The vast majority of Australians who sell their home use a real estate agent to represent their interests. However, only a fraction of buyers have their own representative.
A buyer’s agent, also known as a buyer’s advocate, is a real estate professional who is hired by the buyer and who has a responsibility to represent their interests.
(Many real estate agents provide helpful advice to buyers, and some real estate agencies employ staff specifically to liaise with buyers. However, none of these people are real buyer’s agents, because they ultimately work in the interest of sellers.)
Buyer’s agents are used by both owner-occupiers and investors. They generally charge either a flat fee or a percentage of the purchase price (or a combination of the two).
Buyer’s agents help clients with some or all of these tasks:
- Identifying suitable locations (this is particularly relevant for investor clients).
- Shortlisting properties based on the client’s criteria.
- Inspecting properties.
- Negotiating with real estate agents.
- Bidding at auctions.
- Guiding the client through the buying process.
- Recommending related professionals (such as conveyancers and property managers).
The cons of using a buyer’s agent
The biggest drawback to using a buyer’s agent is paying their fee, which is generally between 1%-3% of the property value or a flat fee usually above $10,000. They may also charge extra for auction attendance.
Another potential negative is hiring a poor-quality buyer’s agent. Ensure they are licensed and don’t have conflicts of interest.
The pros of using a buyer’s agent
Buyer’s agents offer three main potential advantages.
First, they have far more knowledge than the average consumer, which means they’re better able to identify a suitable location for the purchase, spot any flaws in shortlisted properties and negotiate successfully with real estate agents.
Second, they have more time than the average consumer: while their client is at work, they can be doing all the tasks mentioned above.
Third, they can use their relationships with real estate agents to secure access to off-market properties, thereby giving their clients access to more properties than the average buyer.
Going solo vs using a buyer’s agent
Depending on a buyer’s budget, schedule and level of property knowledge, they might decide that it’s better to handle the research, due diligence and negotiating themselves, rather than employ a buyer’s agent.
Alternatively, the buyer might decide that the value of a buyer’s agent exceeds their cost.
If you’re looking to buy a home or investment property, your Loan Market broker can calculate your borrowing power and manage your mortgage application.
