In the competitive and intricate Australian real estate market, a buyer's agent is your dedicated advisor and guide. From identifying the best property strategies to negotiating the best deals for you, they'll have your back.

But here are two questions that most property investors wonder about before hiring Investment Buyers Agent Australia.

  • How do I pay my buyer's agent for the services?
  • Can these trusted advisors accept commissions for the services they provide without compromising my interests?

In this blog, we'll discuss the answers to these questions, explore the indispensable role of buyer's agents in Australia, and break down the commission-based payment method for you.

Let's begin!

What is the role of a buyer's Agent During Property Investment?

Buyer agents offer comprehensive services, starting from property search to expert negotiation and documentation.

Buyer's agents are your insider guides

They've significant knowledge of local markets and industry trends. They undertake exhaustive research and Real Estate Investment Analysis, scouring listings and leveraging their network to unearth the best investment properties that align with your criteria.

Buyer's agents are your strategic negotiators

  • With a deep understanding of market values, they'll work tirelessly to secure the best possible property price and deal terms on your behalf.

Crucially, buyer's agents in Australia are bound by fiduciary duty. This means they're ethically obligated to give priority to your interests above all else. This ensures that every decision and action is made with your best interests at heart.

You can trust that your buyer's agent is not motivated by commissions or personal gain. Instead, they are dedicated to securing your ideal investment property at the best possible terms.

Understanding the commission-based payment system

Commission is one of the most common payment systems prevalent among buyer agent firms. So, what exactly is commission-based payment?

Typically structured as a percentage of the property's purchase price, commissions serve as a source of income for these dedicated Investment Buyers Agent Australia. It's a way for them to be rewarded for their hard work and dedication.

However, when a buyer's agent's income is tied to the purchase price, there's the potential for conflict.

Will they push for a higher price to increase their paycheck, or will they genuinely have your best interests at heart?

This is where transparency and trust play pivotal roles. As mentioned previously, it's imperative for buyer's agents to prioritise their fiduciary duty above all else, ensuring that your interests are paramount. 

While commissions can create a delicate balance, a truly dedicated buyer's agent will always put your needs first.

Therefore, before hiring a buyer's agent in Australia, go through their previous projects, take a look at their reviews and most importantly, schedule an initial consultation with them to understand their working style.

You can prepare for the initial session by understanding your investment goals, budget and plan and enlisting questions that examine your experience, expertise and working style.

Legal regulations governing buyer's agents in Australia

  • When a buyer's agency represents themselves as professional property investment advisors under the Real Estate and Business Agents Act 1978 (the REBA Act), they need to hold a licence. A licensed real estate agent/ agency may employ registered representatives to assist with real estate transactions.
  • The Estate Agents (Professional Conduct) Regulations 2018 defines the standard of conduct expected of buyers agents and agents' representatives in their regular dealings with investors.

Apart from the above obligations, the buyer's agents also need to comply with several other legislation, such as the:

  • Estate Agents Act 1980
  • Sale of Land Act 1962
  • Residential Tenancies Act 1997
  • Australian Consumer Law 
  • Property and Stock Agents Act 2002
  • Fair Trading Act 2012

The Real Estate Institute of Australia (REIA) typically enforces these laws, along with other eminent organisations like the ATO and the Australian Securities and Investment Commission.

Code of Conduct

The Real Estate Institute's Code of Conduct represents a set of ethical guidelines that all buyer agents in Australia are expected to follow. The Code of Conduct includes provisions on a wide range of issues, including:

  • Dealing honestly and fairly with clients
  • Avoiding conflicts of interest
  • Providing accurate and up-to-date information
  • Acting in a professional and competent manner

How much percentage of the property price can you expect to pay to your buyer's agent?

  • In Australia, the commission percentage is generally between 1% and 3%, depending on the complexity or level of service provided. Ensure to get a clear picture of whether the commission percentage they're quoting is inclusive or exclusive of GST.
  • The job of Investment Buyers Agent Australia is to find you the lowest price. But, in this model, a lower property price means a lower fee for the agent. To address this issue, some buyer's agents may charge a higher percentage for a lower price.
  • Here's good news for investors- buyer's agent fees are tax deductible. As these fees represent a component of the cost base of buying an investment property, they reduce capital gains tax when selling the property at a later date. However, if you're an owner-occupier, buyer's agent fees are not tax deductible.

Wrapping up

Buyer's agents can significantly save your precious time and dollars by negotiating a lower price for your property. Do your research and choose a licensed agent who does not have any conflicts of interest. You can potentially save thousands of precious dollars more than the buyer's agent fee.