Poll- Used a buyers agent?

I don't think it's as simple as it's a waste of money, it depends on the scenario. There are plenty of people with good salaries and no time to browse listings and open homes and even then they don't know what to look for as they don't have the expertise.
For myself i used one as time was not on my side and i could not afford to make another stuff up. Property is a long term game so if you don't get it right until your 40'S there is no chance of early retirement.

 

Thats the only time I would use one- If I was buying in an unfamiliar city, or if I was overseas/ very time poor.

 

Used a BA some years ago for a city I was less familiar with - cost <10k- gr8 value for money as her negotiating skills alone saved me the fee I paid.

40k for a BA seems steep unless it's for a development site and even then...

 

That’s what I thought. The BA I was dealing with charged a fixed percentage.

I was trying to negotiate a sliding scale as I don’t believe the purchase of a $2M property is twice the work of a $1M property.

He wouldn’t budge; so I did it on my own. Property was gone up $300K in first 12 months so I am happy with my efforts.

 

Who needs a buyers agent, I shall just call you haha

Top work!

 

No-one can afford my fees .

 

Where did you buy? Just curious.

 

It’s interesting reading people’s perspectives here and as a BA (in Perth) I’ll try to remain unbiased Buying investment property (and the occasional owner occupier) is our (BA’s) industry and the area we dedicate all of our time to – 24/7 – researching, negotiating, due diligence, then often further negotiation, then settle and handover (and beyond eg develop your new site). A good BA will have built networks with local agents who will often come to them first with properties before going to market as they know their buyers are qualified and ready to go. Fees generally range dependent on services provided – eg if a BA is looking for a growth property or looking for a particular development site within a certain brief (again the higher development fee pays for itself with a good BA).

I just published an article on my news blog on the Benefits of using a Buyer’s Agent v DIY Investment which gives a high level overview with the main points detailing the advantages of using a BA including expert Insight and understanding of the industry, connections, independent advice (eg not working for the agent but working for you), and negotiating expertise. In a nutshell a good BA will likely pay for themselves in the actual purchase (finding the great property and negotiating) and you will reap the rewards with a great investment.

 

Your cash on cash return is almost always worse using a BA than doing the legwork yourself. Even if you get a slightly better price than you would have negotiated, the fact that you can't capitalise this cost means that you'll probably be forking out anywhere between an extra 20% to 100% (low value purchase, high fees and 90%+ LVR) out of pocket to what you would have done otherwise.

I think BA are mainly for people that don't want to do the necessary steps. I'm not saying that there aren't good BAs, I'm sure that there are many on here that can find better deals than I can, but for the reason above and for the fact that there are also bad BAs, I'd personally never use one.

 

What do you mean by 'capitalise'?

You can certainly borrow to pay a BA cost - and claim the interest too.

 

True, but if you have a finite deposit (say $50k starting out), then using a BA will mean that the maximum purchase price of the property just became less. For argument's sake, let's say closing costs are $10k, as are BA costs and you can only get an LVR of 90% (plus LMI).

In the non-BA scenario you can afford a $400k property. However if you use a BA, you suddenly can only buy a $300k property. Your repayments will be less, but your cash on cash return is also much lower.

You could argue that you borrowed and capitalised the $10k BA fee in this example onto the loan, but whether you put $30k of your money as a deposit and pay the $10k out of pocket or put $40k deposit down and "capitalise" the $10k, it's still the same result. The bank will only lend you $270k, where they would have lent you $360k had you not used a BA.

I know, this is a very much oversimplified example, but hopefully you understand what I'm trying to say.

 

I engaged one, once. Every property they presented to me was on Domain or Real Estate.com. I specifically wanted to leverage a relationship with agents that would bag a distress sale, or similar. I didn't have time to build those relationships. I lost my upfront fee.
I ended up finding what I was looking for myself. Many hours of Internet searching, talking to agents and 5 trips interstate.

 

We've used a BA for every purchase, but every purchase has been interstate.

Sure, they were all on Domain/RE.com but also in areas in hot markets at their respective times.

I had enough knowledge and done enough research and have enough negotiation skills to have jumped on a plane, inspected, made an offer, negotiated etc BUT - I simply wouldn't have got my arse in gear to do that.

For us, the BA was worth every cent as our eyes and ears on the ground.

The properties have done well, but that's not necessarily the BA's doing, as I say, markets were good when/where we bought. The BA's got 'ok' deals but none of the off market, fire sale deals you read about, just a decent deal after some agent back and forth negotiating.

If I were buying locally to me I would't use one, (unless it was say in a very hot suburb or auction based or something?) Generic stock private treaty I'd do it alone but interstate I'd use one every time. For us, the fees were easily worth the time saving in one of us flying all over the shop inspecting and trying to get deals done. More than that though, we just plain wouldn't have bothered and would have ended up buying locally instead, which looking at back at where we were looking at the time would not have performed as well as the BA purchased IP's have.

 

Personally we would never engage a buyers agent.
The way I look at it, I won't get much value for money. Let's say you are reasonably healthy but has a cough. Your friend recommended the best surgeon in the world. You see him/her and gave a some cough medicine and charge you a surgeon's rate which he is entitled to. I would think it has absolutely no value in there. It would be different for a terminal patient. He would be godsent and worth every penny.

I can read, research, negotiate and has my own contact, buyer agent is a waste of money for me. But may be worth every single penny for some other who can't.

 

While your numbers are right, it’s a short sighted view. It’s about the long term gain and relative to your average investor, BAs will make less mistakes along the purchase path, understand what constitutes a better investment grade property, particularly in an area in which they specialize vs an interstate buyer, and de-risk the investment in many areas the average buyer won’t even know about along the way. Not to mention the hours of work not required. As with anything, there must still be oversight and decisions made by the investor.

We have many clients who have done both and in almost all cases, IPs bought by BAs have outperformed self buys over a cycle (those clients who have done both). I’m yet to find an investor, (who has used a proper BA!) who doesn’t think it’s worth the money. Ironically, most people who say they’re not worth the money are those who have never used one.

Of course, each to their own but I believe they’re absolutely worth every penny having bought many properties myself and using a BA.

 

Sorry, but that's not a very good argument. It's like saying people that don't buy caviar are the ones that think caviar is gross/too expensive.

People that think BAs aren't worth the money obviously are very unlikely to use one.

Most of property gains are also to do with the region that you're buying in more than the property (rising tide lifts all boats).
I bought two properties in Rockhampton, which have turned out to have been terrible investment decisions. Now, had I used a BA, I would have found one that did Rockhampton, perhaps bought slightly different properties and still made a terrible investment decision.
You're a BA in Sydney, I see, if a prospective client comes to you and says that they want to buy an investment property in Sydney, do you tell them not to? I personally think that it's very bad timing to be buying in Sydney, so whether you do or don't use a BA, you'll likely make capital losses and almost certainly be cashflow negative.

Had I used BAs for my purchases, I would have spent over $100k just on BA fees, which would have slowed my investment journey significantly.

Maybe a BA is a good idea for people that don't have the skills or willingness to learn about property markets, or mum and dad investors that will only ever buy one or two IPs anyway, but for serious investors, I just don't see it as a reasonable choice.

Note: After re-reading what I wrote, I can see that the tone might be construed as being a bit argumentative or belittling. I don't mean it in that way at all, I've got no problem with what you do and am not having a go at you personally.
Sorry if it comes across that way.

 

I use Newton law of motion for this one
the more friction an object is subjected to the slower it will travel

and that translates to with money and investment less friction cost is better
the more friction cost you add to your investment journey your return will be lower
no BA, no stock tips subscriptions, no costly Seminars

But the world goes around by not everyone doing the same thing so it comes down to whatever works for you

 

Have engaged good BAs for leg work mostly, being too busy with other ventures at the same time. They are just another team member you can engage if you see value in what they bring at a particular point in your investing career. Sometimes its not easy being in 5 places at the same time, working on a dozen different projects. Delegate leg work, but never brain work. Once some are short listed, it then needs to pass your own level of scrutiny. That is where a lot of people go wrong. They don't know how to properly do DD on a deal brought to them.