Buyer's Agents for First Home Purchase - Worth the Investment?

Hi, Considering our overwhelming experience with navigating the property market for our first home in Melbourne, we're hesitant and skeptical about our prospects. We're wondering if engaging a Buyer's Agent would truly be beneficial as they claim. Have you found Buyer's Agents to be valuable in your experience with purchasing a PPOR/First Home in Melbourne? especially if considering potential future changes such as converting it to an investment property or selling it down the line. Was it worth the investment, or did you regret the decision?

 

I'd say definitely not!
Not only do I not really see the value in BAs most of the time, but buying a PPOR is not about what the best financial decision may be but to find the property that you'll be most happy with.
This means you'll just have to attend 100+ open homes.

 

If it's your first home/ppor you probably have a good idea of what suburbs and type of property you want. I think in your case a BA is more useful if you're very time-poor and have a fairly large budget

If you need guidance on the buying process you can get them from a mortgage broker and solicitor/conveyancer

 

I know two people who used BAs for their PPOR (ex-boyfriend and colleague) and was closely watching their entire search, plus I engaged one for my first home but pulled out before the search began, only because I stumbled across a perfect apartment off the plan at below market price, otherwise I would have gone ahead. I have used BAs for investments.

We are all in Sydney, but I think it would largely be the same for Melbourne - only difference is perhaps Melbourne is a buyers' market atm and easier to navigate yourself.

Here are the benefits:

- if you are a busy working professional and don't have time, or don't want to spend time on the property search, a buyers agent can be a godsend. You get your weekends/weeknights back and you can focus on other important things without going through most of the physical and emotional drain of property searching (which can take up to a year, or even more!!)

- you may get access to off market properties that you wouldn't have come across otherwise

- discuss and nailing your exact brief with a buyers agent can really help clarify what you're looking for and whether you're buying a good value property. I was really unsure about what I wanted, until I filled out the buyers' agent full brief and had a long sit-down with them. drawing from their market experience, I learned a lot about what to buy, where to buy, what will retain value etc.

- a good buyers agent is supposed to pay for themselves or more, in that they will hopefully get a better deal for you, than what you could negotiate yourself.

- having someone experienced on your side for emotional support throughout the process can be really reassuring.

- having a buyers' agent bid for you at auction can take away heaps of stress and hopefully get you a better deal.

Of course, most people buy their PPOR without a buyers agent and I'm sure many do all right. But I believe in outsourcing to experts as a general philosophy and I have seen too many friends give up their weekends for a whole year going to open homes. I most definitely wouldn't want to do that as I value my lifestyle and have other goals.

If I was getting another PPOR I would most likely use a BA. You need to choose one carefully though, they do vary greatly in approach/quality and you want someone thorough and dedicated.

 

I think with buying property it becomes a case of the Dunning Kruger effect for a lot of people i.e. a little bit of knowledge gives a lot of confidence with an over estimation of ability. In reality most people aren't buying potentially a few properties a week like a professional buyer is, and buying even 1-2 a year is really not enough to truly know what you're doing.

There is no match for experience, no matter how much an amateur buyer thinks they know, so the value is understanding that you don't know what you don't know - a small but incredibly important difference to getting the best outcome!

 

People that buy two properties a year don't know what they're doing?

Also, if a BA averages several properties per week, I'd say there's a very strong chance that they're not putting in what I'd consider a reasonable amount of work per property.

 

100% agree......no way there are that many deals at the moment that are well under market..hard enough buying 1 a month.

BAs who are buying 6-10 a month...are not getting fantastic deals ...anyone can do them. It just shows how gullible people are.

Its like the guy who claims he has over 60 properties...people say wow...but the reality is there is a BA or Mortgage Business pumping cash to buy these. As to whether even a person on 500k can do this...no way.....

 

There are absolutely excellent buyer's agencies that are buying multiple properties a week, every week. It depends on the size of the agency, their internal structure (team vs. single BA) and other factors. I also said potentially buying a few a week. There are weeks where we have bought 3 or 4, but those deals aren't put together over a few days, they are put together over a few weeks and we have a smaller team.

In either case, to suggest that buying a few in a week equals lack of due process or a reasonable amount of work just means you're not really understanding the underlying process and value in BA (as previously stated). This is fine of course, but a BA is doing this 8-10 hours a day and often 7 days a week whilst other people work their own jobs. It's not beyond any reasonable amount of work to put together 3-4 deals in a week and cover every aspect of the purchase in fine detail, I can promise you that.

And yes, anyone who does anything 1-2 times a year is not going to be as proficient, experienced and knowledgable as someone who is doing it professionally day in day out, week in week out. This applies to almost anything in life - sports, any number of professions, you name it. To suggest otherwise really doesn't match with reality, unless you think (for example) that someone who plays golf twice a year is going to be just as good at it as someone who plays it every day. It's just not how the world works.

Someone who is buying 1-2 a year knows more than someone who has never bought, sure, but in relative terms it's not even close. I remember when I was buying only 1-2 a year back in the might noughts and just didn't know what I didn't know. Thinking back, I really didn't know what I was doing relative to what I know now. At the time I just didn't realise it.

 

It's not always about buying them under market. For most people it's about getting it done at market in a highly competitive environment as most BA clients are home buyers who are looking for a variety of different value drivers, such as time, process, not knowing what to buy or what not to buy, dealing with agents on their behalf, due diligence, negotiating so they don't overpay (not just underpay), etc.

Fantastic deals are unicorns and cheap property is usually cheap for a reason. Arguably the best properties always have competition, and therefore the value prop changes for the home buyer. Borderless buyer's agents spruiking below market deals are just pushing an agenda that doesn't really guarantee anything. If any buyer's agent is buying 6-10 a month then send me their marketing strategy! Coping with the resourcing on that alone would be a nightmare.

 

From what I see with dozens of clients using BAs over the years is that the reality for some people is that it has added immense value. Simply put they would never be able to do it themselves and usually for one of 3 reasons:

1. They are genuinely too time poor to be able to allocate the time into buying property (e.g. in demanding executive roles with a young family)
2. The logistics of an interstate investment are too challenging for them (take Perth as a prime example currently)
3. The BA keeps them accountable to their brief and on track with what they're looking to do... many people are lost and get distracted by things which are not material particularly with an owner occupier purchase.

 

This bring me the question.......why even go with a buyers agent when a buyer with some education can do this.....

As for unicorns...I find ...at least 1 a month.

 

Simples - not everyone has the time or inclination to educate themselves in the same way that not everyone wants to do an electrical apprenticeship to learn how to re-wire their fuse box. It's easier, more time efficient and cheaper on a time-cost basis to outsource the work for most people, as with many other professions. Time is a huge one. For example, I can do my own gardening and mow my lawns and clean my house, but I don't because my time is better used elsewhere. The value isn't in whether I CAN do it myself, it's the time-cost of actually doing it.

It's fantastic if anyone putting in the hard yards and education to do it themselves, but we're generally talking time frames that aren't practical for the average buyer. Keep in mind 70% of buyers are home buyers and the vast majority of investors only buy one investment property. This site is fantastic, and there's a wealth of knowledge, but the PC community is an knowledge anomaly relative to the majority of people who are buying.

 

For anyone considering the services of a professional that costs thousands of dollars, it is important to consider what value they are providing and most people seem to find it much easier to justify spending thousands of dollars on tradespeople than on getting good advice.
What do you need help with? Finding the right property? Negotiating? Are you hoping they can find you elusive off-market properties? Are you hoping they will save you time or money? Or do you just need guidance and reassurance with your decision making?

It is unfortunate but many First Home Buyers will be buying at or close to their limit, based on either their servicing capacity or deposit. This can make it difficult to justify the use of a Buyer's Agent, as their fee could easily mean you can't afford the same property you would have bought on your own.

If you can afford the fee and you can see value in what a BA can offer, then it should be worthwhile but it really depends on you and finding the right BA.

 

I think this Buyer's Agent concept is only good outside Sydney. As in Sydney only Auction Sell works. 1st, there is hardly any good buyer's agent in Sydney. I spoke with one of them and he says that they don't believe in Off Market Property but will find and win in "Auction" for me :-D. They will stick to the estimate and budget strictly blah blah. As if that if I go to auction on my own, I will end up bidding $300k ovr my budget :-D

That was one hilarious response.

 

Hilarious. So how are you going to get a property?

 

There are good buyers' agents and there are average buyers' agents. Like hiring any professional if you do your homework there are higher probabilities of ending up with a good one.

I have bought 3 properties in Sydney through buyers' agents over the last 20 years and happy with the results. Taking the efforts to find a good buyer's agent in Sydney has been worthwhile for me.

When looking for Sydney PPOR two buyers' agents told me brief was overambitious and unattainable. The third buyers' agent said it was possible with some flexibility. In the end I ended up buying PPOR that met all key parts of my brief and the buyers' agent fee has definitely been worth it.