Below is the most common frequently asked questions about residential buyers agents.
- What does a buyer’s agent do?
A buyer’s agent provides end-to-end assistance in the property buying process for a fee. A buyer’s agent will locate a suitable property, assist in negotiation with the seller, handle necessary paperwork, and provide counsel and support till the purchase is finalised and the property is settled.
- Why should I use a buyer’s agent?
A buyer’s agent brings professional expertise, experience to the table which simplifies the whole process. A buyers agent will save time by doing property research, evaluate the market and conditions, provide alternatives and comparable properties, conduct preliminary inspections, and complete the price negotiations.
- Does a buyers agent need a real estate license?
Yes, a buyer’s agent needs to have a real estate license. To act as a real estate agent or representative, including being a buyer’s agent, an individual must be properly licensed.
- How much does a buyer’s agent cost?
The cost of a buyers’ agent can vary widely depending on a few factors such as their experience, the services you require, and the market conditions in your desired area.
Fixed Fees: Some buyers’ agents charge a flat fee for their services. This is agreed upon before beginning the process and does not change regardless of the home’s purchase price. The flat rate can range anywhere from $3,000 to over $15,000.
Percentage Fees: A buyer’s agent will charge a fee based on a percentage of the property purchase price. This usually ranges between 1.5% and 3% depending on the level of service provided.
It’s imperative to clarify the fees structure upfront and what services are included in which fee and whether there are any additional costs upon settlement.
- How can a buyer’s agent help me secure a lower purchase price?
A buyer’s agent can leverage thorough market knowledge, experience, assessment of the property’s true value and negotiation skills to get you the best deal possible.
- Can a buyer’s agent help me, if I’m buying an investment property (IP)?
Yes, further to a normal property purchase, a buyers agent can provide valuable input on the potential return on investment, rental yield, and capital growth prospects based on their understanding of market trends, making them an excellent resource for investment property purchases.
- How does a buyer’s agent find properties?
In addition to scanning public published listings, buyers agents often have access to off-market properties and have a network of contacts including sellers agents, developers and other industry professionals that can provide potential leads.
- Is a buyer’s agent the same as a buyer advocate?
A buyer’s agent and a buyer’s advocate are essentially the same; both are real estate professionals who work exclusively for the buyer in a property transaction. These terms can be used interchangeably and refer to an agent who guides and protects the buyer’s interests during the house hunting, negotiation, and purchasing process.
- How can a buyers agent save me money?
There are many different ways a buyers agent can save you money, they include:
- Valuation expertise: buyers agent are experts in evaluating the value of a property. They can help prevent from overpaying for properties that are overpriced.
- Negotiation skills: Buyers agents can negotiate deals with sellers or sellers’ agents.
- Better access to properties: Buyers agents have access to broader properties including off-market ones
- Minimize costly mistakes: buyers agent guide you through the purchasing process, helping you avoid common (and potentially costly) mistakes
- Time is money: Agents handle many time-consuming tasks including finding appropriate properties, arranging viewings, dealing with sellers, and handling paperwork.
- How do i know if my buyer’s agent is truly independent?
Ensuring your buyer’s agent is truly independent is essential. Here are a few tips to confirm their independence:
- Exclusivity: An independent buyer’s agent works exclusively for buyers and does not sell real estate. Confirm that they do not have any listed properties or have affiliations with selling agencies.
- Agent Agreement: Their agent agreement or contract should clearly state that they represent you the buyer’s interest exclusively.
- Fee Structure: Independent buyer’s agents are typically paid by the buyer, not the seller. If the buyer’s agent is receiving fees or part of the commission from another party or from the seller’s side, it may indicate a lack of independence.
- Property Recommendations: If the buyer’s agent pushes for properties from a particular developer or seller, this could be a red flag. An independent buyer’s agent should recommend properties that best fit your needs and budget, regardless of any other information.
- Transparency: A buyer’s agent should disclose any relationships with sellers or any other intermediaries and openly discuss any potential conflicts of interest.
- Verifiable References: Ask for references from past clients. If the buyer’s agent consistently suggests that their clients buy specific properties or work with specific sellers, it might suggest dependence.
- Licence Check: Conduct a licence check to ensure the buyer’s agent license is current and there have been no charges against them related to misconduct.
- Are buyers agent fees tax deductible?
The associated fees paid to a buyer’s agent are generally not immediately tax-deductible if you are purchasing a property to live in, as they are seen as a capital cost related to the acquisition of the property.
If you are acquiring a property for investment purposes, the buyer’s agent’s fees may still not be directly deductible, the fee forms part of the cost base of the property, which could potentially reduce your capital gains tax liability when the property is sold.
Refer to the Australian Tax Office (ATO) website for more information about working out the cost base of an asset – Cost base of assets | Australian Taxation Office (ato.gov.au)
This is not tax advice. Tax matters are complex and the specifics often depend on individual circumstances, so it’s always advisable to seek professional tax advice from a qualified accountant or tax adviser to understand and advise on your specific situation and circumstance.