Have you happened upon an auction while on a walk, decided to watch what goes down, and been intrigued about that bidder who has a phone to their ear and seems as confident in their bidding as a Melbourne barista serving lattes on a Sunday? That is a buyer’s agent, and they are not to be confused with a real estate agent. The simple difference between a buyer’s agent and a real estate agent is that they work for the buyer (obviously), not the vendor. So it is often agent vs. agent on any given Saturday, one trying to get the price up as much as possible for the vendor and the other using experience and knowledge to keep the price down below the budget of their client.
Keeping things certified
When looking at using a buyer’s agent to help you purchase a home, make sure you check that they are a member of the Real Estate Buyers Agents Association of Australia (REBAA), Australia’s only national professional association for buyer’s agents. The REBAA maintains stringent checks and standards on their members, so that it is worth asking a potential agent why they are not with the REBAA if it turns out this is the case. They may not deem it necessary, and in that case, it is worth doing extra due diligence to check their credentials, past purchases, and background to get a good idea of their suitability.
Keeping things local
An important aspect of choosing a buyer’s agent is to make sure they have significant (at least 24 months) experience in your local market. Markets within a city or regional area behave differently to each other, while within a city, there are various markets (i.e. inner city, middle rings, outer rings) that are affected in different ways by changes to both local and larger economies. A buyer’s agent who can demonstrate lengthy experience in your local area/s will be able to talk with confidence (and with data) about how your local market has fluctuated and performed over multiple years, and tell you exactly where it is now and where it is likely to be headed in the future.
Economists may have a multitude of advantages in their predictions of the national market, but a strong buyer’s agent candidate will have watched how a community and its surrounding markets have changed in a variety of ways, and will have a clear idea of what your money will get you.
Keeping things affordable
Buying property in Australia is not cheap, and especially so for first home buyers who can’t leverage existing capital gains to climb the property ladder. Unfortunately for first home buyers, the double-edged sword is that they also lack the experience of bidding for properties, negotiating prices in a private sale scenario, conducting proper inspections of a property (pest and building inspections) and sometimes keeping well below their maximum budget.
Of course, a buyer’s agent does not work pro bono. They typically charge between 1-2% of the purchase price, which can be a significant sum for some buyers. They may also go another route and set a fixed fee so that this assures you that they will work diligently to keep your bid price down, or they may ask for the percentage but negotiate an upfront cost that protects them for the work they do in researching and bidding for properties. Lastly, you can choose to employ them just to bid, which may be anywhere upwards of $400-500 per auction.
So, is it worth the investment? If a buyer’s agent can save you $20,000 on a property, and their fee is only $8,000, then their service will have been well worth it. Of course, you don’t know that you couldn’t have personally kept bidding down to that same price and saved yourself an extra $8,000, which is a question you will have to grapple with.
If you are a first home buyer and find that you either struggle with the complexities of the real estate market and economy and think you would benefit from a guiding hand, or you simply don’t have the time or inclination to do the work entirely by yourself, then a buyer’s agent is the obvious resource in finding the right property for the right price. If you are someone who looks up economic and real estate market reports on a weekly basis, knows the average time on the market for your local area, what the median house price was in 1976, and feel quietly confident in your ability to either negotiate prices or have your bidding techniques well-honed, then you can probably do the job yourself.