What is a buyer’s agent and do you need one?
Many people have bought property themselves or have seen close friends and family do the same. As such, it’s a very common question to ask; ‘Why do I need a buyer’s agent when I can do it myself?’ It’s a good question to ask and there are many reasons why you should consider one.
A buyer’s agent is a professional buyer of real estate. They search the market to find an ideal property that best suits your needs and then negotiates to buy it at the lowest possible price. A buyer’s agent works for you, unlike a real estate agent who works for the seller.
Why use a buyer’s agent?
People are time-poor.
These days we’re all extremely busy. Looking for that ideal home or investment and understanding what’s available on the market and what price properties are selling for takes a lot of time. It typically takes over 100 property inspections to really know an area. Therefore, even if you manage to see ten a week, that’s two to three months of looking. Buyer’s agents can do that leg work for you. They’ll discard 80-90% of the properties that don’t meet your needs. This leaves you to see the few that do meet your criteria.
Good properties always sell well.
While you might think you’re a unique individual, many buyers are often looking for similar priced properties in similar areas that are close to work, schools, transport and leisure facilities. Therefore when a good property comes up that ticks all the boxes, there’s lots of competition for it no matter the state of the local economy. That increased demand means there’s less chance of you securing it when you do find it, and if you can win at auction it’s often for an inflated price. Buyer’s agents can assist you to find that property sooner and secure it before the demand gets too high.
Buyer’s agents know about off market sales.
Many properties get sold without hitting the general market and are not seen on property listing websites – these are called silent sales. Why would a vendor want to sell a property without going on the market? They might:
- not want the neighbours knowing their property is for sale,
- be going through a divorce and want privacy and speed,
- have found their next property and need to move quickly,
- only need a certain figure to progress on in life, or
- not have the budget for a full advertising campaign
Sales agents will often bring silent sales to buyer’s agents they know and trust, as they’re aware they have a list of pre-qualified buyers that are keen to move forward. It’s harder for sales agents to give silent sales to the general public as they need to deal with many more people and they don’t know who is serious and who is just a serial looker.
Buyer’s agents have negotiation experience.
If the average buyer only buys a property once every three to five years and a professional buyer’s agent buys daily or weekly, who do you think is more experienced in negotiation? Any skill takes practice – the more times you negotiate, the more you experience different ways a negotiation can go. Over time you learn to avoid the classic mistakes and have a much better chance of securing a property and at a better price.
Buyer’s agents are unemotional and factual.
As buyer’s agents are not going to live in the property and transact multiple times, they are often less emotional than owners when buying property. Therefore it’s harder for the sales agents to put emotional pressure on them to pay more money. Buyer’s agents will buy properties based on comparable sales prices of other properties that have sold recently. They can be more black and white through what some people call the most emotional experience’s of people’s lives.
Buyer’s agents have insider knowledge.
As buyer’s agents deal with sales agents every day, they build up a trusted relationship. They will have dealt with many properties together and built a mutual understanding of how they like to do deals. A professional sales agent would not want to destroy a long standing relationship with a buyer’s agent.
A sales agent can still sell properties to the general public. But it takes them much more time and effort to deal with lots of individual transactions from multiple buyers. Sales agents will often give vital information to buyer’s agents that they may not share with the general public such as the vendor’s circumstances, other comparable properties in the area or potential areas of concern. This can give you the inside track on whether to walk away from a potential headache or how to secure it under more preferential terms.
A buyer’s agent has local expertise.
A buyer’s agent will often be an expert in the local area and that information can be imperative in knowing things like which is the better and, more expensive side of the street. They’ll often also know which buildings or streets might have a bad reputation or are harder to sell. Unfortunately first impressions don’t always make the best investments.
It’s not always about price.
I often find it’s better to secure a property that ticks all the boxes at a fair price than a property that has some major flaws that you pick up cheap. A cheap property will often require continual maintenance. It will also be hard to sell. However, good properties can always fetch a premium. Buyer’s agents help you to focus on what really matters.
You can avoid going to auction.
While a lot of properties in our main capital cities are advertised as going to auction, there’s nothing stopping you buying before. I often find at auction buyers will buy based on what the bank will lend them, not what the property is worth. That’s where you get the headline news of a property selling for $100k+ over reserve. Buyer’s agents often avoid auction for that reason as they want to pay a factual price.
You’ve got to spend a dollar to make two. Our parents’ generation was taught to get wealthy by saving money. Look after the pennies and the pennies look after the pounds. However this generation knows that you’ve got to spend money to make money. Whilst a buyer’s agent may cost you two per cent of the purchase price, they can easily save you five to 10 per cent by not going to auction and not paying an inflated, emotional price. If a buyer’s agent helps you choose a property that grows at eight per cent rather than six per cent, that can make hundreds of thousands of dollars difference over the life of the property.
About the author Chris Gray is CEO of Your Empire, a buyers agency which builds property portfolios for time-poor people – searching, negotiating, renovating and managing property on their behalf. Chris’s team buys 1-2 properties a week and often spends $5m+ a year renovating on others behalf, providing a unique insight into market conditions and buyer and seller sentiment. Chris hosts “Your Property Empire’ each Monday on Sky News Business channel, where he interviews various heads of property research companies and major industry figures. Chris is a qualified accountant, buyers’ agent and mortgage broker. For more information visit www.yourempire.com.au, www.chrisgray.com.au and follow Chris on Twitter: @ChrisGrayEmpire