Why I don't use buyer's agents

If I have a budget of 400k and a BA knows where the best 400k properties are he may try to negotiate a 420k property to a 400k... It's not like he'll increase my budget or will suddenly get a 400k home for 300k (if you find me someone who can then point me to them)... I think it's so silly that people are paying BA's 10-15k to buy them a 100-250k property.. Sometimes 5-10% of purchase price.. Up to 5 times what the agent selling it is making... Nuts.. 5-10k on 500k property ain't too bad at least it's 1-2% but how some people justify paying a BA 10k when he only saves them 10 is nuts too lol I see the advertising all the time... "Price listed was 350k and we got it for them at 340k, a huge 10k off".. But don't write that they charged the buyer 10-15k for the purchase... I just think 10-15k is a huge chunk of cash for a BA service. I'd only pay it if they can save me 2-3 times that..

 

The actual negotiation of the purchase price is potentially only part of what a BA does. Depending on the overall service they offer it can include recommending a location, finding and recommending a specific property, negotiating the lowest possible purchase price, assisting with all due diligence arrangements and possibly ongoing research/market commentary. As long as you ask the specific BA exactly what you are going to get for your money - you can then make a decision on whether you see value in their offering or not. If you don't - don't pay it. Simple.

 

So I have a conveyance come across my desk acting for a buyer who has engaged a BA.
Clients wanted to buy a PPOR in Holland Park (SS was onto that 2 years ago wasn't it?) but couldn't get an offer accepted on anything. Client's are solid people so finance etc is all good. Clients come from a particular ethnic group (not commonly found in Australia) and bump into the BAs at an open house- the BA are also from the same ethnic group and speak their language- although the clients are fluent in Inglés- . Clients seem happy with the deal; I don't think it was a bargain but I don't think they were done either.

 

Well played. What's your strategy in effectively achieving this multiple times?

 

Hi guys, thought I'd post here instead of a new thread.
Am looking at engaging a BA for assessing / negotiation and bidding at auction. We have a property in mind. Their fee is $1.1k + ~1.0% of budget if successful.
Say our budget is $1,500,000 - should we be setting the maximum price to pay as $1,485,000 so we are indifferent and pay the same in the end, if we were to use one or not use one?
My partner is wondering what if we lose out to somebody that had a budget of $1,495,000 when we could have done it ourselves. I'm telling her there are some merits but she believes if her budget is X, she will stick to it to the end. What other insights do they bring in this situation?

 

1.1% is expensive if they are bidding at auction for you or was that only applicable if they successfully negotiate before auction at a price that you are prepared to pay for the property?

 

Turns out it's 1% if negotiated before auction and a flat fee of ~1k for auction attendance / preparation report
I guess my question isn't relevant as that's much fairer.

 

Yes I can imagine. Please tell the stories.

 

This is an absolutely terrible story

 

what is a property sideshow rental company?

 

I think Flat Fee is much fairer approach.
Every property is unique - you cannot find one with the exact same variables. Eg. Units, even within the same block, no one unit is the same, different level, different facing aspect etc.

Not sure how you can put a "performance" metric such as a 1% of budget.
You would think such a metric would lead them to pushing you towards higher priced properties due to a higher commission.

 

I also believe flat fees are fairer however you will find that many BAs who charge a commission usually do so within a scaling fee schedule eg: the lower 1% of $1m if purchasing $1-1.5m

 

seems reasonable to me. I bought a house in Melbourne and got my brother to bid on my behalf at auction. Unfortunately I engaged a solicitor who he recommended and the solicitor started taking instructions from my brother instead of me. It got messy and expensive because the solicitor prepared the settlement documents wrong and had to redraft.

I would not get family involved again. Compared to what I went through, $1k is cheap.

 

I have done it. I was once part of a joint venture that wanted to start a business operating near central Perth. We found a suitable commercial building and wrote up the offer. Meeting the agent the agent refused to present the offer to the owner of the building. We just called up and made an appointment with the owner. It took about 10 minutes to negotiate the deal in person. We also told the owner about the real estate agent and he fired the agent on the spot. It turned out our offer fell through due to council, not the owner. However, we referred the owner to a good agent we know and our good agent sold the building very quickly for a price that was higher than our offer. It all worked out for the new agent and the owner but the previous agent got nothing. Its a poor attitude to actively prevent a deal.

 

Apologies for derailing.
What would be a fair flat fee to pay for a full search, assessment and negotiation / bidding?
Melbourne - Budget $1.3 to $1.5 m

Thanks.

 

What is it worth to you?

 

Good question. At 1.5% that's $19.5k to $22.5k
I would probably cap it at the lower end for that price bracket. Seems like a lot of money but not sure if that's typical.

 

There is certainly a strong argument for both for ad against. It really comes down to the buyer and their property, area and market knowledge. I do feel that they are a great resource for anyone thats time poor and relatively new to the industry.

 

All buyers agents have different niches they focus on:

• Some do live in (PPORs), some don't.
• Some attend auctions, some don't.
• Some focus on long term growth, others on short term
• Some buy development sites
• Some only buy in this state or that state
• Some only buy in certain regions
• Some only buy in certain suburbs
• Some buy apartments, some don't

I think at the end of the day, if the BA opens your eyes to something that you wouldn't have seen/known otherwise, then yes worth the time & money (imagine if there was a BA for bitcoins and they told you about it before the boom? ). For example, I find it staggering how many Melburnians don't know how much you can buy a house for in Geelong or that Geelong is the same distance to Melbourne as Pakenham way (suburbs of Melbourne versus regional town).