Updated: Oct 19, 2021
Many home buyers have been asking how a Buyers Advocate can help them save, when it comes to buying their properties. Some have also wondered what a buyers advocate do to help them buy their house, that they cannot do on their own.
Too many people simply focused on what they can save upfront in terms of buying price. Buyers have forgotten the benefits of buying their property fast. Many believe they do not need the house now, thus, they are in no hurry to buy. Is this really true? I will explain what else property buyers need to consider, when you buy your house in this article.
This is true, usually when times are bad, and there are not a lot of buyers in the market. But it is hardly the case, during good times, where they can be 5 or more buyers for each property being sold.
What can a Buyer Agent save during bad times?
During bad times, when there are more properties being listed for sale than interested buyers, it is possible to negotiate for a good price, as there are not a lot buying competition. You are probably the only person interested in the property. Thus, buyer's advocates would be able to help purchase the property at a better price or with better terms. On average, we are consistently securing saving of between $30k to over $100k for our clients.
What can a Buyer Agent save during good times?
During good times, where there are more more buyers than properties being available, saving on upfront costs is very unlikely. We definitely can submit low-ball offers for the property, but this would not be fair to the buyer, as they would be missing out on the property that they want.
Instead of looking at upfront savings, consider how much faster a our Buyers Advocates can help to buy your property. With our buyers advocates in their buying team, our property buying clients has been able to purchase in under 3 months. Now, let us compare this to a typical buyer who chose to buy the property on their own. Canstar studies have shown that it can take a buyer up to 12 months to buy their properties.
Why is it critical to buy fast in a booming market?
Many buyers believed they are in no hurry to buy, just because they currently have a stable roof over their head. While this is true, what else are they missing? What have they not considered?
Have you thought of:
How many weekends you've spent searching for house, and going for inspections? How do you put a value to these lost time? How much does disappointment cost? How much do you value your time?
How much have you missed by buying just a month slower than others? It is true that there COULD be a better house in coming weeks. How many "coming weeks" have you waited for that house? Have a look at the list price. Is the next house any cheaper than what you've just walked away from? What does this mean in terms of dollars?
Let us have a look at the following case study.
Benefits of Buying Property with and without Buyers Advocates
This case study is based on 2 actual groups of buyers. They are colleagues at work, and had decided to buy their first homes with similar budgets. The real names had been replaced by Group 1 and Group 2, and their budget and property price growth has been rounded up to whole numbers to simplify the illustration.
Group 1: Budget $1,000,000. Bought with our Buyers Advocates, and took 3 months.
Group 2: Budget $1,000,000. Bought on their own, and took 9 months longer.
From 2020-2021, Corelogic reports that house prices in the Melbourne property market has been growing at an average of 1-2% EVERY MONTH. That's about 20-24% a year, compounded.
Group 1 found and bought their first home in 3 months. Our buyers advocates have found a good property and secured it for our clients at $1,000,000. Group 2, however, were still searching for their home. It took them a further 9 months before they find their first home.
In these 9 months, Group 1, who had already secured their home, had a significant growth in their asset. The value of their house has increased to $1,143.000. If they had not engaged our Buyers Advocates, they would have to spend over $1,143,000 (+ stamp duties) to buy the very same property. IE, instead of having to spend an extra $143,000(+stamp duties), they have effectively increased their asset base by $143,000.
Buyers Advocates helped save over $143,000. Their Asset increased by $143,000.
Meanwhile, Group 2, who is buying on their own, would have to spend a further 9 months and $143,000 + Stamp duties, if they are looking for something similar in a similar area. IE, they would have to spend a further $151,000 (considering 5.5% stamp duties) more, to buy their home.
Or, like most first home buyers, they have no choice but to buy in a lesser location. Keeping their original budget of $1,000,000, they managed to buy about 15km further away from the city. That is about 30 minutes further, during peak hours.
That is 1 hour of extra travel time every day, and they have lost $143,000 in equity growth, due to this delay.
Buying without a Buyers Advocate, cost them 1 hour more in travel time every day and $143,000 in lost equity growth.
Conclusion: Buyers Advocates Do Help Save Costs
Now, hasn't Group 1 saved $151,000, just by engaging the services of our Buyers Advocates?
And by the time Group 2 buys their home, Group 1 would have an extra $143,000 in asset to tap into.
Assuming a typical buyer's agent charges a fee of 2% of the property price, Group 1 would have gained $143k by investing in the $20k buyers agent fee, a return on investment (ROI) of over 700%! While, by saving the $20,000 buyers agent, Group 2 have to spend $151k more to buy their house. A loss of over 750%.
It is true that the services of Buyers Advocates are not for everyone. We have rejected many clients because we believe we are unable to help them. But more importantly, we keep this service exclusive to help those who genuinely wanted the assistance and who would appreciate our expertise. Here are some reasons why you would NOT need a buyers agent.
If you are interested to discover if our Buyers Advocates are for you, get in touch.