Buyers Agent-First investment property

Hi all, I was hoping someone could provide some advice.

I?m looking at purchasing my first investment property in Melbourne and was considering using a buyer?s agent. I?ve looked at a few companies that offer these services and I?m getting a little bit stuck. The companies I?ve spoken to thus far have the full package which is around $10,000, for that they handle everything and put forward what they feel the best investment option is. The second option is to do all the groundwork yourself and then have them step in for the negotiating process, which is significantly less, between $2,000-$3,000.

I?m apprehensive to depart with $10,000 but at the same time I?m concerned about paying overs if I?m dealing with Real Estate agents directly. I was interested to hear about other peoples experience and what you?d recommend. I?m looking to spend approximately $400,000 on the property.
 
I like to use buyers agents for several reasons:

1. They save me a lot of time and money. If I'm buying interstate it would cost me more than their fee to get to know the market properly then to find a property, negotiate on it and make the purchase. If I'm buying locally, this might still be valid, but not quite as much.

2. They're better negotiators than I am. It's what they do all the time. I also tend to get a bit emotive about the purchase which I find BAs don't.

3. They know the market better than I do which means I'm less likely to pay too much.

If you've got a great BA they can save you time, money and mistakes. This doesn't mean they'll get a better deal than you could, but odds are they will. There is also something to be said for learning to do it yourself.
 
Myself I prefer hands on and having a learning experience, plus I feel confident in my ability having worked as a REA before and bought/sold before.

However there are some great advantages of using a BA listed prior and if I was looking at buying interstate besides Brisbane (my mentor dad lives there and grew up there) I would probably engage a BA to assist as they would know the market more than me plus the trips/accom/time would cost me more.

If I was the CEO of Qantas well then I would probably engage a BA to do it all every time as my time would be worth a lot more haha and 10k in 3M isn't as much as 10k in 500k ;)
 
Hi Leroy

Disclaimer: I am a BA (though not in Melb) :)

My two cents:

For the same reasons that people choose to engage a selling agent to sell their home or IP so they elect to use a BA to buy:

1. Agents are licensed to sell/buy, and do it for a living. It's their job so they're more likely to get a better result than if DIY.
2. Exposure: agents have access to more buyers/properties thus increasing your chances of selling/buying for the best outcome as audience/choice is often wider.
3. They negotiate for a living. Not all of us are born salesmen and some feel uncomfortable/out of their depth in this space. Hiring someone who does it on a regular basis makes sense.
4. More efficient timeframe. With a professional doing the work for you, not only do you usually sell/buy faster but it's likely to be more streamlined than if going down the DIY route.
5. Local knowledge of an area is something you can't DIY in a short period of time. Using a local REA/BA is utilizing and leveraging this as they are specialists in different cities/towns/suburbs.

Sure, there's more reasons but I've got to go cook dinner now :D
Happy hunting!
 
Hi all, I was hoping someone could provide some advice.

I?m looking at purchasing my first investment property in Melbourne and was considering using a buyer?s agent. I?ve looked at a few companies that offer these services and I?m getting a little bit stuck. The companies I?ve spoken to thus far have the full package which is around $10,000, for that they handle everything and put forward what they feel the best investment option is. The second option is to do all the groundwork yourself and then have them step in for the negotiating process, which is significantly less, between $2,000-$3,000.

I?m apprehensive to depart with $10,000 but at the same time I?m concerned about paying overs if I?m dealing with Real Estate agents directly. I was interested to hear about other peoples experience and what you?d recommend. I?m looking to spend approximately $400,000 on the property.

When you say they handle everything, what specifically are you getting for your $10000?
 
When you say they handle everything, what specifically are you getting for your $10000?

Typically and also in our case the full end-to-end service comprises the following steps:

BUYERS AGENCY AGREEMENT
CLIENT'S NEEDS ANALYSIS
RESEARCH & ADVICE
DETAILED PROPERTY BRIEF
SEARCH & LOCATE THE BEST PROPERTIES
APPRAISE
PRESENT
NEGOTIATE / BID AT AUCTION
ACQUIRE
ARRANGE OTHER SERVICES AS REQUIRED

In our case a significant amount of time would be spent on client's needs analysis and research and advice, before the final Brief is developed.
 
As mentioned, it's really about leverage.

You can do the work yourself. You live in Melbourne, after all. It's just a matter of whether you want to go to invest the time and energy yourself (which can be substantial, but also provides you with a slew of benefits including building networks, becoming familiar with the market, improving negotiating techniques and communication skills etc which can help not just now but in the future if you maintain them) or if you'd prefer to invest in the help of a professional and leverage their knowledge, skills, networks etc.

I chose the DIY path in my 'hood (Marrickville). Every cent counted as I was still saving my deposit. To say I was living frugally during that period is a mammoth understatement, so my best option was to learn everything I could while I was saving like mad and that meant no BA for me. Time was on my side so the decision was easy.

It paid off, but a staggering amount of time went into that process. And that's what it boils down to.

When I make my next acquisition it'll be interstate and while I will fly to the area a few times to scope things out, be on the ground, meet the agents etc, I'll be leveraging the knowledge, experience and networks of a friend who knows the area and agents/pms like the back of his hand. I've got plenty going on in life so I'm happy to use an expert, rather than become one.

Now, for my disclaimer: I'll be operating as a Buyer's Agent later in the year. After helping a number of folks snag properties in my area of specialty, I decided to formalise things to assist more people. I'm pleased that all that running around, inspecting, building rapport, networking, bidding, offering, negotiating etc is going to more use than just my own investment purchases.
 
Typically and also in our case the full end-to-end service comprises the following steps:

BUYERS AGENCY AGREEMENT
CLIENT'S NEEDS ANALYSIS
RESEARCH & ADVICE
DETAILED PROPERTY BRIEF
SEARCH & LOCATE THE BEST PROPERTIES
APPRAISE
PRESENT
NEGOTIATE / BID AT AUCTION
ACQUIRE
ARRANGE OTHER SERVICES AS REQUIRED

In our case a significant amount of time would be spent on client's needs analysis and research and advice, before the final Brief is developed.

1. Pardon my ignorance of the matter, but what is the incentive for a BA to push hard for a really good deal, rather than settling for an ok deal - knowing that the client will likely be satisfied with the ok deal having not paid above market-value? How does a client know that the BA has secured them the absolute best deal possible?

2. Given the process outlined above, how many properties can/will be presented to the client to choose from? And will these potentially be additional costs at any point, if the client takes their time and declines some options?
 
Now, for my disclaimer: I'll be operating as a Buyer's Agent later in the year. After helping a number of folks snag properties in my area of specialty, I decided to formalise things to assist more people. I'm pleased that all that running around, inspecting, building rapport, networking, bidding, offering, negotiating etc is going to more use than just my own investment purchases.

I hope you've the necessary licence and have had experience at a licensed buyer's agency before you do this.
 
1. Pardon my ignorance of the matter, but what is the incentive for a BA to push hard for a really good deal, rather than settling for an ok deal - knowing that the client will likely be satisfied with the ok deal having not paid above market-value? How does a client know that the BA has secured them the absolute best deal possible?

You often don't know just how good the deal is until some time after you've made the purchase. There's no guarantees anywhere that says you'll absolute best deal, you couldn't guarantee this if you did it yourself.

The BAs incentive to do a great job for you should be (a) repeat business and (b) referrals to friends. You'd only do this for them if you're happy with what they did for you.

2. Given the process outlined above, how many properties can/will be presented to the client to choose from? And will these potentially be additional costs at any point, if the client takes their time and declines some options?

The last time I used a BA to purchase a property, he was coming to me weekly with the various properties on the market that met my criteria (sometimes there were no properties). After initial negotiations, most of these properties were dropped for various reasons. It took about 4 months to find the right property at the right price and it turned out to be a great deal! The BA was actually talking me out of most of the other properties, saying, "I think we can do better".
 
You often don't know just how good the deal is until some time after you've made the purchase. There's no guarantees anywhere that says you'll absolute best deal, you couldn't guarantee this if you did it yourself.

The BAs incentive to do a great job for you should be (a) repeat business and (b) referrals to friends. You'd only do this for them if you're happy with what they did for you.



The last time I used a BA to purchase a property, he was coming to me weekly with the various properties on the market that met my criteria (sometimes there were no properties). After initial negotiations, most of these properties were dropped for various reasons. It took about 4 months to find the right property at the right price and it turned out to be a great deal! The BA was actually talking me out of most of the other properties, saying, "I think we can do better".

Word of mouth and repeat business like this is why the BA will try and get you the best deal.

Not knowing what you paid the BA but they worked for 4 months (not dedicated im sure) but only made $10,000. Cheap investments...
 
1. Pardon my ignorance of the matter, but what is the incentive for a BA to push hard for a really good deal, rather than settling for an ok deal - knowing that the client will likely be satisfied with the ok deal having not paid above market-value? How does a client know that the BA has secured them the absolute best deal possible?

2. Given the process outlined above, how many properties can/will be presented to the client to choose from? And will these potentially be additional costs at any point, if the client takes their time and declines some options?

Re 1
I agree with other posters. However, I do feel the underlying reason is a strong work ethics and the job satisfaction of having a happy client and a job well done. This is then reinforced by referrals, word of mouth, testimonials etc.

...and the "best deal" does not mean just the lowest possible price. Most BAs focus on finding the best possible property first and then securing it for the best price / terms for their client. The final price will depend on many factors such as competition from other buyers, vendor's circumstances, skills of the selling agent, how much the client wants the property etc. etc. By focusing on the "best property" first in the worst case scenario the client would end up paying fair market price for a really good property. Long-term the client would still be far better of compared to buying an inferior property at a few thousand dollars discount.

Re2.
Only good properties are shortlisted and the best presented to the client. This process continues untill the right price is negotiated and the client is happy to sign the contract. In our case there are no additional costs as we work for a fixed fee agreed upfront.
 
The main reason I believe for using a BA for your first purchase is to avoid making an obvious mistake.

If you look at the stats the vast majority of investors stop at one property, why is that?

I would suggest it is first time investors predominately who get sucked into properties that can often be a disaster for their investment journey. They often buy properties that in most cases should be avoided such as:

High Density Off the plan
Serviced Apartments
House and Land Packages
Student Accommodation
Holiday resorts
etc etc

Investors who have a bad experience with no or negative growth on the first purchase often then label investing as a bad idea and never do it again.

Using a BA for the first purchase should help avoid these issues, be a good learning experience and give you the confidence to purchase yourself in future should you want to.

Good Luck with your investment purchase, may it be the first of dozens.

Regards
 
Hi all, I was hoping someone could provide some advice.

I?m looking at purchasing my first investment property in Melbourne and was considering using a buyer?s agent. I?ve looked at a few companies that offer these services and I?m getting a little bit stuck. The companies I?ve spoken to thus far have the full package which is around $10,000, for that they handle everything and put forward what they feel the best investment option is. The second option is to do all the groundwork yourself and then have them step in for the negotiating process, which is significantly less, between $2,000-$3,000.

I?m apprehensive to depart with $10,000 but at the same time I?m concerned about paying overs if I?m dealing with Real Estate agents directly. I was interested to hear about other peoples experience and what you?d recommend. I?m looking to spend approximately $400,000 on the property.

$10,000.00 is worth how many hours of your own time ?

$400,000.00 is not a huge amount to spend on something in Melbourne do you have a particular area in mind already or are you seeking advice ? Do you want an apartment, house etc... or not fussy ?
 
Blows my mind that people waste money on a ba.

Do the ground work. Put the 10k towards ip2.

If you feel the need to blow 10k at least go to the casino and have some fun.

James
 
Blows my mind that people waste money on a ba.

Do the ground work. Put the 10k towards ip2.

If you feel the need to blow 10k at least go to the casino and have some fun.

James

All this. If you want to build a substantial portfolio on an average wage and think you can just hand ball the hard yards to someone - good luck!
 
Horses for courses.

I could do my own tax, or use a professional.
I could manage my own super fund, or use a professional.
I could reroof a house, or use a professional.

Buyer's agents definitely have their place, but they aren't for everyone. You need to do your own cost-benefit analysis, but there is a lot of situations where the benefit outweighs the cost.
 
I'm considering looking at using a BA for a few reasons:
* First time buying a property, and don't really have anyone around me who's familiar with the market.
* Since I'm early-mid 20s I feel like agents might be able to take advantage of my age/experience to push that little bit further.
* Possibility at looking at other regions outside Sydney which I'm not familiar with.
* Hoping to gain some knowledge from the BA - I have a long term investment goal and I want to make sure my first property is a good choice to set me up with a good platform.

Is a good idea though? Have anyone used a BA company called Suburbanite?
 
@Fungus

Haven't come across Suburbanite though do recall seeing the principal's name (Anna) before at seminars - she does hold a real estate licence plus is a certified practicing valuer.

Would be interested in any testimonials as well.

Cheers
 
I'm considering looking at using a BA for a few reasons:
* First time buying a property, and don't really have anyone around me who's familiar with the market.
* Since I'm early-mid 20s I feel like agents might be able to take advantage of my age/experience to push that little bit further.
* Possibility at looking at other regions outside Sydney which I'm not familiar with.
* Hoping to gain some knowledge from the BA - I have a long term investment goal and I want to make sure my first property is a good choice to set me up with a good platform.

Is a good idea though? Have anyone used a BA company called Suburbanite?

Gday Fungus,

As david said, there are a good reasons to use BA mainly to do with leveraging experience but I also agree with Biz that its not about outsourcing everything or all the work. Especially not you brain. Do you due diligence, learn as much as you can (like on here) and you will be better able to engage with what any professionals (be it brokers, accountants, or BA's) are telling you.

I haven't heard testimonials for suburbanite. Some BA's are willing to incorporate training into their model so you learn as you go. Others are much more formula driven "buy what we give your or leave" etc
 
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