As most of Australia is duly aware the financial sector is in the midst of a drawn out, yet necessary, shake up, with mortgage brokers facing the brunt of suggested changes. Regulators have shared their scepticism around lender-paid broker remuneration, doubting if the industry can act in the best interest of their customers whilst operating within the current model, suggesting that conditions incentivise mortgage brokers to act in their own best interests rather than the consumers. Whilst an outcome is a long way off, the initial backlash from mortgage brokers and consumers alike, who share the same fear and doubts around whether Australians looking to save money and secure a mortgage would be willing to pay an upfront cost for service, emulates the doubts a lot of prospective property purchasers have around engaging, and ultimately paying for, the services of a property buyer’s agent.
Whilst it is entirely possible to list and sell your own home or investment property, almost all properties within NSW (and most of Australia) are marketed and sold through a professional selling agent who combines their market knowledge, buyer database and negotiation skills to achieve the most favourable outcome, a combination of price and terms, for their client; the vendor. On the flip side, however, the vast majority of prospective purchasers choose to navigate the competitive property marketplace without formal assistance outside of their friends, family and colleagues who seemingly always have a profound insight into all things property. A common misconception is that most people can’t afford the costs of engaging a buyer’s agent, and view it as an additional cost on top of what is typically the single largest expense of their life. It is important to realise, however, that you could be paying in other ways by not fielding the advice of an expert, such as:
- Purchasing a sub-par property with limited capital growth and/or rental yield potential.
- Spending unnecessary time out of a rising market, where the longer you take to buy something, the more chance you have of being priced out of your preferred location or property type.
- Overpaying on a property due to not correctly identifying its value and applying incorrect negotiation skills or tactics.
- Spending time and money on varying reports and legal works on properties which are unattainable within your budget however have been quoted at a lesser level by the sales agent as to increase interest/competition levels. An experienced buyer’s agent will be able to identify this right away.
So what can you expect to pay when engaging a buyer’s agent? Outside of the usual marketing costs selling agents are only paid IF you sell, usually a percentage of the sale price, whereas a buyer’s agent is typically paid an engagement fee when the search phase begins and an additional fee once a property is successfully purchased, either a fixed amount or a percentage of the purchase price. Why would anyone prefer a percentage rather than a fixed fee? At Rose & Jones our “Success Fee’’, paid after identifying and securing a property on behalf of our clients, is a percentage of the purchase price, however, we cap this fee in accordance with the clients budget. This provides our clients with the comfort of an assured cost ceiling whilst leaving potential for a lesser fee should we secure the desired property type at the low end of their budget. With over 20 years in the marketplace our deep relationships with sales agents and extensive due diligence methods ensure our clients not only gain access to 100% of available property, but secure the desired offering for the best possible price and terms. As touched on in our recent blog post the services provided by an exclusive, experienced buyer’s agent add value to the process and should be considered by all prospective property purchasers.