of the service. Do your research and ask the right questions, if they can’t answer your questions and you don’t get a positive gut feeling that you want to work with them, then maybe this isn’t the right fit for you.
You would do due diligence on the property you are looking to purchase, why not do the same for hiring a buyer’s agent? Ask them how many properties they have sold off market, their average time to secure a successful purchase and how long has the process from initiation to settlement has taken for their last three clients. Bear in mind every client is different with different needs and timelines however it will give you a better idea of the service you may receive from them. It’s also a good idea to investigate the length of contract and be wary of agreements that are 12 months or longer.
It’s important to find out key information before selecting a representative to purchase on your behalf. Every industry has their own procedures, fee structures and particulars of service, make sure you know what you are getting before signing any contracts.
Buyer’ agents will and should work for you on behalf of your interests throughout the entire process. Because of this, there is no one size fits all approach so there are a few options with regards to fees. Many will tailor a package for you if you want specific services to cover your needs and budget.
You can have them act as a buyers advocate if you have found the property and would like assist with the due-diligence, negotiation and acquisition through settlement at a reduced cost, or you might require a full search and strategy.
Fee structures are typically fixed priced or structured as a percentage of the purchase price – it’s fairly standard to be on average around two per cent, which is paid when the sale becomes unconditional or at settlement. To cover both parties, it is common practice that an initial non-refundable retainer fee will be asked upfront to commence the service.
Ideally both parties will take a ‘whole of life’ approach, starting with an initial consult to clarify your buying criteria, objectives, goals, budget and strategy. Some agents are also able to offer services even after settlement from property management, future wealth & portfolio planning and annual audits.
Prior to even purchasing your property, some agents will have the resources to access financial advice from professionals to conduct an analysis of your financial situation and then present strategies to move forward tailored to your objectives.
Finally due diligence and risk mitigation on the property of your choosing should be done to identify any risk factors and highlight the key benefits all before event signing the contract to purchase. This is hugely beneficial if you are purchasing outside of where you reside, are first time or even a seasoned investor that needs the extra assistance to get the contract completed.