We've been asked if it's worth to use a buyer's agent. How much can a buyer's agent save you?
There is no one single answer to this. Our property buying services are not for everyone. Our services are for:
people who value the quality time they save
people who want to buy fast and buy with confidence
people who do not want to overpay for their properties
In short, the answer to those questions is, unfortunately, another question:
How much do you value your time?
Since everyone places a different value on their time, it is not possible for us to calculate with how much property buyers would have saved (or avoided paying) if they had not engaged our property buying service.
But here are some factual, recent examples of our clients' experience. Had our clients been buying without a buyer's agent's insight and experience in the property market, they would have overpaid, and it will take them longer to realise any equity growth. And I mean OVERPAID, by over $120,000 in one case.
When asking "is it worth to use a buyers agent?", it’s important to also consider what you would have paid, if you do not have the right insight, knowledge and experience of a property buying agent. That, is what you will save on the purchase price. In many cases this savings is through our negotiation skills. In other cases, the savings come from taking the emotions out of the purchase, valuing the property based on the right insights, knowledge and analysis of the property, understanding of property values, and benefiting from our network and relationship with the agents.
Here's how the Buyer's Agents at Concierge Buyers Advocates have helped our clients.
Client 1 –
Client contacted us very late in their purchase process. They had intended to bid at an auction, in 3 days time, and got cold feet. It was an established property with a price guidance of $700k-$770k. He believed it was worth a million, and was prepared to offer $1 million for it, given the proximity to Melbourne CBD and other amenities. We got in touch with the agent, organised an special private inspection, had a chat with the agent, who gave us some insight into the sales. Our subsequent research and due diligence processes dug deeper into the history of the property and the vendor, the interest in properties in the area, and we acted on it. Our research, and findings, placed the property appraisal and valuation at between $820-$850k. The agent's price guide was slightly lower, probably to attract more interest. Our client was prepared to offer slightly above our valuation as they liked it. They placed an "emotional premium" of $30k on it.
Auction started and our $880k auction limit was quickly exceeded. Our advice was to walk away. The auction ended with the property being sold at $958k! That was late 2019, when buyers were starting to rush into the market after a prolonged property market downturn.
In June 2020, just half a year later, the very same property was valued at $855k. Had our client gone to the auction on their own, they would be prepared to pay almost $1 million. But that will be overpaying. We've saved him over $103k, with our insights and advice. He was prepared to go "all out".
Client 2 –
Client engaged our service to help them acquire a 3 acre land in Traralgon, in regional Victoria. Expressions of interests would close in 3 days. We organised a last minute inspection, received the sales contract, realised that there were 5 (yes, FIVE) concerns with the land. Bushfire, flood, 2 major easements across 40% of the land and it was near an old landfill. The client was surprised when we presented our findings. This was an unique property, a sheriff's sale due to council rates default. It was listed at between $180k-$200k, and the client was prepared to offer up to $300k for it. We put our valuation at $200k, and we allowed another $20k for his "emotional premium".
The property was sold for $280k. Whoever paid that, had obviously overpaid, as we managed to secure an off-market property of a similar size nearby, for $260k, a few weeks later. The best thing with this property is that there's no flood risk, and no easements.
A tangible savings of $20k. But the intangible savings in the better quality is priceless. There's no easements and no flood risks.
Client 3 –
We came across a property, listed between $780k-$850k, which looked amazing in the real estate listings. Just by looking at the listing and virtual inspection videos, it looked fantastic, and it was worthy of a $900k-990k price tag. We organised a private inspection, and we found some issues, and brought these to our clients attention.
The on-site inspection of the layout and structure of the property, suggested that the house has had a few extensions, and some parts of the building appeared to have been illegally modified, as they would not pass building codes. Our due diligence research confirmed our suspicion. Something which an untrained, inexperienced person would not have noticed. Under the gloss of staged photos and virtual inspections videos, lies some significant undisclosed findings.
We placed the valuation at around $740k-$780k, after factoring our findings. It was in the low end of the vendor agent's price guidance. After several discussions with the vendor agents, we suggested our client to walk away, as the property is not worth the price guidance. During our negotiations, it was apparent that the vendor's was hoping for offers above $900k. In a short 3 weeks after our advice, the listing was revised with a lowered price guidance of $700k-$770k.
Had the client gone ahead with the purchase sight unseen, they would have overpaid by over $100k. And they would have bought a building with some unapproved structures, and many more potentially illegal and dangerous structures. Savings? Priceless.
One should never buy sight unseen. An on-site inspection services of an experienced buyer's agent can reveal a lot of hidden nasties. Remember, a selling agent always work for the vendor, not the buyer.
Client 4 –
Our clients were about to make an pre-auction offer and were considering to offer up to $938K. They engaged our services as they wanted some expert opinion. We did our due diligence checks, investigations. We did not believe the hype and interest around that property. We advised them to wait for the auction. Their instructions were to go up to $950K if necessary.
We bought the property for $868k at the auction. A savings of $70,000 had they submitted their offer before auction, and $82,000 lower than what they are prepared to pay at the auction.
Client 5 –
We found a $800k property for our overseas investor clients. Client was skeptical and were brainwashed by the doom and gloom news they received from the media (both in their home country and Australian news). Our on-the-ground insights, knowledge and analysis of various factors suggested otherwise.
Our analysis into the forex market also found that the Australian Dollar has been too low for too long, and our insights into the facts of the economy and location, suggested that it was long overdue for a strong Australian Dollar rebound.
We convinced our client that we have the confidence of a conservative 5% rebound, plus a potential 5% capital growth in the property market within a year. That would easily offset the extra 8% FIRB foreign investor stamp duty premium.
We bought the property in March 2020.
What happened really took us by surprise. The Australian Dollar made a strong recovery. In May 2020, on the day of settlement, the AUD had made a strong 20% recovery! Our Client's property value had appreciated 20% even before they collect their keys!!
At the time of this writing (Sept 2020), the AUD has recovered another 5%. That's a 25% growth in under 6 months! It's all about timing. And with our background in big data, data analytics, a good collection of data and good on-the-ground feel of the property market, we are able to forecast and identify trends before it happens.
Savings? Why look at savings when there is a 25% growth?
These true examples are how our buyers agent service had helped our clients save in a successful purchase. The true savings is often made when our clients DID NOT buy. That was when they heed our advice to walk away, because the properties were either:
have little to no growth;
have issues with the land / area; or
could even suffer major depreciation!
When you buy the right property, the real benefit is realised when you buy at the right time, and have bought one that appreciates over time at a greater rate than other investment options.
So, is it worth using a buyers agent? How do you put a price on the savings and disaster avoidance?
If you’d like to explore how you can benefit from our Melbourne buyer agent service, get in touch, and we will explore if our services are right for you.