This is typically one of the first questions that the majority of people ask when they
contact Industry Insider Property Advocates through one of our many different
marketing channels.
In this article, I’m going to describe the most common fee structures that buyer
advocates and buyer agents around Australia are charging their clients.
How to find a good buyer’s agent
The reality is there are over 300 buyer agents and advocates in Australia, and they
all offer very different levels of quality and service.
Industry Insider is an active member of REBAA, The Real Estate Buyers Agents
Association of Australia. Established in 2000, REBAA exists to raise the profile of the
industry by establishing guidelines for the professional conduct of real estate buyer’s
agents nationally.
You can read the REBAA Code of Conduct to see what sort of guidelines they
require buyer’s agents to adhere to (and please take careful note of point 19 on page
3).
If the buyer agent or advocate you are interviewing isn’t a REBAA member, you
should always ask them why. REBAA is Australia’s only national professional
association for buyer’s agents. In order to become a member, agents must go
through a stringent process. Once an agent is a member, they have to adhere to the
above strict code of conduct.
In my personal opinion, if you are looking to engage a professional buyer’s agent or
buyer’s advocate to assist with one of the largest financial decisions of your life, you
should only be employing a member of the above association.
Around Australia, there are over 60 different companies who abide by the REBAA
code of conduct. Selecting a buyer’s agent from this association will ensure you are
dealing with a professional that has sound values and ethics and a history of proven
results for their clients.
How much does a buyer’s agent cost?
Now to the fees. I personally believe the main reason people ask about the fees first
is because they don’t understand what it is we actually do as a buyer’s agent or
buyers advocate.
Until we understand what you as a buyer are searching for and how much input you
would like during the search, it is difficult to offer you a price on our services and a
tailored solution. The reason for this is that there are different service offerings with
the majority of the buyer agents/advocates around Australia.
Here are the three most common services that a buyer’s agent or buyer’s advocate
will offer their clients.
A tailored end to end service, where you sit back and relax while we do all the
work for you. This consists of clarifying the best asset based on your borrowing
capacity and family’s requirements. We will locate, evaluate, complete the due
diligence and negotiate the best terms and purchase price on your behalf. This
service at Industry Insider is our most popular as it also offers access to a range of
properties that are not advertised or listed for sale on real estate websites.
A negotiate only service, where the buyer will assist with the sourcing of
properties. Then the buyer’s agent/advocate will use their years of negotiating skills
and extensive network to produce you a better result than you could if you were
trying to buy the property yourself.
Auction bidding service, where we attend the auction and take the stress and
uncertainty away and control the auction bidding.
At Industry Insider Property both our end-to-end service and our negotiate only service require
an engagement fee between $2,000 – 3,000 to start the search. This fee is to cover
resources of the search and is refundable after 14 days, only if you are not happy
with the level of service you have been provided. (I’m pleased to say no one has
asked for a refund so far!)
Around Australia there are two common ways in which the majority of buyer agents
and buyer advocates in our industry charge. Below are examples for you to consider
based on your purchase price.
A percentage based on the purchase price. (Complete Service)
The percentage-based model is very similar to how the majority of the listing and
selling agents across our country work. However, this percentage-based option only
works in our industry if the fee is fixed in advanced or is scaled down.
Below is an example of what it looks like when we use a percentage-based fee.
Client Budget of $1,500,000 – $1,700,000
Property Purchase Price = $1,650,000
Engagement fee of $3,000 inc GST to start (off set against purchase)
Purchase fee of 2% inc GST of the purchase price up to $1,500,000
Total fee = $30,000 as we agreed to fix the fee in advance against $1,500,000
A flat fee based on the purchase price. (Complete Service)
The flat fee model is agreed to in advance. Again as above, there are some selling
agents who also charge a flat fee for their services.
Client Budget of $700,000 – $800,000
Property Purchase Price = $800,000
Engagement fee of $3,000 inc GST to start (not offset against purchase)
Purchase fee = $12,000 inc GST
Total fee = $15,000 inc of GST
Please note I added two examples above that have different engagement fee
structures. Eg 1. Offset and Eg 2. Not Offset against the purchase fee. It is important
for you to understand which offering you are signing up for because this will affect
the amount you are required to pay once the property has been purchased.
Are buyer’s agents worth it?
In our industry you have to understand the value of your skills, your network, your
ability to read the play and of course your experience. I say to my potential clients, “If
I can’t negotiate the best fee as a Director, then how can you expect me to negotiate
the best result for you when I am negotiating with the seller’s agent?”
If you hire an experienced buyer’s agent they will save you time, money and stress
and the value they provide should cover the fees they charge.
At Industry Insider, more than 80% of our business is referral. This is a great sign as
our clients keep coming back and also telling their friends and family about their
experience.
This is why the best source of business for Industry Insider and majority of the buyer
advocates across Australia comes in two forms.
1. Referral business from clients who have already used our services before. This is
because we already have a higher level of trust and credibility in their eyes.
2. When a client has previously engaged our buyer advocacy services and they
share their story with a family member, friend, work colleague, business owner about
the experience they had with Industry Insider.
Fun fact – Did you know that in the USA and Canada 90% of people engage a
buyer’s agent or buyers advocate to help with their property purchase?
I truly believe if you DIY your property purchase, chances are you will either over pay
or buy the wrong type of property. This can cause significant financial stress down
the track.
As a last food for thought, I pose this question to you. “Would you sell your own
home, or would you engage a professional selling agent?”
If you answered NO you would engage a professional selling agent, then why on
earth would you buy a property without professional guidance and support?
At Industry Insider we specialise in buying established family homes in the inner ring of Melbourne, Bayside, and the beautiful Mornington Peninsula. If you need any assistance with buying, don’t hesitate to speak with one of our Property Buyer Agents on +61 8374 7652 or book a Zoom call here
https://calendly.com/propertychat/discussion-with-industry-insider
Industry Insider Property
Level 3, 489 Toorak Road, Toorak 3142
+61 8374 7652
+61 402 346 810
industryinsider.com.au
