If you’re planning to hire a buyers agent Melbourne, it is important to understand the costs of their services. Unlike a real estate agent who represents both buyers and sellers, a buyers agent renders their services exclusively to buyers. Their relationships with sellers, strong knowledge of the Victorian real estate market, and their impressive negotiating skills can make a complex purchase process relatively easy.
What are the fees of a buyers agent in Melbourne?
There are many factors that determine the fees of a buyers agent. The amount of time spent on completing your purchase and the level of service provided are among the main considerations. The level of experience and expertise they possess also plays a crucial role in determining their costs. There are three fee structures or pricing models used by a buyers agent or buyers agency Australia.
1) Fixed fee
Under the fixed fee model, a buyers agent charges a fixed price for their services. Their fees will not change depending on the purchase price of the property. However, the costs will vary based on the level of service they offer. A full service which includes sourcing properties, negotiating, and closing the sale will cost more than negotiations only.
The fees charged under this model could range between a couple of thousand dollars to $15,000 or more. A premium property could have you spend even more on a buyers agent, but the quality of their service along with the potential of significant savings make them worth your buck. The main pro of the fixed fee pricing model is that you find out what you owe upfront, which makes it easy to budget accordingly.
2) Tiered fixed fee
Under this model, the fees of a buyers agent Melbourne will vary depending on the purchase price of the property. For instance, a property purchased for $250,000 to $500,000 will cost $6,000 + GST in agent fees. A property costing between $500,000 and $750,000 attracts $9,000 + GST. And properties valued at $750,000 to a million dollars will set you back $12,000 + GST.
The benefit of the tiered fixed fee pricing model is that you’re aware of the price from the outset. What makes it better is that your agent fees will be lesser if the price of the property is in the lower brackets.
3) Percentage of property price
The price at which the property is purchased will determine the agent’s fee under this pricing model. This means the higher the price of the property, the higher the agent fees. The majority of buyers advocacy Melbourne charge 1% to 3% of the property price based on the level of service offered. While a full service could cost you up to 3%, a partial service which includes only sourcing or negotiating will cost much less.
The main issue with this pricing model revolves around a conflict of interest. The goal of a buyers agent Melbourne is to close the purchase at the lowest price possible. However, it means that in doing so, they lower their fees as well. As a result, most agents levy a higher fee for properties that cost less.
For instance, if the property price is less than $580,000, the agent’s fee will be 2.5% of the purchase price. Properties that cost upwards of $580,000 will attract an agent’s fee of 2%. This way, there is no conflict of interest and both you and the agent stand to profit. However, you will know the exact amount you owe the agent only after the completion of negotiations.
Additional costs associated with buyers agents
If a buyers agency or agent provides additional services, like preparing property assessment reports or conducting due diligence, they may charge you additional fees. While some buyers agents include these costs in their fees, some others don’t. Make sure you request a full fee schedule before hiring a buyers agent Melbourne.
Cost of a buyers agent Melbourne
Typically, the fees of buyers agents in the Victorian capital range from 1.2% to 2.75% of the property price. Fixed fee charges can range from $3,500 to $10,500, while negotiation services or auction bidding services cost just $500 + GST.
Is it worth hiring a buyers agent in Melbourne?
The short answer is ‘yes!’ Besides saving you the time and energy spent on searching for a house and going through the complex purchase process, their contacts and negotiating skills can help you save thousands of dollars. They handle all aspects of the purchase process and represent your best interests to make sure you land your dream home, that too at an affordable price!