Should I use a Buyer's Agent?

I am new to property investing and am looking at buying my first IP. I'm not sure if I should use a buyer's agent to help me buy a property - does anyone have any opinions on this?

I have done a lot of reading over the last two years and I have read books from people who have similar thinking to mine; two of these people act as buyer's agents. Therefore I am confident that they will pick an asset that will suit my needs.

The pros I see are:
- reduces risk due to my lack of knowledge (I will be buying interstate in Brisbane based on the research I have done, but I know nothing about the areas to buy). BA will know the area and know what is fair value for a property.
- Can learn along the way the ins and outs of what to look for in a property / negotiating tactics etc.
- Can leverage off the buyer's agent's connections in the industry - can potentially get an off market purchase from a motivated seller

The cons I see are:
- Have to shell out between 8-15k for the BA fee (although I see this as a good investment)
- May not learn the skills needed to do it well myself (teach a man to fish etc.)

Does anyone have any thoughts / experience with using a BA or any advice to offer?

Cheers
 
Personally - if I were to buy interstate for my next IP I'd have no issues using a BA for those reasons you've outlined. I've got bugger all free time too.

It's important to appoint an excellent BA though - like all service professions, the quality varies dramatically.

Cheers

Jamie
 
I used a BA to purchase my first IP, I had limited knowledge of the area and limited experience in negotiating. I feel that they saved their fee in the negotiations and that overall it was an excellent learning experience.

I think for certain people a good BA gives value for money and can get you off to a solid start. Purchasing a dud IP first up would have made moving forward with my investing goals difficult.

I don't regret using a BA. One day I might even use one again if it suits me.

Well that is my experience with BAs. Where are you looking and what are your goals? Sharing this might net you some contact details for BAs that have provided good service at reasonable prices.
 
NO!

Not for the first few purchase I reckon. you need to learnt. any states any time there is always a 'good deal' its a matter if you find it.

you need to have the experience and knowledge, this experience and knowledge will also helps you finding buyers agent later down the track.

investors that did very well: eg Nathan from (binvested). he did not start out using a BA, he learnt the process himself.
 
NO!

Not for the first few purchase I reckon. you need to learnt. any states any time there is always a 'good deal' its a matter if you find it.

you need to have the experience and knowledge, this experience and knowledge will also helps you finding buyers agent later down the track.

investors that did very well: eg Nathan from (binvested). he did not start out using a BA, he learnt the process himself.

just like keeping yourself healthy, you need to eat well and exercise, like it or not there is no easy way out
 
Impermanence,

I am currently using a BA for my second IP which is for an intestate purchase in Brisbane and made that decision to go with a BA due to time constraints and some family issues etc.

Just remember every investor is different and really it's up to you to still research the BA you are going to use to get the best for your intended purchase.

Make sure you are really detailed on your buying brief with them to get a very clear understanding on what you are after-CG,CF+,development site etc..

A Buyers Agent is a big outlay but if you get a quality outcome from it and maybe a little knowledge from the process will you be that concerned in say 10 years when the property has hopefully doubled..me thinks no!!

Good Luck

Coota
 
I'm also strongly in the "NO" camp. Particularly for a first IP.

My points:

1. There is no substitute for doing your own research. OK, there are certain (limited) situations where I could see a BA might add value but having them tell me which areas to buy in NOT one of them. If you don't have that understanding of the investment then you probably should not invest in it.

2. In most cases, the BA won't save you money. There are no magic tricks that the BA can perform to 'negotiate' a better price for you.

3. Using a BA at an auction is even more ridiculous since the bidding process is mostly transparent. Forget all this bidding tactic crap, just stand there yourself and bid in the minimum increment up until your willingness to pay.

4. The BA is incentivised to get you to buy something - even if the best course of action is to sit and wait for a better opportunity.

5. You could commission many independent valuations for your $8-15K.

6. People get hung up about buying properties 'under market' or 'off market'. In reality, there's few bargains like that to be had - particularly in major cities. Selling agents have legal obligations and financial incentives to obtain the best price for their vendors. If an agent sells a property before it "hits the market" then he's probably very confident that a normal campaign wouldn't result in a better price for the vendor.


Just my two cents.
 
I agree with coota on this one - get the brief right and outline your expectations.

The scatter gun approach may work well for some but a clearly defined plan is a better way to go.
 
Personally - if I were to buy interstate for my next IP I'd have no issues using a BA for those reasons you've outlined. I've got bugger all free time too.

It's important to appoint an excellent BA though - like all service professions, the quality varies dramatically.

Cheers

Jamie

Cheers Jamie, I will keep that in mind. Looking at the big picture it seems to make sense, I can see value in it for my situation. Will be in touch soon when my place in Wright settles haha :D

I used a BA to purchase my first IP, I had limited knowledge of the area and limited experience in negotiating. I feel that they saved their fee in the negotiations and that overall it was an excellent learning experience.

I think for certain people a good BA gives value for money and can get you off to a solid start. Purchasing a dud IP first up would have made moving forward with my investing goals difficult.

I don't regret using a BA. One day I might even use one again if it suits me.

Well that is my experience with BAs. Where are you looking and what are your goals? Sharing this might net you some contact details for BAs that have provided good service at reasonable prices.

Yes I can see that their negotiating experience alone and contacts in their particular area of the market would save me immediately. Particularly as I have never bought an IP before, I think there is a lot for me to learn and piggy backing off a BA would allow me to steepen my learning curve.

I have been researching IPs Australia-wide and have a strategy to buy in the big 4 capital cities. I decided on Brisbane because Perth is coming off the mining boom, Sydney has gone above fair value and I think Melbourne may have some oversupply issues (would be 2nd place at this stage for me though).

I have done my own research with regards to the BA to use so I am pretty comfortable in that regard.

just like keeping yourself healthy, you need to eat well and exercise, like it or not there is no easy way out

Frankly, I don't see the point in making mistakes that could cost tens of thousands of dollars and potentially put you back years in your investing. I would prefer to cough up a bit of money upfront. I

I see your point with learning the ins and outs yourself though and getting to know property better, there would definitely be benefits to this down the track. My plan originally was to buy 5+ properties over the next decade or two using a BA every time, I can see the benefits to doing it myself though in future purchases.

Impermanence,

I am currently using a BA for my second IP which is for an intestate purchase in Brisbane and made that decision to go with a BA due to time constraints and some family issues etc.

Just remember every investor is different and really it's up to you to still research the BA you are going to use to get the best for your intended purchase.

Make sure you are really detailed on your buying brief with them to get a very clear understanding on what you are after-CG,CF+,development site etc..

A Buyers Agent is a big outlay but if you get a quality outcome from it and maybe a little knowledge from the process will you be that concerned in say 10 years when the property has hopefully doubled..me thinks no!!

Good Luck

Coota

Thanks for the well wishes Coota. I am definitely big on research so I will ensure the BA will be good at what they do. I will keep in mind being specific on my buying brief too, however this is malleable at the moment (not deadest on either CG or CF+ ATM)

Got to think big picture for sure: 10 years, maybe 500k cap. growth would far outweigh the 10k upfront!
 
""Frankly, I don't see the point in making mistakes that could cost tens of thousands of dollars and potentially put you back years in your investing. I would prefer to cough up a bit of money upfront.

I see your point with learning the ins and outs yourself though and getting to know property better, there would definitely be benefits to this down the track. My plan originally was to buy 5+ properties over the next decade or two using a BA every time, I can see the benefits to doing it myself though in future purchases.""

You mentioned you have done a lot of reading over the last two years and you think at the same time you will make mistakes that cost you thousands? and you think a BA wont make mistakes? hence I mentioned you need to experience and knowledge to address the mistakes that your BA might be making.

I see the value in BA if you are on 5+ properties and checking out properties in other states.
 
You mentioned you have done a lot of reading over the last two years and you think at the same time you will make mistakes that cost you thousands? and you think a BA wont make mistakes? hence I mentioned you need to experience and knowledge to address the mistakes that your BA might be making.

I see the value in BA if you are on 5+ properties and checking out properties in other states.

I see what you mean, but this is where I am at with my investing. I have a lot to learn about the ins and outs - no doubt I will look back in ten years time and say I should have done X or why didn't I think about Y.

I have limited resources of time and money (and knowledge!) at the moment unfortunately - I think if I was investing in my own backyard I would be more likely to implement the DIY strategy, but I don't see much value in Canberra at the moment.

I am lacking in both time and money at the moment so some trade-offs have to be made the way I see it.

Also, with the area I will be purchasing in as a given, won't I be forking out thousands in flights and accommodation (as well as time) to scope out the right areas to buy in Brisbane? Doing something like this would be nice when I have more time and money..

I see your point with knowing the mistakes the BA might be making too, but right now it is a case of "I don't know what I don't know" if that makes sense. Just trying to learn as quickly as possible!
 
I see the value in BA if you are on 5+ properties and checking out properties in other states.

I believe impermanence is looking in other states, specifically QLD.

I understand that it is important to do your own research etc. I don't understand why people are so against a BA especially for the first one. It is the time when you are most likely to make a mistake due to inexperience and the risk associated with a mistake is highest, your entire investment risk is spread into one property. You can use the buying process with a BA as a mentoring experience giving you confidence in the future.

Sure it is not for everyone and becoming independent should be a goal, however imo the first purchase and interstate purchases are two times you can most benefit from a BA. As the OP is doing both imo a BA wouldn't be a terrible and maybe a good choice.
 
I don't really think there's anything wrong with using a buyers agent.

Personally I wouldn't because i love finding and negotiating on deals and because of this it boosts the returns a little. For someone else they can pay a bit extra and have it done for them, if they value their time as such.

However, it's not only the deal time that needs to be taken into account though. There's been many hours prior to looking for deals in actually weighing up strategies, deciding which state is in the right economic position to match that strategy and then finding which suburbs suit our purposes. Not everyone is into that.
 
Impermanence,

No need to defend your decision on using a Buyer's Agent as I went through the same thoughts before engaging my BA also-Cost,handing over purchase decision to another etc....

As others have stated just do you DD on your BA and always remember no one will care as much about your purchase as you..period!!
 
I don't really think there's anything wrong with using a buyers agent.

Personally I wouldn't because i love finding and negotiating on deals and because of this it boosts the returns a little. For someone else they can pay a bit extra and have it done for them, if they value their time as such.

However, it's not only the deal time that needs to be taken into account though. There's been many hours prior to looking for deals in actually weighing up strategies, deciding which state is in the right economic position to match that strategy and then finding which suburbs suit our purposes. Not everyone is into that.

Yes, I am just trying to make the most efficient use of the limited resource of time. I much prefer studying the market than negotiating the best price to pay / inspecting properties. I am a bit of a bookworm and the studying aspect has always come easily to me.

On the other hand, I don't enjoy inspecting properties and negotiating. I feel out of my depth. However I'm not sure whether to work on this aspect and get better at it, or continue to outsource to someone who is good at it. It will all sort itself out in time I guess..

Impermanence,

No need to defend your decision on using a Buyer's Agent as I went through the same thoughts before engaging my BA also-Cost,handing over purchase decision to another etc....

As others have stated just do you DD on your BA and always remember no one will care as much about your purchase as you..period!!

This is very true. I am ultimately responsible for all the decisions regardless of whether I outsource or do the legwork myself. I do care about my money a lot.

I am going to meet with 2 BAs this week so hopefully I will get more of a feel of how confident I am with handing over the decision making to a third party..
 
i am biased ( i am setting up shop for BA)

but horse for course!

if you know what you are looking for and know planning rules to source suitable site, no point hiring BA.

but if you are time poor, Not sure what to buy, not aware of areas and pockets, should hire BA.. few grand spent on professional service can go long way.
 
Yes, I am just trying to make the most efficient use of the limited resource of time. I much prefer studying the market than negotiating the best price to pay / inspecting properties. I am a bit of a bookworm and the studying aspect has always come easily to me.

On the other hand, I don't enjoy inspecting properties and negotiating. I feel out of my depth. However I'm not sure whether to work on this aspect and get better at it, or continue to outsource to someone who is good at it. It will all sort itself out in time I guess..



This is very true. I am ultimately responsible for all the decisions regardless of whether I outsource or do the legwork myself. I do care about my money a lot.

I am going to meet with 2 BAs this week so hopefully I will get more of a feel of how confident I am with handing over the decision making to a third party..

Good luck with it all Impermanence and make sure you ask the right questions of the BA. Look for experience, credentials, runs on the board, references and reputation- all very important. REBAA have developed a good list if you haven't seen it already http://rebaa.com.au/how-do-i-choose-a-buyers-agent/ though ultimately you need to be able to trust the agent and be able to work with them effectively to achieve your goals. I'd suggest interviewing at least 3 if you don't already have a personal recommendation.

One mistake that I've heard some buyers making recently, however, is engaging a BA who doesn't actually reside (or has never lived) in the state or city they're looking at buying in. Ensuring your BA has genuine local knowledge is actually imperative when you're considering who to use - just my two cents :)
 
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