Q: What is a property buyer’s agent?
A: A property buyer’s agent is a professional who represents a buyer (home buyer or property investor) to help them secure a property. This would include finding, evaluating, negotiating, and securing the property on behalf of their buyer.
In recent times, property buyer’s agents have become far more prolific in Australia. First homebuyers to seasoned property investors are now turning to buyer’s agent to purchase a property on their behalf. This is not unfamiliar grounds for buyers in the USA, as 6/10 of the buyers over there choose to engage a buyer’s agent to act on their behalf.
Australians are catching onto this new trend and are switching from the old DIY investing method by seeking help from buyer’s agents. Why you may ask? It is due to the following advantages a buyer’s agent will deliver:
Access to More Properties – An experienced buyer’s agent will have networks in place that allow them to gain access to properties before they are listed to the public. As buyer’s agents buy properties every day of the week, they develop a business to business relationship with the sales real estate agents. Like anything in business you need a win-win scenario! What are the win’s for each side of the transaction you may ask? Well:
The win for the buyer’s agent is they get to buy quality properties before they hit the market. By gaining early access, the buyer’s agents clients can stay ahead of others in the marketplace, ultimately saving them time, and money!
The win for the sales agents is they do not have to deal with the Saturday sticky-beaks, tyre kickers and indecisive buyers when they sell directly to the buyer’s agent. They will also avoid having six weeks of open homes, late night phone calls and extra advertising costs for their vendors. So like it or not, it is actually in the best interest for a sales agent to help the buyer’s agent over an individual DIY buyer or investor.
Benefit from Experience and Knowledge – When you engage a buyer’s agent, they will have their favoured areas based on, rental yield, capital growth prospects, value for money, upcoming infrastructure, and plentiful on-the-ground research before the media is all over the area. Let’s face it, if you are reading about the latest hotspot in a property magazine, the chances are there are 10,000’s of others doing the same thing. So, on-the-ground research and experience cannot be substituted by a few late nights of Googling “the next area about to boom”.
Save you Time – It can take months to adequately research an unfamiliar market. It will also cost you time and money, driving or flying to the areas you are researching. If a buyer’s agent’s fee is less than the costs associated with that time and effort, then you have already got your money’s worth just from this one benefit. Remember time is money!
Save you Money – Buyer’s agents know the market and have the contacts to secure better deals than the public. Think about it this way, if a buyer’s agent has a long term relationship with a sales agent in the area, and buys properties from the sales agent week after week, a business relationship will be formed. This means when good deals come up, such as a distressed sale, who do you think gets the call? You guessed it: the buyer’s agent. A good buyer’s agent will also be an expert negotiator who will ensure every last dollar is extracted off the sales price for their client.
Help you Follow an Investment Strategy – There are many ways to make money from real estate. Learning a specific strategy from a successful and experienced investor is one of the greatest benefits of using a buyer agent. You just need to find a strategy that fits your personal situation and a buyer’s agent who is in a position similar to what you would envisage yourself being in.
Avoid Ever Making a Mistake – The saying “Mistakes are life’s greatest lessons” sounds like something you need to tell someone after they had a bad day. The cold and hard reality is making mistakes in property can destroy you financially! A buyer’s agent will make sure you do not fall into one of these life’s “greatest lessons”, as they have the experience of purchasing hundreds of properties and know what’s best for you (if they are acting in-dependently: I’ll go into this in more detail in my next article).
Bidding and Negotiating – One of the most popular reasons people use a buyer’s agent is to off course support them during the auction and negotiation process. Bidding at auction can be a tricky, frustrating and intimidating process and it helps to have someone objective to represent your needs in the heat of the moment!
So before you consider purchasing a property without using a buyer’s agent, understand that yes there are upfront costs for their services, however a good buyer’s agent will save and make you many times the money you paid them. Most importantly, they will save you time, allowing you to spend more time doing what you love not what you need to do.
By Scott O’Neill 26th June 2016 – Director of Rethink Investing Pty Ltd