Buyers were cautioned from using Buyer Agents in a recent article published in the Real Estate Conversation. According to the article by iBuyNew CEO Mark Mendel, buyers were at risk of being squeezed for more money than they needed to pay when they engage a Buyer Agent to buy a property.
These assertions aren’t true. Buyer Agents will always work in the best interest of the buyer and always work to secure the property at the lowest possible price. Obviously, we have a vested interest in this discussion. However that doesn’t mean that we shouldn’t respond.
Firstly, it’s incorrect to think that a Buyer Agent would push up the price of a property – they are under instruction from their client as to their maximum limit and cannot spend a cent over.
Mendel’s article cited the auctions from the latest series of The Block as an example of Buyer Agents “bidding against one another and pushing up prices”. The inference is that if Buyer Agents weren’t bidding, the properties wouldn’t have sold for the amounts they did and the buyers would have saved money.
The Buyer Agents bidding at The Block would have been under instruction from their clients as to how high they can bid. The Agent can only represent the client; they don’t have a blank cheque to secure property at any price. The Buyer Agent is only doing what the buyer would do anyway: bid until they successfully secure the property, or not. It’s the buyer’s desire for the property that drives competition.
Secondly, fees to engage an Agent are always agreed upon before the client signs on the dotted line. They know what they can expect to pay even before the search begins.
Buyer Agents can be a huge benefit to buyers by securing them quality property, quickly
Buyer Agents will always work with the client to tailor a fee structure that suits their situation. Fees can either be a fixed fee to a percentage of the client’s anticipated budget, or, variable, which will be a percentage of the purchase price.
Regardless of the structure agreed upon, it is ultimately up to the client as to how much they spend on the property, and therefore pay to the advocate.
There are abilities that the Buyer Agent possess that are in many ways worth more than their fee.
For example, a Buyer Agents negotiation skills can be a huge advantage for buyers to secure a property for the lowest price and best conditions. Earlier this year, National Property Buyers Queensland State Manager, Stephen McGee, negotiated the purchase of a two bedroom Nundah apartment for $12,500 under the asking price – something that may not have been achieved if the client didn’t engage an agent.
Buyer Agents will also look at the best quality property available with the best potential for capital growth. The client obviously needs to pay a fee to engage a Buyer Agent, but will hopefully make that expense back and more in capital growth.
For example, a two bedroom Thornbury apartment purchased by National Property Buyers Victorian State Manager, Antony Bucello in 2011 for $420,000 now has an estimated value of $550,000 to $570,000 – up to a $150,000 profit in five years. The capital growth potential for this property has come to fruition and as a result the client has made back the costs of hiring an advocate almost 20 times over.
As with any service, clients will experience different levels of quality. There are some Buyer Agents that will provide a better service and get consistently better results than others, just as there are Selling Agent who will provide a better service than others; or in any other field for that matter. Buyers looking to engage a Buyer Agent should do their due diligence before making the commitment to engage one.
The majority of Buyer Agents will always work to ensure their client purchases the best quality property. And their service provides more than just the convenience of saving time. It’s the Buyer Agents ability to recognise quality property and assist the buyer secure it for the lowest price that are often the more significant advantages.
It’s this expertise and insight that makes the cost of engaging a Buyer Agents well worth the investment.
Contact us to find out how National Property Buyers can help you find your ideal property.