Two of the key questions that our clients ask us are “Should I use a buyer’s agent..?” and “Are they really worth the money..?” so this week we explore the positives and negatives of engaging a buyer’s agent. Whether you’re an Australian expat or living and working in Australia, this information will help guide your decision as to whether to engage their services for your next property purchase.
What are the positives of a buyer’s agent..?
- Aligning your property strategy to your financial goals
A great property buyer’s agents should be able to sit with you and explore your financial objectives and goals as well as your current position. They will then work with you and/or your financial planner to ensure that your property investment strategy aligns with your overall financial objectives. This can often be far more important and valuable than the individual property itself.
- Access to off-market properties
While we can all jump on realestate.com.au and domain.com.au to start searching for our next property, many great buyer’s agents will have access to those properties that never get listed. This can be particularly valuable in certain areas to avoid the need to go to auction and can also lead to a far quicker purchase process. This will largely depend on the network your buyer’s agent has built up over time and how long they’ve been in the industry.
- Expertise on interstate properties
Many people, rightly or wrongly, prefer to invest in properties in the areas that they know, which is typically the areas that they lived or grew up in, or at least the state that they’re from, whether or not this represents the greater bang for your buck. Many great buyer’s agents will have the expertise, research and resources to explore other states. This can be an excellent strategy in terms of diversifying your portfolio, minimising your exposure to land tax, and ensure that you’re aiming to invest at the right stage of the property cycle in that given city or state.
- Experience in property negotiations and auctions
Very few people truly have the skills and emotional stability to succeed at auction and come out with the right outcome. For many people, emotions get in the way and they end up over-paying not to be outdone by the next bidder. A great buyer’s agent can help you to remove this potential emotional overspend by setting disciplined limits that they agree with you prior to the auction, and attending on your behalf.
- Saving you time and money
And finally, of course, a great buyer’s agent can save you a great deal of time and money, particularly if you’re an Australian expat living and working offshore. Attending an auction every weekend just isn’t possible and this can often lead to poor decisions simply to get the purchase completed while you happen to be in town.
What are the negatives of a buyer’s agent..?
- Unethical buyer’s agents
This is not terribly different to most other industries, however it could be argued that the property and real estate industry is less regulated than many other areas of investment advice and financial services. It’s important to ensure that your buyer’s agent is registered and holds the necessary licenses, speak to some of their clients to get their feedback if you feel the need to and ensure that the payment for their services aligns with achieving the right outcome for you. Many will charge an engagement fee with the success fee to be paid at settlement of the property while others charge differently.
- Is the agent worth the price..?
It’s important to assess whether the cost of engaging the buyer’s agent will produce a better or more desirable outcome than you could achieve yourself. This may be in the form of savings on price, saving you time from attending busy auctions on the weekend, designing your overall investment property strategy and carrying out the cash flow modelling or simply guiding you on where to invest. Consider what percentage of the purchase price their fee will represent and ensure that you’re comfortable with this number. Paying $20,000 for your buyer’s agent to purchase a $300,000 property on your behalf may be a ‘little steep’ for some.
- ‘Jack of all trades, Master of none’
It is all too often that we come across property buyer’s agents who claim to be the experts and ‘go-to-resources’ for buying an investment property for anywhere in the world. For this statement to be true, they would need to have a significant research team and access to a large pool of resources to make it happen. Often, these groups are simply selling projects from around the world that are paying them the highest commissions from third party providers. You have to apply some common sense here to assess whether the group could really be experts on all of the areas they’ve claiming.
If you have any tips that you would like to add when it comes to engaging the services of a buyer’s agent, let us know. We’d love to hear from you.
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