Buyers Advocate or Agent

Simply a Buyers Advocate/ Agent is an estate agent (or much less commonly a Lawyer) who acts for a property buyer in identifying, negotiating for and buying a property.

Buyer's Agents (or advocates) first appeared on the Australian real estate scene less than 15 years ago. It is a role that first appeared in the top end of the real estate market and was largely an unadvertised service that top end real estate agents offered their well healed clients. Eventually a few real estate agents decided to focus exclusively on acting as a Buyers Agents (in fact one of, if not the, pioneer of this industry still operates today and is one of the better known Buyers Agents operating at the top end of the real estate market ).

Using a Buyer’s Agent if you are buying a top end property can make a lot of sense as that end of the market has fewer  sales, more unadvertised property, fewer auctions and a generally lacks transparency. With type of market dynamic and millions of dollars at stake you can understand why expert assistance may be required.  The majority of Buyers Agents/Advocates are paid based on the price of the property eventually purchased by their client (most commonly, buyer’s advocates will collect a fee of between 1-2% of the purchase price).

Whilst a Buyers Agent/ Advocate maybe a good idea for some like everything they are not without their pitfalls.  

A Buyer’s Agent who is being paid on successful purchase may be ‘too keen’ to complete the purchase (this is because the advocate is paid to purchase a property, not on an hourly basis, and would be paid no more to bid at 10 auctions rather than one auction). 

Further, because the advocate is paid based on the purchase price, it is in their interests for their client to pay more for the property. For example, if their client pays $400,000, the advocate would usually receive $8000. Should their client perhaps overpay and spend say $450,000 the advocates’ fee will rise to $9000 obviously this creates potential for abuse. As with the growth of any industry not all the many advocates that have set up shop have the necessary industry experience and some do not always act in the best interests of their clients.

One other caution is that a number of property marketers represent themselves as being Buyer’s Advocates and or advisors. Their focus however is to steer you into buying into a project or property that they are trying to sell. Always ask for a written statement from any adviser disclosing any conflicts of interest and be very careful of who you take advice from, as the saying goes “never ask a Barber if you need a haircut”.

Having said all that, Buyer’s agents can be a good idea simply because most people don’t buy homes often. As a result, they are not experienced in the market, don’t know immediately the prevailing market conditions and don’t have the benefit of day-to-day monitoring of an area that a buyer’s agent does. A buyer’s agent can take the emotion out of the auction and negotiation process. 

If you are like most first time home buyers and are just a little unsure and need a little assistance in the house buying process you may at least as a first step talk to friends and family who have done it before and maybe talk to a trusted family solicitor or accountant. If you are going to appoint a Buyer’s Agent make sure you check them out thoroughly, ask Real Estate Agents in the area about them and ask for and check, client references. 

Remember there is no substitute for doing your homework.