Trying to justify cost of a buyers agent

Me and my wife are looking for next investment. We can't afford in sydney so we have resorted to buying abroad.
I have contacted multiple buyers agents and they all sound promising, but we are both overwhelmed with the cost of them and if they are really worth it.

A lot are charging a fix fee of 10k, some 12k, others a percent of the final price.
In the end, it looks like we will be spending minimum 10k on one.

How can I be certain that they are not just going to buy anything in order to make a quick sale. I understand they are working for me, but honestly, it's completely a trust game and words can easily be manipulative to the naive ears, which I'm sure many in the industry know all too well.

Should we suck it up and take our chances with a buyers agent, or put our heads down and do the research ourselves?

My stress levels have been so high lately in working out my next move, being torn between shares, investment property or buying the place we will call home. Im leaning more towards I.p for now. Now the cost and theoretical value of a buyers agent is adding to that stress.

I feel like a buyers agent will relieve me from a lot of stress in this turbulent times, but its just the constant thought in the back of my head that the money im paying him could easily be saved with more research, and thought.

Honest thoughts please

 

I think you've got more issues than just a Buyers Agent if you are buying abroad. Have you done your research into how your country of choice works?

 

I need to rephrase that, I mean interstate

 

Well, that's an easier question. I guess you need to assess if you have the skills/time to do the work yourself, and if you are willing to do it. Outsourcing is much easier, but then you have to trust the opinions of someone else.

For me, I've never used a BA. I've bought site unseen, and I've travelled interstate & done it all myself. Have I made mistakes? Plenty!

 

I was time poor for my second IP. So I did use a buyer agent as I was living in Sydney at the time.
But after I have move to Brisbane. My other IP was my own once I got to know Brisbane as a whole.
Zero mistakes in doing this process. Money well spend in my eyes.

don’t ever accept the first few proposals the buyer agent gives you.
Make sure you criticise and overanalyse why they choose those.

 

Figure out where you want to buy, then ask this forum for a local recommendation.

Brokers are often a good source for a recommendation. Some of us have worked with multiple BAs over time and have seen the results.

I've used BAs for my interstate investing. Those properties are among the best in my portfolio.

 

$10k in the scheme of things for the Median value of property isn't that much if you put things in perspective.

 

Buyers Agents aren't selling anything (or shouldn't be) sad this would be a conflict of interest - make sure that they are licensed, they aren't working for a sales agency or associated with a developer.

Use your BA to bring suitable properties to you with their recommendations (& why they have discarded others) rather than sifting through every listing which meets your criteria.

DYOR as to what is on market and How these compare with those presented to you by the BA.

 

Why Interstate ? Why cant you invest in shares and property? why does it have to be one or the other? Buy a property that will allow you to do both.

 

If you can't wrap your head around the value proposition, maybe you need to go DIY?

I agree that DIY can the best option for many folk, providing they have the time, the skill and the contacts.

Or maybe you're valuing the BA cost the wrong way? What does the fee look like if its gets you into the market sooner? 2.5% growth per month on a $600K property is already higher than the fee! Will you be able to get a deal done in 4 weeks?

Or lets assume the BA, through their local knowledge and experience has better asset selection than you, and their proposed property would deliver an additional 1.5% capital growth per year over 20 years (versus something you buy yourself)?

Playing out the timing piece , here are a few anecdotes from just the last week- in a rising market, timing (along with asset selection) is paramount. Timing can be dependant on access to stock/ deals.

- Lockdown in Sydney, vendor got anxious and wanted a super quick sale (Alexandria). Agent only showed 3 groups via private inspections. All 3 were BA's.

- Brisbane (Keperra), genuine off market opportunity due to some nuances with the lease- Agent only showed 2 parties- both BA's

- Just launched in Brisbane (Geebung) this week. First open on Saturday. We're attending a private inspection on Friday with 1 other BA. Likely both parties will have offers in before most people even see the property. Does this guarantee either of us the win? No, but every little bit of inside running sure helps!

Using a BA is not for everyone, including many here on PC (as they're generally a more educated & experienced group). There can however be clear benefits to using a (good) BA.

 

The value proposition for a service provider really depends on how rich u are and time poor u are.

If u are filthy rich, not interested in knowing details it might make sense.

The bit that I can't understand is how to strike a good outcome when there are two sets of agents fees in the middle. Win win win win? Or does someone lose? Do I lose?

 

Filthy rich? Or you simply capitalise the BA fee.

 

Are BA fees tax deductable for an IP??

 

not for properties on capital account. Would be for developers though.

 

Hey Terry, what do you mean by capital account?

 

An investor not a developer, in short. See my tax tip on this

 

Who did you use mate ?

 

My honest thought after reading your post is - you have to short list max 2-3 suburbs, get a fair understanding of what recent sale prices are and approx rent that can be achieved depending on the specs of the property & consider a BA who is on the ground and local to that area (that is if you are going to engage someone to assist you)

Given the demand in masses, your purchase cost can be easily more than 10% if you take another 6 months to complete your research. I read a post here on Pchat where someone mentioned the prices are increasing 1-1.5% each month (not sure how true it is)

I personally think the time that you are outside the market is directly proportional to the loss that you'll make because that amount is what you could've saved had you pulled the trigger instead of waiting on the sideline. All the best!