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Engaging a buyers agent?

Discussion in 'The Buying & Selling Process' started by Katarina_Investor, 3rd Mar, 2016.

  1. Katarina_Investor

    Katarina_Investor Member

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    Hi, we are about to get a pre-approval for our first investment property in Sydney. Long story short, we need it to grow as much as possible for the next three years (will need the cash for personal purpose), whilst getting a good rental yield and minimsing the holding costs.

    The more rp data and Investor literature I read, the more confused I get on what and where to buy

    Is it worth engaging a buyers agent at 1.2%

    Thanks
     
  2. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    I know I am biased because I am a buyers agent, but if you are getting confused and bogged down by analysis paralysis, it might be worth hiring some professional help to cut through the maze of options.

    You can get BAs that charge a fixed fee or others that charge a % - see here: Buyer's agent fees - REBAA
     
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  3. MsAli

    MsAli Well-Known Member Premium Member

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    Hi @Katarina_Investor - Sydney? :eek:

    If you are in Sydney, you could research on the forum, ask a lot of questions and go do the purchase.
    :)
     
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  4. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    You do need to at least figure out what general location you want to buy in (which I agree is quite difficult). Buyers agents tend to specialise in large general locations, but one based in Sydney isn't ideal if you're buying in Brisbane.

    I'd also recommend a BA that charges a flat fee (or at least close to it) which is agreed on upfront, rather than a percentage.

    Overall my experiences with BAs have been outstanding. Both from the perspective of working with mutual clients as well as using their services to purchase properties for myself. Admitedly they're not for everyone, but if you're already thinking it might be useful, then that sort of assistance almost certainly is useful.
     
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  5. Jake Milne

    Jake Milne #1 Buyers Agent, Vic. Business Member

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    It's the same situation as doing anything yourself vs hiring a professional.

    If I were you I'd be asking myself:
    1. Do I have the time and energy required to learn how to invest properly?
    2. Do I have the time and energy to?search for, negotiate on, and purchase said investment properties.
    3. Can I do it to a similar level of a professional?
    4. Does a professionals experience and therefore difference in ability (contemplating both immediate savings and future gains) warrant their professional fees?

    Imagine it this way. People can learn how to fix their own cars. It takes time to learn the trade, purchase of the tools to be able to perform the job, experience to be able to do it right first time around.

    Even if you learn how to fix a car you'll probably never be as good at it as a mechanic but you can probably achieve a level of competency that you're happy with and will deliver results.

    So asking is x% worth it is not something anyone else but you can answer.

    One way I use to decide how much I should pay for something is establishing how much time is required for me to get the results, and how much that is worth to me. My time is worth $200/hr so if I can spend x hours @$200/hr on buying an investment property and it's less than 'y' fee of the professional then I'd do it myself. Otherwise my time is better spent earning more money.
     
  6. JacM

    JacM VIC Buyer's Agent Business Member

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    Hi @Katarina_Investor

    I echo the comments of @Propertunity in that if you are feeling a bit strangled by Analysis Paralysis, then a buyers agent can be very handy to you.

    Some agents charge by percentage of sale price and others a flat-rate fee as mentioned by @Peter_Tersteeg . Remember that GST may apply so it is important to check if GST is included in the fee quoted, and be clear on the services provided within the fee as this can be quite different from one agent to the next.

    Normally, you will be required to nominate where you wish to buy and the agent will either take you on since your nominated suburb(s) are within their area of expertise, or indicate they cannot take you on since they do not cover your nominated suburb(s).

    I find that most of my clients don't know where they want to buy but have a similar set of requirements and as such I sniff out areas that match those requirements.

    Each of the following components are meaning that more people are wishing to acquire property that has sufficient yield to cover most costs and not disrupt lifestyle.
    • Salary increases are not keeping up with the rising cost of living, and most folks are on a normal average salary and thus people are becoming less prepared to endure significant out of pocket expenses
    • The destiny of negative gearing is presently uncertain
    • A mortgage is for 30 years - a long time to tighten the belt and miss out on living life along the way (going out for dinner with friends, participating in social activities and sports, going on holidays, being able to fund the occasional unexpected medical bill)
    • Lenders needing borrowers to demonstrate capacity to keep up with mortgage repayments (a combination of salary income and other income such as rent... thus the importance of the amount of rent received)
    • That size and speed of capital growth is not a guaranteed thing
    The moral of the story being that your requirements are very sensible and rational and in line with things that are on the minds of many other prospective investors.
     
  7. trinity168

    trinity168 Well-Known Member

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    Agree with @MsAli -- Sydney would be a tough market to get much equity growth with a 3 year outlook. It may happen, it seems to still be chugging along, but, I think most forumites are hedging their bets elsewhere.

    Buyers Agents -- yes, have used them, happy with purchase.
    Know which state you want to get into, make sure BA is local. Plenty of good ones here on the forum, and I happily recommened our BA in Brissy too.
     
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  8. radson

    radson Well-Known Member

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    Just remember, the market doesn't care what you need.
     
  9. Leo2413

    Leo2413 Well-Known Member Premium Member

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    I agree. Same thing as money seldom goes to people who 'need' it the most, but goes to those who deserve it the most.

    Of course not talking about places with great poverty.

    Just my opinion.
     
  10. Biz

    Biz Well-Known Member

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    Good luck with that, more likely it will shrink as much as possible in the next three years.
     
  11. vtt

    vtt Well-Known Member

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    Not if she buys a well positioned property in a good street in the Inner West :)

    I used a BA to buy my investment property which is now my PPOR and I couldn't be happier. Well worth every penny.
     
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  12. Bullion Baron

    Bullion Baron Well-Known Member

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    If you engage a buyers agent in Sydney, do you think they would turn you away even if they thought it was the wrong point in the cycle to be buying?

    3 years is not a long window if things go wrong. The last Sydney peak took around half a decade for the recovery to play out.

    If you need the cash for something personal in 3 years time then invest/save in something more conservative than a market where you'd typically be leveraged 5-20x with your deposit.
     
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  13. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    Like gold bullion?
     
  14. Bullion Baron

    Bullion Baron Well-Known Member

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    No.

    If someone had a timeline of 3 years to invest and then needed to cash out would you encourage them to buy a property?
     
  15. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    No not under any circumstances. It is mostly accepted that 7 years would be an absolute minimum due to the high transaction costs getting into and out of the asset.
     
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  16. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    Depends on the market cycle. But I dont encourage anyone to buy a property, and certainly dont encourage someone to buy a property which would not suit their risk and financial situation
     
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  17. Katarina_Investor

    Katarina_Investor Member

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    I definitely earn less then a buying agent! However, it doesn't matter whatever their fees are in the end, as long as I am saving more then I would be paying

     
  18. Katarina_Investor

    Katarina_Investor Member

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    Care to share how to deserve it? :)

     
  19. Katarina_Investor

    Katarina_Investor Member

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    Thanks! Any reasoning behind this outlook? I'm sure you know what you are talking about, but we have been hearing the "bubble pop" story for the past n years...
     
  20. Katarina_Investor

    Katarina_Investor Member

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    This is why I am looking for a buyers agent! :)