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Should you use a real estate agent or a buyer’s agent to buy property?
Australia’s real estate market has gone crazy in the last two and a half years. You can chalk some of that up to the almost half a million ex-pats returning to Australia and looking to buy a home. Some of it is low mortgage rates.
With prices at sky-high levels, though, it puts potential home buyers or property investors at somewhat of a disadvantage. Whilst sellers traditionally use a selling agent, buyers far more rarely use a buyer’s agent. Many people are only vaguely aware that buyer’s agents even exist, let alone what they do.
If you’re in the market for a property, and want a guide comparing a buyer’s agents to a selling agent, keep reading. We’ll cover the essential information and what you get from each.
What Is a Selling Agent?
A selling agent is the kind of agent you likely think of when you think about real estate. Selling agents help property owners sell their homes, commercial buildings, or land. Some of their more common duties include:
- Suggesting pre-sale improvements
- Writing marketing copy
- Getting professional photos of the property
- Helping set a target price
- Getting the property online
- Negotiating the final sale terms
In other words, they do a lot to help the person who’s looking to sell their property. In fact, it’s their main job to represent the seller’s interests throughout the entire marketing and sale process.
The steep increase in real estate prices has made it a particularly lucrative time for selling agents. Although, rising mortgage rates may help bring prices back down to more reasonable levels.
Selling agent fees
Commission fees depend on the real estate agency, the agent and the location. The Perth commission rate average is around 2.31%, based on Local Agent Finder.
You Shouldn’t Negotiate With a Selling Agent
In the current real estate market, it’s AGAINST your best interests to negotiate directly with a selling agent. After all, they are legally appointed to represent the seller, and part of their job is getting the best possible price. They have a financial motivation to drive the price up.
Beyond that, almost any selling agent you come across will bring vast negotiation experience to the table. They’ll know how to talk around problems that might bring the price down and highlight features that make you want to pay more.
While it’s not malicious, selling agents also know that major real estate purchases can become an emotionally-driven decision. The more emotionally invested you become in the purchase, the easier process the selling agent will have in triggering those emotions to get the deal or price they want.
Negotiating directly with a selling agent yourself runs contrary to serving your own best interests.
What Is a Buyer’s Agent
While hiring a buyer’s agent is considered standard operating procedure in the U.S., it’s unfortunately uncommon in Australia and almost unheard of in the Perth property market. The more likely scenario is that you look for properties yourself and then negotiate with the selling agent.
Before the real estate market turned white-hot, and when supply-and-demand were at least somewhat balanced, that approach could work. Even in a slower market, you need someone on your team who only cares about your best interests. That’s the primary role of a buyer’s agent vs selling agent.
What Do Buyer’s Agents Do?
A buyer’s agent may carry out a number of different tasks. For example, let’s say that you’re primarily interested in investment properties. A good buyer’s agent will often provide investment property strategies or guidance.
They can provide perspective on whether the asking price for a property makes sense or if you should look for something else.
Buyer’s agents also take on the role of the expert negotiator when you buy a home or other property. While they want to earn their real estate agent fees, they are emotionally divorced from the process. That helps them avoid agreeing to or rejecting offers based on an emotional knee-jerk response.
If you want specific types of investment properties, a buyer’s agent will often do the research for you. They’ll point out properties that you can potentially get for a good price and properties you may want to avoid.
Picking a Buyer’s Agent
Even though buyer’s agents are less common than selling agents, it doesn’t mean you should pick one at random. Buyer’s agents can bring their own agendas to the table.
For example, some buyer’s agents strike deals with builders or other service providers. The agent recommends their builder or other services at exclusive rates. If you use the recommended builder or service, the agent gets a percentage of any sales or services you contract.
While most buyer’s agents won’t knowingly recommend a bad builder or service provider, it doesn’t mean they’re recommending the best option for you either.
You want a buyer’s agent without those kinds of financial relationships in place. It removes the temptation for them to steer you toward a service provider or even a property that might need those kinds of services.
The same goes for any agency that is a “one stop shop“, the kind that have a financial advisor, brokers, or have a relationship with developers that offer them lots of land to “direct” clients to, and say it’s a great idea based purely on depreciation of the new build. We believe this is a conflict of interest, and anyone looking to pull you in that direction, you should steer well clear of.
How would you know these answers when you go for a chat or call? You ask if they have any financial kickbacks from any other profession they recommend.
Watch Out for Junior Staff
You also want a buyer’s agent who will represent you throughout the process. Some agents will hire junior staff to shepherd the deal along.
While those junior staff may prove competent, it’s not the same as the senior agent representing your interests. Junior agents can’t offer the same levels of experience or insight, which is a large part of why you hire a buyer’s agent in the first place.
Ask potential agents if they’ll represent you through the whole process before you hire them.
Buyer’s Agent vs Selling Agent
When it comes to a buyer’s agent vs selling agent, the main difference comes down to which party’s interests they represent. Selling agents represent and protect the property seller’s interests.
Buyer’s agents represent and protect your interests when you buy real estate. They can also help you identify good properties for specific investments and even recommend investment strategies that align with your long-term goals.
You&Me Personalised Property Services offers buyer’s agent services in Perth and greater Western Australia. If you’re looking for property investment options, contact Heath Bassett or Simon Deering, co-founders.
At You&Me Personalised Property Services, property buyers only deal with the co-founders.