Over 60% of properties in the U.S are bought using buyers agents. In Australia, however, most people still choose to buy property without professional help - for better or worse. The biggest factor for not using a buyers agent, whether people admit it or not, is cost; so much so that most people will never use one and therefore never experience any of the other problems. But if you're considering using a buyers agent - and you should consider it, a professional and independent advocate can be a great asset - you need to have full disclosure on what you're in store for. Here's the three biggest problems with buyers agents in my opinion, and how a smart property buyer can overcome them.
Buyers Agents cost too much
For many people struggling to save a housing deposit, splashing out another $10,000+ on a buyers agent is basically unthinkable. Other buyers don't see the value in the service they're getting - and this isn't helped when buyers agents charge on a commission basis. This has reached a ludicrous degree in places like Sydney, where buyers agents will charge $15,000-$30,000 for the purchase of a single property. In almost all cases the value of a property has no actual relation to the amount of work that a buyers agent does. If a buyers agent can't explain the extra work they're doing for a more expensive property, they're probably not a good choice.
Solution: Find a buyers agent who charges a fixed fee for service that you can afford, and see if their services are scalable or can be deferred if your deposit is low.
Buyers Agents don't help you make a decision
Clients pay good money to buyers agents to use their knowledge, analytical abilities and dare I say it, judgement, to help them make an informed decision on what property to buy. Buyers agents can, however, overload the buyer with far too much marginal information on various suburbs and properties without any genuine assessment or comparison. Alternatively, the buyers agent uses obviously unsuitable examples to steer the client in the direction of a property the agent favours. In either case, the buyers agent is not doing their job of providing a rigorous assessment and comparison of the client's options, and clearly communicating their recommendations based on their professional judgement.
Solution: Find out what your buyers agent's processes are before you engage them, and make sure you're comfortable with them. Don't be bamboozled by industry speak or fluff words. Get your buyers agent to demonstrate their process if you want to be completely happy.
Buyers Agents aren't actually buyers agents
This might seem an obvious one, but it's surprising how many people call themselves 'buyers agents' who actually aren't. If your buyers agent is selling properties, or taking a commission from the selling agent or developer, they're getting paid by somebody else, which means they're working for somebody else. I've even seen one property magazine give its 'buyers agent of the year' award to an agent selling development property. Unbelievable!
Solution: Ask your buyers agent how they get paid. If they're earning any money from the sale of a particular property, then they don't solely have your interests at heart.
Remember, at the end of the day, a buyers agent should provide quality, independent advice at a price you can reasonably afford. Otherwise the chances are you simply won't use them.