Think carefully about engaging a buyer's agent: Mark Mendel

GUEST OBSERVER 

Australians should think carefully about engaging a buyer's agent to help them purchase a property.

Buyer's agents were prominent in this year’s series of reality TV show ‘The Block’, with four out of the five renovated apartments auctioned in the finale purchased through buyers’ agents. 

While contestants in The Block made huge profits from properties selling far above reserve prices, it was often a case of buyer's agents bidding against one another and pushing up prices.

Many more Australians looking to purchase property have been turning to buyers’ agents but they need to approach them with caution.

Prospective property purchasers must consider whether a buyers’ agent will provide genuine assistance in securing a property or just find ways to spend more of their money.

Buyer's agents charge between 1.5 percent and 2.0 percent of the purchase price of the property if they find your home and negotiate the deal or secure the property at an auction, which means the fee they charge is linked to the price you pay for the property.

That is the less you pay the less they make, which seems counter intuitive to me.

Their fees can end up being very costly, especially for people who have struggled to save to get on the property ladder.

Consumers using a buyer's agent should ensure they are licensed as a real estate agent and independent. 

While buyers’ agents can be very useful for time poor property buyers or those looking for something particular, buyers’ agents in the general market may cost the consumer more than the benefit that is derived.

Mark Mendel is founder and chief executive officer of iBuyNew and can be contacted here.