How do Buyer's Agents Add Value?
Understanding the way that a good buyer’s agent adds value is key, and it will shape the way you approach budgeting for the services of a good buyer’s agent. First, let’s look at one of the major traps so many prospective buyer’s find themselves falling into – shopping for the cheapest deal.
For a great number of entrants to the real estate market, the sheer cost of purchasing a property can give prospective buyers pause at the question of voluntarily adding any further costs of the project. But that is just it, the scale of the investment that buying a property represents makes it all the more important that you get it right.
In terms of the fee structure, most buyer’s agents offer several options with prices differing accordingly:
Full service: search and purchase
Evaluation and negotiation
Auction bidding service
There are a number of different ways to structure a fee agreement. For example, it could be a fixed fee for auction bidding or a percentage of the sale price for the full buyer’s agent service.
Experts surveyed about the value of buyer’s agents, by Australia’s leading consumer advocacy group Choice, point to the crucial importance of the services provided.
“A buyer’s agent can offer real value when it comes to valuing the property and securing the deal,” said Vince Mangioni, Associate Professor in property economics and development at the University of Technology, Sydney.
He believes a crucial part of the services that buyer’s agents offer is to help their clients understand what a property is worth, so that they don’t overspend and so that they don’t overspend and avoid missing out. In the majority of cases, this is something the client would not be able to do without their agent’s experience and expertise.
If you want to find the best house for you, your family and your lifestyle, you need access to the best service, the greatest expertise and the deepest experience. The property market is a very competitive one.
HOW DO HOUSING COSTS COMPARE FOR USING A BUYER’S AGENT VS GOING IT ALONE?
They say time is money, and nowhere is that more true than in property. We can cut your search time dramatically, and in the process saving you a significant amount of money on your deposit and thus on your mortgage.
Let’s look at an example. Sydney’s median house price was back over $1 million as of March, growing at an average of 2.5% per quarter over the last year. With buyers spending an average of nine months looking for a new home, you could be paying more than $75,000 for the same house in Sydney at the end of your search compared to at the start. With Cohen handler achieving an average time to buy of between four to six weeks for our customers, you could be saving tens of thousands of dollars by getting us to supercharge your search.
ARE BUYER’S AGENTS’ FEES TAX DEDUCTIBLE?
Under certain circumstances, buyer’s agents’ fees can be deducted from your tax obligations, but two things have to happen for this deduction to take place. First and foremost, the house must be bought for investment purposes – if you are looking to buy a home for yourself and your family, you cannot claim buyer’s agents’ fees back on your tax return.
However, if you are an investor buying the property income-generating purposes such as rent, these fees may be deductible, but not immediately. The second of two triggers is that you must dispose of the property. The sale of an investment property will in most cases attract capital gains tax – as buyer’s agents fees were used to help acquire the property, they may form part of the cost base of a capital gains tax asset and can reduce your tax obligations in the financial year in which you sell the property.
HOW DO I SELECT THE RIGHT BUYER’S AGENT?
In much the same way as a lawyer is your advocate and your guide within the legal system, a buyer’s agent represents your interests as a buyer throughout the real estate process while providing the guidance you need to make informed decisions about your financial future.
As such, choosing a buyer’s agent is similar in practice to choosing a lawyer or any other real estate professional. Take time to meet the buyer’s agent prior to retaining their services and ensure you understand their background, their approach and their ways of working intimately. Do they know the location you want to buy in well? Do they understand the unique market forces applicable to the type of property you want to buy? Do they have experience in successfully facilitating similar sales? More broadly, do you feel they are invested enough in your goals to proactively help you reach them? Do they inspire confidence in you with every conversation? Are they approachable with questions?
The answers to these will help determine if the agent is just trying to move you along or is truly willing to be the partner in this journey you need.