How much does it cost to use a buyer’s agent?
A buyer’s agent gives you access to ‘hidden’ properties at a reduced price and many other benefits so rather than asking what they cost, the better question to ask is: ‘What’s the cost of NOT hiring one?’.
Those new to the concept of a buyer’s agent might question the value of using someone else to find, vet and purchase a property on your behalf when it is already such an expensive process. Most importantly, a buyer’s agent listens to your needs and represents you (not the vendor as real estate agents do). They will negotiate a better deal and find a property that meets your exacting requirements. The bottom line is if you go it alone, you will most likely pay a higher price on a property than we would, as well as waste time and energy in what can be a frustrating and confusing process.
Here are some important points you need to know about the costs of hiring a buyer’s agent:
- Our service usually pays for itself. We will only work with you if we are certain we can deliver value. Our clients usually save 7−9% of the property price by working with us (based on comparable sales and our purchases in the last 12 months). Due to our superior negotiation skills and vast experience of dealing with real estate agents our service usually pays for itself.
- It’s money well spent to gain access to the ‘hidden’ property market. Market analysts have estimated that one in 10 of about 90,000 homes sold in the past year were off-market sales that real estate agents didn’t list and took straight to buyer’s agencies. And it is not just the prestige properties that favour the off-market approach. It is popular for many reasons including:
– Relationship/marriage breakdowns
– Seller employment changes
– Inherited property or sale of a deceased estate
– To avoid costly real estate agency fees
- Due to any of the reasons above, sellers of off-market properties are often looking for the fastest sale possible, which leaves the door open for lower offers and greater negotiation power.
- You save money by avoiding the underquoting trap. A buyer’s agent knows what you should be paying for a house based on industry knowledge, experience and a keen eye. Without this, it can be easy to fall for underquoting and waste time turning up for auctions only to find you were not even close on the price. It also saves you wasting money on building and pest reports for houses you can’t afford. The Real Estate Institute of Australia has recently seen a spike in complaints from potential buyers who have paid $500 to $1000 plus for these reports, only for the auction price to exceed all guidance and expectations.
- Time costs money. Without a buyer’s agent it can take you considerable time to find the right property − which also costs you money as the market appreciates. While it may not sound like much, taking an extra six months to buy means your purchase price has gone up 4−5% on average, and even higher for the suburbs that are really in demand.
- Not all buyer’s agents are equal. Agent’s fees vary and it is important to hire someone who is experienced, well connected and a strong negotiator. A buyer’s agent who gives you a low quote may mean you save $5,000−$10,000 on the fee but could end up overpaying on the property by $50,000−$100,000 − or end up not finding anything you want. We have worked with a significant number of clients who initially chose a lower cost buyer’s agent, paid an upfront retainer and after six months were still no closer to finding the right property. They not only paid money for no result but also lost the opportunity that six months of growth in a dynamic market can provide.
- Cost varies depending on need. A buyer’s agent’s costing is very much dependent on the complexity of a brief. Often our clients will have very detailed briefs that specify a house on a particular street or in one building. The time and negotiations involved in this would be at the higher end. However, it is only after a consultation can we determine your needs and the exact cost.
- Not everyone needs a buyer’s agent. If you have successfully bought a property before, and have enough time to dedicate to the process and are confident in your ability to negotiate, then you probably don’t need the services of a buyer’s agent.
Whether you are buying a house, renovating your kitchen or doing your taxes, you always have the option to do the work yourself, but a lack of expertise can end up costing you more than you think it will. A buyer’s agent ensures you are purchasing the right property to suit your purpose, as well as making sure you are not overpaying for a particular property.
Contact us for a consultation now and find out how we can help you with all your property buying needs.