Should you consider a buyers’ agent?
by Neil Jenman
READING TIME: Apx 4 minutes
The 2020 real estate world is not kind to home buyers. Gone are the days when buyers – be they family home buyers or investors – could sit in an agent’s office, drinking coffee and discussing their needs. Nowadays, it’s hard for buyers to even get their calls returned. If you’re a buyer and you want to see houses, well, you know what to do: Look online and then turn up to inspect the home at the time set by the agent.
Buyers: “DO WHAT YOU’RE TOLD,” that’s what the industry is saying in 2020.
Social distancing is nothing new to home buyers. Most agents have been keeping their distance from buyers for years – until ‘crunch’ time, either at an auction or when buyers are ‘played’ against each other. As a buyer, until you’re ready to sign a contract, few agents want to know you.
Seriously, you get better service buying petrol and a Mars Bar from a 7-11 than when trying to buy a home from most agents. Or should that be “trying to buy” a property?
There are 10,080 minutes in a week. And here’s the deal: The homes you want to inspect are open for 30 minutes. If that doesn’t suit you, too bad. If you don’t show up at the time chosen by the agents, too bad.
Want to inspect homes on a Sunday, your only day off? Too bad, the agents are having a day off too. Come back to the next ‘open-for-inspection’ next Saturday.
But what if you want to see two homes with two different agents and they are both ‘open-to-inspect’ at the same time? Again, too bad, you can only see one.
So, why is this? Why are so many agents so bad to buyers?
Well, most agents are employed by sellers. It’s the sellers who pay the agents and it’s the sellers for whom the agents work. The agents have no real duty to the buyers.
Furthermore, agents know that if they have a good property for sale at a sensible price, there will always be buyers for it. That’s why agents are notorious for being rude to buyers, for failing to return calls, for failing to consider feelings and for generally not caring a damn about buyers.
It’s a wonder more buyers don’t hire their own agents. In America, for example, it’s common for buyers to hire Buyers’ agents to help them do battle with the sellers’ agents.
In thousands of sales in the US, there are two agents, one for the sellers and one for the buyers. But not so in Australia. In most sales in Australia, buyers must fend for themselves.
But it doesn’t have to be this way. A growing number of buyers are hiring their own agents to help them. And, judging by the overall feedback, many buyers are delighted to have their own agent.
In theory, a buyers’ agent is a wonderful idea for buyers. The buyers’ agent can do all the searching for properties – thereby saving buyers many frustrating hours; and, best of all, when it comes to negotiating the price of a property, the buyers’ agent can take care of it all.
If handled correctly, the cost of a buyers’ agent can easily pay for itself because the buyers’ agent can often negotiate a better price. Good buyers’ agents are good negotiators, they can easily save the buyers a small fortune. Just as sellers’ agents are supposed to get the highest price for sellers, the buyers’ agents are supposed to get the lowest price. It’s like a battle of agents.
In my own case, our family has used buyers’ agents three times – and each time, we have been delighted. Not only did the agent save us a lot of time and get rid of the typical hassles, they also saved us several thousand dollars on the price of the property. This more than covered their fees.
Most buyers’ agents charge a fee for searching for properties (say, a couple of thousand dollars) and then they charge a percentage of the price of the property (usually one to two per cent).
It doesn’t really make sense, however, to pay a buyers’ agent a percentage of the price of a property because that means the more you pay, the more the buyers’ agent gets paid. You are better off negotiating with the buyers’ agent to pay a percentage of the amount they save you (plus a fee for searching for properties).
Always remember, whether it’s a sellers’ agent or a buyers’ agent, fees are negotiable. Just negotiate the fee before you hire them.
Of course, buyers must be careful. There are some dodgy buyers’ agents around; after all, many are former sellers’ agents. I have seen horrendous cases where investors have been pushed into property by a buyers’ agent only to discover, years later, that the property was worth hundreds of thousands of dollars less than they originally paid.
Some buyers’ agents like to ‘double-dip’ meaning they get paid by sellers as well as buyers. This is a disgraceful conflict of interest. Be careful. At least one of the country’s highest profile buyers’ “award-winning” agents is double-dipping. He has steered naïve investors into properties where they’ve lost hundreds of thousands of dollars.
But, if you’re looking to buy a home right now and you are sick of the treatment from sellers’ agents, maybe you should consider a buyers’ agent. At the very least, check them out. Carefully.
It could be one of the best property decisions you ever make.
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