Are you planning on buying your first home? You must be excited! Buying your first home is a big decision because it represents a major step forward in life and requires a sizeable investment. Home ownership is the Great Australian Dream!
But as exciting period it is, buying a home presents many challenges. The real estate market in Australia remains buoyant. This is because while demand for housing is high the supply of available property is tight.
It may not be enough to peruse online listings and property advertisements. When supply of available property is tight, you should expand your search beyond the usual sources of property listings.
You should consider hiring a Buyer’s Agent.
What is a Buyer’s Agent?
A Buyer’s Agent is a real estate agent who works to protect the interest of the buyer. In a real estate transaction, you have 2 sides: the Seller and the Buyer. The Seller works with a Listing Agent.
Remember that first and foremost, a Buyer’s Agent is a real estate agent. He or she has been on the other side. He or she has worked with sellers of property before. This experience becomes valuable during the negotiation process because the Buyer’s Agent will have an idea of the mindset and approach of the Seller.
Here are 7 important things you need to know about a Buyer’s Agent:
- Acts as an Adviser; as a real estate agent, a Buyer’s Agent knows what it is like to buy and sell property. He or she may be a home owner as well. If so, the Buyer’s Agent can give you three- side perspective on buying a home.
The Buyer’s Agent can also advise you on how to finance your home. Some prospective home owners are so caught up with the idea of home ownership they lose sight of how they will pay for it.
The Buyer’s Agent can skillfully put things into their proper perspective. He or she will advise if you need to apply for a home loan and if so, guide you through the process.
- Functions as an Investment Consultant; buying a home is not a purchase. It is an investment. Property is an asset that appreciates over a period of time.
You should not only look at a prospective home as a unit of shelter but as an investment that could yield huge returns in the future.
A Buyer’s Agent can update you on the latest developments in the property market including trends and forecasts.
- Initiates Efficient Property Search; Buyer’s Agents have their own network of property sellers. Some are listed on the open market while some are not.
After getting your specifics on the kind of home and neighborhood you want plus your budget, the Buyer’s Agent can prepare a list of properties that will fit your needs.
He or she can schedule the visits; make arrangements for transportation and meetings with the respective home owners. A Buyer’s Agent can also guide you through auctions and open houses where you have to compete with other buyers and investors.
- Expert in Negotiation; Negotiation is a tug- of- war between the buyer and seller on the final price of the property.
It can be tricky because both parties want to protect their interests. They understand some compromise has to be met but the objective is to walk away from the negotiation satisfied and happy.
As someone who has been on both sides of the transaction, a Buyer’s Agent knows how to navigate points of contention and bring them to a middle ground.
An experienced Buyer’s Agent will have the prospective home inspected by an architect or an engineer. This will give you an idea on the additional investment you need to fix up the house. Your Buyer’s Agent can use this to leverage negotiations to your favor.
- Manages Leg Work; a real estate transaction can be a complicated process. Contracts have to be prepared, signed and processed. You have to abide with regulations in the city state. The title of the property has to be inspected and cleared.
The Buyer’s Agent can do all of these for you. They can have the contracts prepared by real estate attorney and visit the Land Titles Office to verify the title of the property.
- Receives Commission as Compensation; just like a real estate agent, a Buyer’s Agent gets paid a commission for a successful sale of property.
But you do not bear the cost of the commission. The Listing Agent will share his or her commission with the Buyer’s Agent.
Some prospective home buyers are wary of this because it may represent a conflict of interest. It opens the possibility of collusion between the Listing and Buyer’s Agents.
That is why you should take time qualifying a Buyer’s Agent. Conduct due diligence by asking all candidates to provide client references. Contact the REIA office in their area and verify reputation.
- A Buyer’s Agent will Propose an Exclusivity Agreement; it is pretty much standard practice for real estate agents to request exclusivity when they decide to list property. Buyer’s Agents are no different.
You should expect a Buyer’s Agent to extend a proposal for an Exclusivity Agreement to you.
The biggest risk here is if you sign an exclusive agreement with an ineffective Buyer’s Agent or one who is difficult to work with. Here are 3 tips on how to approach the working arrangement with the Buyer’s Agent:
- Read the contract very carefully; if possible, give a copy to an attorney for legal advice.
- Ask for a short- term deal; most agreements are for 90 to 120 days. Negotiate for 30 days maximum but renewable depending on performance.
- Propose for non- exclusivity; this allows you to explore other options but at the same time protects the first agent should you decide to go with his seller.
Hiring a Buyer’s Agent is a great idea especially if you are buying property for the first time. It will make the process easier, more efficient and convenient, saves time and reduces the risk of making costly decisions.
But it remains a relationship the success of which depends on how both parties engage with each other. It’s not just about finding the right candidate but from your side, learning to trust and work with your Buyer’s Agent.