What Is A Buyer's Agent?
Understanding The Property Market and The Role Of A Buyer’s Agent
Property ownership has created more millionaires in Australia than any other asset class. Through the power of leverage, everyday people on normal wages and savings can do extraordinary things! How do people do it? Is it through buyers clubs, buyers agents or everyday people going it alone and figuring it out for themselves?
As the property industry continues to grow, different players such as buyers clubs, property clubs, and buyers agents are introducing new products and services that appeal to investors. However, as an investor, you are probably looking for ways to find better properties and excel in the skyrocketing property market.
What Are The Numbers?
According to the most recent Australian Taxation Office statistics, which cover the 2016-17 financial year, there were 2,156,319 individual property investors in Australia at that time, out of a population of 24,598,900, meaning that just 8.8% of Australians owned an investment property.
The statistics show that 71% of investors individually own one property, while 19% have two and 6% have three – so 96% of investors have one to three properties.
What do these numbers tell us? We can see that most people get stuck with so few properties, that their portfolio isn’t allowing them to progress forward to reach their ultimate wealth goals.
How can we leverage what the 1% are doing to allow us to move past the majority? To do this, you need to create a scalable and sustainable property portfolio that can support it’s self and grow in value over the long term, meaning you won’t have to sell down when there are a few speed bumps. Let’s explore some of the ways a Buyers Agent may be able to help in this area.
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What Is A Buyer's Agent?
Firstly, let’s understand what a buyers agent is and what a buyer’s agent actually does. Also known as buyers advocate, the role is the same thing and the names are interchangable.
A buyer’s agent is a professional in the real estate space who guides property investors and home buyers through the process of purchasing a property.
Buyer’s agent acts solely in the best interest of their clients (the buyer). Every single day they are purchasing property and negotiating with real estate agents, they do not fall for these agent games that are being played. If you are interested in buying a property, the buyer’s agent will help you navigate the real estate landscape and be your guide to find the best property for you at the best price.
A good buyer’s agent increases your chances of success in the property market. They will help you get exclusive access to investment-grade properties and achieve better returns. Property Principles Agency is at the forefront of securing residential investment properties, allowing property owners to focus on positive cash flow and long-term growth. To help you understand the value you will be getting, let’s explore these concepts in more detail.
What Is The Difference Between A Buyers Agent And A Real Estate Agent?
The difference between a realestate agent and buyers agents is somewhat a reversal of roles. The Seller is represented with a real estate agent in a transaction, ensuring they are getting the best deal out there for their vendor, running the marketing plan and negotiating hard to get the best price.
While a buyer’s agent acts solely in the best interest of their clients (the buyer), every single day they are purchasing property and negotiating with real estate agents, they know their market, they know the agents and they do not fall for these agent games. If you are interested in buying a property, the buyer’s agent will help you navigate the real estate landscape and be your guide to find the best property for you.
A real estate agent is a more general term that refers to a registered professional who works with buyers and sellers to help them navigate real estate transactions successfully. They help in advertising properties, conducting open homes, private treaty negotiations, auctions, and other real estate transactions.
A buyer’s agent differs from a real estate agent by working exclusively with buyers. The agent represents the buyer in a property sale and serves as an advocate and adviser during the entire process. The role also involves uncovering the needs and wants of the client, and working to find a property that matches those needs. The buyer’s agent will examine the current market possibilities and the possible budget constraints of the investor to ensure their needs are satisfied.
Joe Tucker
Joe Tucker is the Director of Property Principles Buyers Agency. A Qualified Real Estate Buyers Agent, Property Investor with a multi million dollar property portfolio and runs the Aus Property Investor Community.
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Testimonials
“We were so pleased with our experience with Joe at Property Principles. He was such a wealth of knowledge and information, super professional and completely invaluable to us in our property investment journey. We purchased our second IP right in the middle of a global health pandemic and recession, talk about tough conditions! We are so grateful for everything you did for us, we can’t thank you enough Joe!”
Sam and Natalie W
First Time Investors
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What Does A Buyers Agent Do?
As you may be able to tell, Property investing needs to take a very structured and take a “Principled” approach.
With each acquisition through a buyers agent or buyer’s advocate, they should assist you with every aspect of the purchasing process, ensuring it’s as stress free and as profitable as possible.
Step 1: Clarify
The first step along your ‘Property Journey’ is to get clarity around your situation and understand you, this then allows us to know where you currently are in your ‘Property Journey and what the next best steps are.
Step 2: Assess
Now having a better understanding of where you are on your property journey, we can start to assess the more finer details of your situation and time frames around purchasing your next property.
This is where you would engage the Buyers agent do start the next step to be your guide on your jounrey. More in pricing below
Step 3: Property Roadmap
Once the Agency Agreement is in place and having gained clarity around your needs, we sit down together and we create your ‘Property Roadmap’, this is our foundational document that allows us to uncover the required steps you need to take to reach your Ultimate Goal, what type of properties you should be buying and what this next purchase will be.
Step 4: Ignition
‘Ignition’ is where the rubber meets the road, we like to the the to use the phase ‘Find, Negotiate And Secure’.
This is the time to execute on what we decided on in the Roadmap building phase, this includes in-depth property research, leveraging relationships with real estate agents, Finding, Negotiating and Securing the ideal property for you.
Step 5: Support
Along the Journey, the agent should be communicating with you every step of the way, as well as educating you on the economy, suburbs and LGA information.
Along with on keeping you in the loop of where the purchase is currently at until the property is secured and you have tenants in.
Step 6: The Three "R's"
The final piece of the puzzle is the 3Rs’: Re-evaluate, Refine and Repeat. To build a successful property portfolio, you need continue to adding to it and not be the majority that get stuck with 1 property. Situations change over time, so your buyers agent should be always Re-evaluating your situation, Refining based on what they discover and Repeating the purchasing process again.
Property is a long term investment and we are your partners in your property journey, we have 6 and 12 month reviews. That way we can identify if there is equity built up, so you to purchase another property and continue to your Ultimate Goal.
How Can A Buyer's Agent Help?
- Gain clarity around your goals and requirements
- Help in determining your property needs and priorities
- Evaluate available properties in the market
- Work on your behalf to search for properties
- Use their agent relationships to get access to off market listings
- Handle due diligence, documentation
- Expert Negotiation
- Have their finger on the pulse of areas in great growth locations
- Assist in finding cash flow positive properties
- Negotiate for the best price
- Find off-market properties
- Help in solving any issues that may arise with the seller
- Purchasing the property from state to finish
- Connect you with professionals like property managers to rent your property
How Do I Choose A Buyers’ Agent?
Investing in a property is no small endeavour, and you will likely spend a lot of time, energy and money on the purchase. That’s why you should find a buyers’ agent with the experience to guide you through the entire process. With many buyers’ agents offering their services in the Australian market, there may be some confusion on how to go about it. Here are some tips that you will find useful:
Research Potential Buyers Agents
In your search for a reputable buyer’s agent, start by examining their online presence. Check their website and active social media account or learn about their services. Look at their online reviews and see how they interact with their customers. You will only want to approach independent buyer’s agents with a reputation for integrity, trustworthiness, and proven success record.
Get Referrals From Your Network
You can start by asking your friends and family members for recommendations of a good buyer’s agent they had experience with. Try and get agents who have worked with clients who have similar needs to yours. If you are a first-time buyer, your needs may differ significantly from repeat buyers.
Meet Potential Agents
Visiting or speaking with an agent will help you determine how effective they are in their role and their communication skills. A good agent will ask relevant questions about your property interests, sources of funds, and purpose of investment. Remember, this person is working for you, so there should be no bully tactics, you’re the one with the power. Their role is as of a guide to help you find the best property to purchase.
Expect Property Investment Education
A good buyer’s agent understands how the industry works, they are very data drive. During your meeting, they will provide a detailed property investment information, current market trends and not just a scripted sales pitch. During this time, make sure they exclusively represent buyers and do not act as sellers. This will ensure they have your best interests as their client.
Review the Contract
Before hiring the buyers agent, review the terms of their contract, make sure what they have explained to you is what you’re signing in the agreement. Also, do be aware that most contracts are an agreement between you and the buyers agent to assist with buying a property, so if you go out and purchase the property without the buyers agent, you may still be liable for their fee.
Listen to Your Guts
Before fully diving into the contractual agreement, listen to your gut. Go with a buyer’s agent that you trust and feel comfortable working with. You’re going to working very closely during the buying process and good communication is very key, so if you’re not comfortable with the agent, move on.
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How Much Does A Buyers Agent Cost?
When you engage a buyer’s agent, the cost of their service is always an important factor but not the most important factor. The amount of money a buyer’s agent can save you really does depend on their skills, experience and expertise. The sole purpose of using a buyer’s agent is to save you the time, stress, hassle and save the money involved in purchasing a property, so the goal is that you get an ROI on the money invested, which is generally through a property that is a great deal!
A buyer’s agent commission is the sum they charge for saving you time and money by negotiating the best price for your property. The commission will usually differ from one agency to the others. While some agents charge a percentage of the property purchase price, others used a fixed price and others a tiered fixed fee. The fees usually range from 1.5% to 3% of the property purchase price or a flat fee equivalent. There are also difference services offered, like negotiation only, Auction bidding and deal analysis.
The majority of buyers agent set fees around three main services:
- Full Fixed search: There are two types of fees: Fixed fee which is most common for prices below $1,000,000. The full service out there in the market you could expect to pay between $12,000 - $16,000 + GST
- Full % search: There is a % model where Fees are typically set at 1.5 to 2.2% +GST of purchase price (or flat fee equivalent)
- Appraisal & Negotiation only: Fees approximately 0.9% +GST of purchase price (or flat fee equivalent)
- Auction bid only: Fees are $500 + GST for attendance and $1000 + GST success fee.
Other Pricing Questions
Does The Seller Pay Buyers’ Agents?
No. Property sellers do not pay the buyer’s agent fee, the buyers agent is on the side of the buyer only and it’s illegal for them to get any kind of fee from the seller. The responsibility for the buyer’s fees and commission lies squarely with the buyer. As a purchaser of the property, you pay the agent for representing you in the buying process. On the other hand, the buyer’s agent must advocate for your best interests during the property-purchase process as they find, shortlist, evaluate, and negotiate the best price for the target property.
Can You Represent Yourself As A Buyer's Agent?
No. For you to represent yourself as a buyer’s agent in a property transaction, you are required to hold a relevant real estate license within the state of purchase. If you do not have the professional qualifications and required license, then you will not be allowed to represent yourself as a buyer’s agent. In that case, you will hire a reputable and experienced buyer’s advocate to represent you for a fee.
Should I buy a property by myself?
That is of course entirely up to you, some of the questions to consider are:
- What is your time worth?
- Are you an expert at finding high growth areas?
- Are you an expert negotiator?
- Will your emotion cloud your judgement?
- What are your data sources ?
- Have you researched the location for 3-6 months?
- Do you fully understand the buying process?
- Is this the best use of your time?
Top 8 Questions To Ask A Buyers Agent
One thing to remember is that a Buyer’s agent is doing YOU a Service, you are paying them for an outcome and they are there to learn about you and craft the best property outcome for YOU. What you want to understand is if their financial incentives are aligned with yours, meaning they aren’t getting kick-backs/commissions from builders, project marketing companies, developers or real estate agents.
You do not want your buyers agents selling you off the plan properties, properties in greenfield locations or anything similar. If they are cookie cutter and don’t factor in your circumstances or ask open ended questions to learn about you, walk away! Please see our group for all the horror stories!
You can even make a game of it and say “Hey, I have a few rapid fire yes questions” and then ask the below.
1. How are you getting paid?
This established how the agent makes their money, if they are getting paid by other people to buy you a property, are their best interests in you? You want a Fee for service model, where you pay the buyers agent to find out with no one else benefiting but you.
2. What kickbacks to do you get from brokers and other professionals?
If an buyer’s agent is getting a referral from a mortgage broker they put you forward to, that isn’t so bad, as long as that is clear to you from the outset and in writing.
3. Do you get referral fees from real estate agents or do they pay you fee for buying their property?
This question needs a straight Yes or No Answer. You do not want your buyer’s agent influenced by a big commission in choosing one agent over the other.
4. How long have you been personally investing in property?
Would you got to a hairdresser that has never cut hair before? If your Investor buyers agent hasn’t been involved with property for a long time, how can they know what is value?
5. What sort of properties do you own?
Do they fit within the same strategy the buyer’s agent is putting forward or is it completely different. If they made their money one way but are buying for you another, that may be a red flag.
6. How many clients have you purchased for?
They will most likely never say the exact number but it would be good to know the ballpark figure and if you’re comfortable with that amount of experience.
7. Are you an exclusive buyers’ agent, or do you work for a project management company or agency that sells property?
This can be a good question to establish if you have someone who also sells properties and may be trying to pass rubbish stock onto you. Or if the buyers’ agent works in a real estate sales office it can pose as a conflict of interest.
8. Can you give me a discount on your fee?
This is more of a way to see how they negotiate, if they are happy to drop prices for their own business, do you want someone that gives up so easily when they are negotiating for you?
About Property Principles
When starting their property investment journey, most people lack the knowledge on the best way to go about it. With so much information about real estate, you could easily get overwhelmed and the real estate industry is also changing as new regulations come into place. Working closely with a buyer’s agent will help you navigate the stormy waters of property investments, and achieve the ultimate goal.
Property Principles Buyers Agency is a leading property investment partner in Australia. Working with us allows you to understand how the property market works and make better investment decisions. As your property partner, Property Principles Buyer’s agent walks with you through every step of the process, from sourcing the property, investing, and completing the transaction. Whether you are a first-time investor, an experienced investor, or a business owner, you can simplify your property investment journey by working with the right people.
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