FREQUENTLY ASKED QUESTIONS
What is a buyers agent/ advocate?
A buyers agent, also known as a buyers advocate are real estate buying specialists hired by a prospective home-buyer or investor to undertake property due diligence and negotiate the purchase of a property on behalf of the buyer – they’re also a licensed property professional who’s engaged by the only buyer to help them find the best available property and negotiate it at the lowest possible price with the best terms and conditions. A good buyers agent/ advocate will be able to quickly and methodically find you the right property at the right price, while at the same time independently representing your best interests at all times. They will also provide you with objectivity and complete transparency throughout your buying journey, so you can make an informed purchasing decision.
How to find a buyers agent/ advocate?
In addition to licensing, buyers should also look for evidence to support the buyer’s agent having skills in the areas that are important to the buyer. For example, if buying for investment purposes the buyer should ask for examples of the depth of the buyer’s advocate’s research or copy of the buyer’s advocate due diligence property report. Buyer’s agents need to be very good communicators which includes listening to their client’s objectives, being able to articulate alternative methods, providing regular feedback throughout the process, and having strong relationships with third parties to the transaction.
What do buyers agents/ advocates do?
Buyers agents/ advocates will:
- Find and identify the most suitable and best available properties in the market according to the buyer’s requirements, needs and property goals.
- Evaluate and shortlist properties for buyer’s consideration and help select which property is the most appropriate based on the buyer’s criteria.
- Undertake comprehensive property due diligence on the buyer’s selected property highlighting its strengths and weaknesses independently and objectively.
- Negotiate the lowest possible purchase price with the best terms and conditions on behalf of the buyer.
Why use a buyers agent/ advocate?
Time, money, and peace of mind are the main benefits which everyone will gain from engaging a specialist. Buyer’s agents have their finger on the pulse and therefore have a lot more knowledge about buying property. The thing about knowledge is that you don’t know what you don’t know. Buyer’s agents know what questions to ask and where to get the information. More often than not, the buyer’s agent own expertise will save the buyer more money on the purchase price than their fees. The buyer will also have saved literally dozens of hours of their own time and be more likely to have made a much better decision on the property that they have purchased.
In addition, it’s worth keeping in mind that buying a property is arguably the most valuable asset that most people will ever buy. Whilst most real estate agents are professional and good people, they are contracted to work for the property owner, so I personally believe that everyone who buys a property will benefit from engaging a buyer’s advocate to represent your best interests. The average person buys a property once every 15 years whereas Your Australian Property are continuously buying properties on behalf of their clients every year – that’s a lot more practice than a DIY. Even if the buyer lives in the same vicinity as where they are buying, they will benefit enormously from engaging a skilled real estate buying professional. Knowing the market is a lot different to knowing the neighbourhood, especially if the property is being purchased for investment purposes.
Are buyer’s agents/ advocates fees tax deductible?
Fees charged by buyer’s agents are usually deemed as tax deductible but only if you’re buying the property for investment purposes. In any case, we recommend you always consult a reputable accountant or tax specialist to determine your individual circumstances.
How do you become a buyers agent/ advocate?
It is essential before engaging or hiring the services of a Buyers Agent/ Advocate to confirm they are fully licensed or authorised to deal in a property purchase transaction. Don’t risk putting what’s often the single largest purchase you will make in your lifetime in the hands of someone without adequate real estate and negotiating experience. Our fully trained and licensed buyer’s agents are ex-real estate industry professionals with no less than 20+ years’ experience. It makes sense to use someone with a knowledge of the industry who can negotiate with the selling agent to secure you the best price. In order for a buyers agent/ advocate to run their own buyer agency, they require a full real estate agent’s license plus an agency license for the company they are operating under. For more details you should contact the Department of Fair Trading in your relevant state to confirm the Agents license requirements.
How does auction bidding work?
Auctioneers have different ways of conducting an auction. Generally, they aim to encourage as many people as possible to bid in order to achieve the highest possible price.
If the bidding has reached or is close to the reserve price (the lowest price at which the seller will sell), the auctioneer will ask the seller if they will sell at the highest bid.
If so, the auctioneer will say the property is ‘on the market’. Bidding will continue and the property will be offered to the highest bidder, at the seller’s discretion.
If bids do not meet the seller’s reserve, the property may be ‘passed in’ or ‘withdrawn from auction’. The highest bidder then gets first right to negotiate a price with the seller. If the highest bidder and seller cannot agree on a price, the estate agent may approach another bidder to negotiate a sale price. If the seller cannot agree on a price with any buyer and they decide to leave the property on the market, they may offer it for private sale. If the agent advertises the property after the auction at the ‘passed in’ amount, they must disclose if it was a vendor bid.
What does auction bid mean?
The auctioneer can set the amount by which bids increase. These are called ‘auction bids’ or ‘auction bidding advances’. You can bid at the amount stated by the auctioneer or offer an alternative amount but it is up to auctioneer whether or not to accept an alternative amount.
The auctioneer may:
- refuse an auction bid at any time during the auction, including when the auction hammer is falling
- resume the auction at the last undisputed bid or start the bidding again, if there is a dispute over a bid
- refer a bid to the seller at any time before the conclusion of the auction
- withdraw the property from sale at any time.
When is the property considered ‘sold’ at auction?
There is no legally binding contract until both buyer and seller have signed the contract of sale.
If you are the successful bidder at auction:
- you will be offered a contract in the same terms that was on display before the auction. You cannot make the contract subject to any further conditions – for example, obtaining finance or having a longer settlement period, unless the seller agrees to them
- you will be asked to sign the contract to make your formal offer to buy the property. The seller accepts your offer by also signing the contract
- you must pay the deposit specified in the contract (unless otherwise agreed)
- there is no cooling-off period.
When you and the seller have signed the contract and the deposit has been paid, the property has been sold and the sale is binding and enforceable.
The sale is then finalised at settlement when:
- all checks have been made
- the title and transfer documents have been exchanged
- the balance of the purchase price has been paid.
What is proxy bidding at auction?
Using a proxy bidder means that you appoint a licensed buyers agent/ advocate to bid on your behalf as a buyer when either you cannot physically attend a property auction, simply feel uncomfortable or hate the stress of the auction bidding process, or have little to no experience with the auction bidding process. In order for the buyers agent/ advocate to act as your auction bidding proxy, you will need to sign an auction bidding service authority, plus provide written instructions of your maximum purchase price limit and proposed settlement term conditions, including any depot monies.
In the situation, where you cannot attend the auction yourself a Power of Attorney is required. This will allow the buyers agent/ advocate to sign the contract of sale on your behalf, without requiring you to be at the auction. Your Australian Property always recommends obtaining independent legal advice when it involves preparing a power of attorney form as they can vary. Luckily, we can recommend a very good and reliable legal firm who are extremely cost effective and highly personalised. They will provide a free review of the contract of sale and section 32 vendors statement, to make sure everything is in order, prior to the auction or private sale negotiation. They will also prepare the Power of Attorney (if required) at no extra charge, due to our current and ongoing relationship with them.
How much do buyers agents/ advocates cost?
At Your Australian Property, we pride ourselves on listening to our client’s needs and also providing you with complete transparency throughout your buying journey. Prior to commencement of our service, we like to meet with you to discuss your specific requirements and agree the appropriate fee upfront.
What’s the main difference between a buyers agent/ advocate and a selling agent?
The difference is simple. Buyers agents/ advocates are paid to represent the buyer only, finding the right property according to their client’s specific requirements, and then negotiating price with the selling agent to ensure the right price is paid. Whereas, the selling agent is paid to represent the vendor to secure the highest possible price from the buyer, and is more motivated about securing a transaction rather than worrying about whether it’s the right property or not for the buyer!