Can a Buyer’s Agent Accept Commissions?
Technically yes, this is often how they are paid.
Buying real estate is a major, long-term investment whether it’s for business or personal goals so decisions should be well thought-out based on the right information. Increasingly, investors and home buyers are opting to hire a buyer’s agent to help them with purchasing property. The buyer’s agent or buyer’s advocate’s job is to find real estate that meets your goals and negotiate the sale on your behalf. However it’s important that you choose a buyer’s advocate who looks out for your best interests.
A Buyers Agent or advocate is a Licenced Estate Agent who chooses to act for the buyer and not the seller in the property transaction. A licensed buyer’s agent charges a fee for service to act exclusively in their clients’ interests. Your buyer’s agent’s interests should be positioned alongside yours so they are driven to ensure you get the best outcome possible.
Fees can be fixed or percentage based and will vary depending on the level of service provided. This can range from negotiation only, to assess and negation or a full search, assess and negotiate service. Fees may be negotiable on a case by case basis, so ask.
It is illegal for a buyer’s or seller’s agent to accept commissions from both parties in the transaction, so ensure they work for you exclusively.
Buyer’s advocates study the market and negotiate for a living so they’re more than familiar with the varying sales tactics, having the ability to judge a property’s value based on evidence and with little danger of being swayed by a real estate agent. They also have access to the information used by selling agents, and properties that are to be sold off market (they haven’t been listed for sale in the public market yet). When buying property, the buyer’s agent has authority to act on your behalf which you agree to.
Developers and selling agents have dumbed down the property buying and investing process for decades and it is much more complex and easier to make buying mistakes than they would like buyers to know. Some people might consider themselves equipped to do the job, however the real estate market can change quickly. Therefore the vast amounts of information buyer’s agents have at their disposal to help you make an informed real estate choice, can benefit you greatly.
When evaluating a potential service provider, take note of their formal qualifications, knowledge, skills, and experience in the field. Without formal licensing and investment qualifications, they have no ability to ask for payment to represent you in the transaction legally. To help you decide, check with REBAA online to view the list of licensed and vetted buyer’s agents.
How are consumers mislead about Buyers Agents?
The term ‘buyer’s agent’ has been misused a lot and is often surrounded by smoke and mirrors rhetoric when a selling agency attempts to portray themselves as something they are not. Buyers in particular need to be cautious of these operators, who are frequently property spruikers or project marketers in disguise.
Real estate laws and terminology also vary from State to State, so this can be a bit murky, so it’s best to check with the local government where you’re planning to buy property. This includes transparency standards which transactions should meet.
Note, that a genuine licensed buyer’s agent acts on behalf of their client exclusively, and they never accept rebates or commissions from selling agents or developers.
Be wary when a so called ‘buyer’s agent’ offers you free advice, especially when the person is recommending properties. If you find yourself in that situation, question how the “buyer’s” advocate earns an income because it’s very likely the individual is accepting commissions from the seller or the real estate firm. This means they are a selling agent trying to mislead you. Report them to Consumer Affairs in your State.
The agent is obligated to be transparent in dealings and you have the right to know so ask freely.
- How do you get paid and by whom?
- Who are you legally obligated to represent in the transaction?
- If I pay you and you rebate my fee, does that mean you have a binding selling agency agreement in place with the vendor/seller?
- Do you have a license and when was it acquired?
- How do you avoid overpaying for a property?
These are only a few of the questions you should ask. If this individual is suggesting you acquire real estate they own, there’s an even higher conflict of interest.
Furthermore, do not confuse financial advisors as equally qualified to give you advice on which properties to buy. They need to be licensed by their dealers group to give property advice and even then, if they aren’t in the market full time, they will be missing vital information. Also ensure they aren’t a front for a developer and getting paid a commission for referring you a selling agent or project marketer to buy a property. If so, they are no longer acting in your best interests.
Personal circumstances between buyers vary and knowing what properties would best fit each requires honed skills in the industry. It’s best to be careful of who you listen to and stick to a field experts, where the right expert gives the right advice..
Your buyer’s agent is your main partner in getting the property you want. Personalities and working styles should also be included in your criteria in choosing an advocate to hire. While this person is knowledgeable in real estate, she/he might not understand your brief. Be clear about what you need and want from your property and work together. Good dynamics between you and your agent will have an impact on your overall satisfaction of the service provided.
For more information on buying property in Melbourne, get in touch with our friendly team of buyer’s agents today.