Most people are familiar with what real estate agents do. Some people mistakenly believe that real estate agents work for both property buyers and sellers. They’re wrong.
Buyer’s agents are available to work for real estate buyers. Read on to find out everything you need to know about buyer’s agents, including:
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What do they do?
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How much do buyer’s agents cost?
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How to find a good one?
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The pros and cons of hiring a buyer’s agent
What do buyer’s agents do?
The key difference between a buyer’s agent and a real estate agent is who hires them. As the name indicates, a buyer’s agent is hired by a property buyer. They can provide one or both of the following services:
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finding suitable properties for buyers and then negotiating sales with real estate agents or bidding for buyers at auctions.
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bidding for buyers at auctions on properties that buyers have found themselves.
Real estate agents, on the other hand, are hired by property sellers. They negotiate with buyers (or buyer’s agents), but they are hired by sellers. That means real estate agents work for sellers, not buyers.
A real estate agent’s job is to sell homes by getting the best possible price for their selling clients, ideally in a short timeframe.
A buyer’s agent’s job is to negotiate the best possible price on suitable properties for their buying clients.
How much do buyer’s agents cost?
Buyer’s agents usually charge a flat fee, a percentage of the property’s selling price, or a combination of both**.
The cost of hiring a buyer’s agent also depends on the extent of the services you want. If you want one to spend time looking for suitable properties for you in addition to negotiating the sale, you will usually pay more.
If you’re buying an investment property, the cost of using a buyer’s agent is tax-deductible.
The pros and cons of hiring a buyer’s agent
There are pros and cons of hiring a buyer’s agent. Let’s look at the pros first.
Pros
- Buyer’s agents are professional negotiators, just like real estate agents are.
Negotiating with real estate agents and bidding at auctions are specialist skills. If you aren’t a good and experienced negotiator or auction bidder, you might end up paying more for a property than you should, especially in the current seller’s market in Australia.
- Buyer’s agents often have access to a larger database of properties.
This can include knowledge of properties that haven’t even hit the market yet. You might be able to buy a property before it’s even advertised to avoid missing out.
- They can save you time and hassle.
Researching the property market and negotiating a sale can be time-consuming. Buyer’s agents do it for a living, so they can save you time and hassle.
They can find properties that meet your buying criteria, so you can just focus on inspecting suitable properties rather than finding them and negotiating to buy one.
- Buyer’s agents have property market knowledge.
This is especially important if you’re an inexperienced or first home buyer.
Cons
The cons of hiring a buyer’s agent include the following:
- It involves extra cost.
Hiring a buyer’s agent is an option that will cost you money, whether they charge a flat fee or a percentage of the selling price.
To be worth the cost, a buyer’s agent needs to save you more in terms of time and money than they charge. This depends on how you value your time, how much time they save you, and how much money they save you with their negotiations to get the lowest possible selling price.
It’s important to understand that you also have plenty of other upfront costs when buying a property, like the purchase price, loan application fees, stamp/transfer duty, building and pest inspection fees, and conveyancing fees.
- You can find suitable properties yourself.
These days, there is an enormous amount of property information available online. If you’re prepared to put in the research time, you can find suitable properties to inspect for free.
How to find a good buyer’s agent
If you want to hire a buyer’s agent, finding a good one is crucial. Like any occupation, some will be better than others. Here are our top tips for finding a good one.
Tip 1: Ask for referrals from friends or family
If your family or friends have had a good experience using a buyer’s agent, then that’s the most trusted recommendation you can get. Just make sure that it’s an unbiased recommendation and that they are not just recommending one of their own friends or family members whose services they haven’t used.
Tip 2: Shortlist experienced buyers agents in the locations where you want to buy
Buyer’s agents tend to specialise in different geographic locations. The better they know a location, the more likely it is that they’ll be able to provide you with a worthwhile service. Look for agents who are based in the areas where you want to buy and who have been operating there for several years.
Tip 3: Look for online testimonials
A good buyer’s agent should have plenty of online testimonials vouching for the quality of their services.
Tip 4: Meet potential agents and ask questions before you hire
Once you have your shortlist, meet your potential buyer’s agents in person and ask questions to help you make your hiring decision. For example:
- how much do your services cost?
- What do your services include?
- How many properties have you bought for clients in this area?
- What is the best deal you’ve been able to negotiate for one of your clients?
Your agent should also ask you plenty of questions to find out your property buying needs and goals. Evaluate your agent’s communication skills as part of making your hiring decision.
The bottom line
Hiring a buyer’s agent when you want to buy a property is optional. Whether or not you should hire one depends on your individual situation. The pros need to outweigh the cons.