What Is A Buyer’s Agent? 2020 Guide To Buying With An Agent

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Buying a home is exciting, but it’s also fraught with risk. Not only will you be making potentially life-changing decisions, you will also be facing mountains of paperwork and seemingly endless hurdles. Some people choose to do it all themselves but, if you lack the time or energy or are worried about spending more than you should, a buyer’s agent might be the way to go.

What is a buyer’s agent?

A buyer’s agent is someone who possesses the qualifications and skills to help you find your dream home for the best price. They have in-depth knowledge of the property market, as well as excellent negotiation skills.

You may feel confident doing your own research and leading the buying process yourself. In which case, you might prefer to go it alone. However, if you have more questions than answers when it comes to buying a home, a buyer’s agent can lead you through the process and reduce potential risks along the way.

A buyer’s agent can help save you money on your dream home.

Buying interstate

Buyer’s agents are particularly helpful for anyone buying an investment property or moving interstate. For interstate investors, an agent can provide crucial knowledge of the local real estate market and suggest upcoming areas for potential investment.

For people moving interstate, an agent can give insight into the local area, like details about local schools, shops and services. In both cases, a buyer’s agent will view properties and shortlist them so you can minimise interstate travel.

Buyer’s agents provide local knowledge for interstate buyers.

Interstate Purchasing WIth An Agent
Buy interstate to move in or start investing in remote areas with buyer’s agents

What services does a buyer’s agent provide?

Buyer’s agents are licenced professionals whose sole purpose is to help you find the right home for the best price. You can choose whether to engage them for the whole buying process or for only part of it. Here are some of the services that they provide:

  • Specifications analysis – determining your needs and wants
  • Listing searches – scouring listing to find homes that match your specifications
  • Inspections – physically inspecting homes before deciding whether to shortlist them
  • Written appraisals – based on sales data evaluations
  • Ensuring process is followed – building inspections and related reports are conducted
  • Negotiation – achieving the best price and terms
  • Contract management – overseeing the contract and exchange process
  • Pre-settlement inspections – physically inspecting homes prior to settlement
  • Settlement

Use an agent for the entire buying process or just for the negotiation.

What’s the difference between a buyer’s agent and a mortgage broker?

A mortgage broker helps you secure a home loan by finding you the right lender. You will use a mortgage broker when you’re ready to make an offer on your dream home.

A buyer’s agent helps you through the entire buying process, including searching for the right home and negotiating the right price.

Is a buyer’s agent the same as a real estate agent?

The short answer is no. A real estate agent and a buyer’s agent are on opposing sides during the buying–selling process. The real estate agent works with the seller to help them get the best price and the best terms when selling their property. A buyer’s agent does the same for the buyer. This is an important distinction because it means a real estate agent is not an advocate for the buyer. If you deal directly with a real estate agent, they will be ensuring the seller gets the best deal, not you.

It is illegal for buyer’s agents to accept any type of payment from a real estate agent for buying particular houses. So you can be sure that they are impartial and legally required to prioritise the buyer’s best interests. However, this does not mean that there aren’t pitfalls to avoid.

A real estate agent works for the seller; a buyer’s agent works for the buyer.

Buying Agent Selling Agent Difference
Selling agents and buying agents are different roles in the purchasing process

Is it worth using a buyer’s agent?

A buyer’s agent can be worth their, often expensive, fees by saving you even more in the purchase price. However, this isn’t guaranteed. Keep in mind that they can save you both money and time, which further increases their value.

Buying houses is not usually a skill that most people can practice regularly. A professional buyer’s agent gives you access to knowledge, contacts, and skills that you might not otherwise have. Even experienced investors can benefit from a quality agent’s skills and local knowledge. Providing it leads to a better deal for you, engaging a buyer’s agent can be worth every penny.

Here are some more ways that a buyer’s agent can benefit you:

An agent can purchase a property at the right time, saving you money. Their expertise can mean a matter of weeks pass between the start of the search and finding the right property. If you go it alone, it may take you months – months in which property prices in the area may vary significantly.

An agent can save you money by being impartial. When going it alone, you run the risk of falling in love with the perfect home. This usually means you offer more to avoid losing your dream home. Using a buyer’s agent can remove the emotional element in negotiations and ensure you get the best price.

Top Tip

A buyer’s agent is only as good as the information you give them. Tell them everything you can about your wants and needs so they can find the best home for you, for the best price and in the shortest time-frame.

How do I choose a good buyer’s agent?

Keep these basics in mind to avoid potential pitfalls when choosing a buyer’s agent:

Buyer’s agents charge fees. If they don’t, beware. A buyer’s agent is being paid by someone. If it’s not you, it could be the developer or owner.

Buyer’s agents are licensed. If they are not, go elsewhere. The agency should be registered with the relevant consumer affairs office.

You can ask these questions to determine whether you have found a quality buyer’s agent:

  1. What sales have you made in this area? Their answer allows you to gauge their knowledge of the area you wish to buy in.
  2. Do you sell homes as well? Find a buyer’s agent that does not have any conflicts of interest, like selling homes. You can also research the agent online to find any conflicts of interest.
  3. Do you have any beneficial contacts in real estate? This will highlight their experience and reputation.
  4. Can I speak to one of your previous clients? If they say no, it might be worth finding another buyer’s agent. Online reviews can also help but be aware that some online reviews are paid for and, thus, fake.
  5. What is your fee and when do I need to pay your invoice? A good buyer’s agent will be upfront and honest about their charges.

We’ve shortlisted top agencies in Australia in our top buyers agents guide.

Choosing Buyer's Agent
To pick a good agent, ask the right questions.

How much does a buyer’s agent cost?

How much a buyer’s agent costs depends on many factors, including:

  • search area
  • budget
  • service required (whole or partial)
  • degree of difficulty
  • their expertise.

Most buyer’s agents will use one of three pricing models:

  1. tiered pricing
  2. fixed rate
  3. percentage of the property purchase price.

Tiered pricing

This means that buyer’s agents will charge based on the property price bracket. For example, if your property falls within the $500,000 to $650,000 bracket, they will charge you a set fee. If you’re property falls within the $650,000 to $800,000 bracket, they will charge you a higher set fee. You can see an example of this in the table below.

Property Purchase Price$500,000 – $650,000 Bracket$650,000 – $800,000 Bracket
$550,000$11,500 + GSTN/A
$750,000N/A$14,500 + GST

Fixed rate

Buyer’s agents using this pricing model will charge you the same fixed rate regardless of the price of the property. The table below shows how this works.

Property Purchase PriceFixed Rate of $10,000
$550,000$10,000 + GST
$750,000$10,000 + GST

Percentage of the property purchase price

According to REBAA, buyer’s agents using this method will generally charge about 1.5 – 2 per cent (plus GST) of the property purchase price. This is reduced to about 1 percent (plus GST) for buyer’s agents that only provide negotiation services. The table below demonstrates how this works.

Property Purchase Price2% (full service)1% (negotiation only)
$550,000$11,000 + GST$5,500 + GST
$750,000$15,000 + GST$7,500 + GST

Upfront costs

Buyer’s agents will usually charge an upfront retainer fee, which could be as little as $1,000 or as much as 50 per cent of their fee. A portion of this is usually non-refundable to cover their time searching for properties. Be sure to check the details before signing a contract with your buyer’s agent.

It is worth shopping around to find the right buyer’s agent for the right price. However, a buyer’s agent offering no or low fees might not be a good investment. It is often worth paying more to ensure you get a professional, quality service.

Read more: Buyer’s agent fees and costs by city

Should I use a buyer’s agent?

A home is likely going to be the most expensive asset you have ever purchased. The purchasing process can be long and can present risks at every turn. A buyer’s agent can help you navigate this process and give you peace of mind that you’re making the right choice when buying your home. Most importantly, a buyer’s agent needs to save you money in the long run to be worth it. If you do choose to use an agent, be sure to choose the right buyer’s agent at the right price and avoid any obvious pitfalls.