Hello and welcome to my Ninth blog post. In this post I will cover what a buyer’s agent is, the services they provide and why I chose this direction in my property investing journey.
What is a buyer's agent?
“Buyer’s agents, also known as buyer’s advocates, are licensed professionals that specialise in searching, evaluating and negotiating the purchase of property on behalf of the buyer. Unlike real estate agents who primarily represent the seller of the property, a buyer’s agent (like it says on the tin), looks after you, the buyer.”
– realestate.com.au
My original plan
Originally, I had planned to go at it alone and complete all of the research and everything myself. A big factor of why I had the suburb research posts was to build up a framework I would use for when looking for an investment property.
I’ve also listened to a lot of podcasts of real estate investing and had a good idea of what how long-distance real estate investing works, and it would mainly be around building relationships. I wanted to go about it the hard way, and my doing so also save the 13 odd thousand you’d spend on a BA, so why did I change my mind?
Why I decided to go for a buyer's agent
The main reasons I decided to go with a buyer’s agent was:
o Avoid analysis paralysis – Purchasing a property is probably the biggest financial commitment you are ever going to make. From my own understanding of myself, I know fear may hold me back from action, especially from something of this financial magnitude. I’ve concluded that having this third party specialist to be a part of my team may be very beneficial to not only help me overcome the initial fear and take action, but also to ensure that my first stepping stone/property isn’t a lemon.
o I set myself a short time frame for purchasing a property (<6 months), and after doing quite a bit of research, it seemed that this may have been a short time frame for me to gain an understanding of a market/investing landscape on my own to pull the trigger.
o Hot market – The main value I was seeking from a buyer’s agent was to find a good deal in a hot market.
o Restrictions – From what I’ve heard about in podcasts, people who want to do long-distance real estate investing will typically fly out to the area they are interested in to get a feel for it; drive around, go to the shops, talk to the locals. Essentially being their own boots on the ground doing research to gather bits of information to contribute to the whole picture of a location which you can’t get from online data and statistics. Lockdowns have really prevented this, adding to my uncertainty of going at it alone.
o Building a team – A large part of becoming wealthy is working with people smarter than you towards a goal.
Note: while I really did want to do it on my own, after careful deliberation I concluded that my best option was to get a new member in my team who can fill the gap in my knowledge (i.e. localised knowledge) to help me work towards my goal. This member is the deal finder; the buyer’s agent.
Alternative options
· I would have had to build rapport with real estate agents in the areas I was interested in investing in. This may be difficult a first time investor as you may not be taken too seriously (from what I’ve heard from podcasts), but not entirely impossible.
· Build more relationships with other parties, such as property managers who may have some localised knowledge which may help when thinking about buying in an area.
· I would have had to find a way to organise a way for someone to conduct my inspections, etc.
Buyer's Agent Service
Typically, buyer’s agents will offer a full comprehensive A->Z package which ranges from 10-15k. There are also tiered services available incase you only want part of their service and want to do some of the dirty work yourself. For e.g., here is part of a fee schedule from one of the buyer’s agents I have spoken to:
SERVICE | TOTAL PAYABLE |
Inspection & Due Diligence · Photos · Inspection summary notes · Due diligence checks (flood zone, council zoning, underground services) · Comparative market analysis report | $1500 + GST = $1650 |
Buyer’s Agent · Advice on negotiation · Negotiation of pricing/representation at auction · Facilitate contract to signed contract stage | $3000 + GST = $3300 |
Contract Facilitation · Building & Pest booking · Other specialist bookings on your behalf (plumbing, electrical, etc.) · Attendance at all inspections · Negotiation | $1000 + GST = $1100 |
Finding out which buyer's agent is right for you
There’s this saying “When there is a gold rush, sell shovels.” Right now, we are experiencing one of the hottest markets there has ever been, and there are many spruikers out there taking advantage of people and ‘selling the dream’ so it’s important to be weary of those out there. I have personally encountered a few through webinars/seminars.
My best go-to for getting an opinion in the realm of property is through the PropertyChat forums. This is the most popular Australian real estate forums and reviews speak for themselves.
I am looking for a property in Brisbane, and I narrowed my search down to 3 candidates. There were multiple forums on PropertyChat around the topic of Brisbane buyer’s agent recommendations, and these three candidates seemed to pop up in every post. I then messaged several people who made a comment for their experience with the buyer’s agent and get their honest feedback.
Afterwards, I set a meeting to chat with all three buyer’s agents. My aim was to:
· Understand the buyer’s agent service and fees of each agent
· Get a vibe of the person to see if I can work with them
· Since the scope of work of buyer’s agents seem to be straight forward and the same, I decided to prompt for more info to gauge where some would offer more value or be differentiated from the others
So essentially, it’s like I was interviewing the agents to see which would fit best to play a role in my team.
