5 Ways A Buyers Agent Saves You Money

Hint: It’s not by purchasing properties under market value… most of the time.

There’s a common misconception that a Buyers Agent’s key benefit is that they can find property for you that is under market value. While this is possible, it's uncommon. 

What even is “market value”?

Put simply, “Market value” is determined by what a property sells for when presented to an open market. So if a property goes through the normal sales process, with open houses, marketing etc, and sells for $800k, the “market value” is $800k. However, if a property sells off market, without the normal process of viewings, marketing etc, the “market” has not had a chance to “value” the property. Hence why properties bought off market can go for what would be perceived as below market value. But, this is a double-edged sword that we will write about in another article. 

What circumstances lead to Buyer’s Agents buying property below market value? 

Usually, it's a clear understanding of the vendors' motivations to sell that fall outside the final sale price. In our case, relationships with real estate agents often give us insights into the vendor's motivations, allowing us further power to negotiate a deal that works as a win-win for both parties. 

In most cases this might be a win for the vendor because of flexibility in settlement times, or maybe an unconditional offer, a win for the buyer because they’ve purchased the house at a lower-than-expected price, and a win for the agent because they have saved a tonne of resources selling the property. 

Recently, we found an off-market opportunity where the vendors wanted a quick settlement, and luckily, we had buyers who were ready to move very quickly. This allowed us to come to a swift agreement at a price far under what the property would have transacted for if it had been exposed to the market. Without other qualified buyers coming through the property, the agent relied on the vendor’s instructions, and we purchased the property. 

So what if you can’t get a property off-market? Don’t worry, a Buyers Agent can save you money in many other ways! 

Here are 5 key ways Buyers Agents save you money:

Solid Fundamentals

A Buyer's Agent will look at investment fundamentals to ensure that you are purchasing a premium asset that will grow at a higher rate than other properties in your purchasing price point. On a million-dollar purchase, over 10 years, the difference between 6% and 7% yearly capital growth is over $175,000. This will allow you to pull out more equity sooner, or re-sell the property at a higher price point. This is because it will have many of the owner-occupier appeal selling points that buyers desire. Examples of this are flat blocks, street appeal, good aspect, location to amenities etc. 

Strong Negotiation Skills

Using terms in the negotiation outside of price as mentioned earlier. In turn, a lower dollar value offer can be made. Outside of our example of a shorter settlement, there are many scenarios of getting creative with terms in negotiations. One of our favourites is leasing the property back to the vendor after settlement until they purchase their new property. 

Saved Time

Buyers Agents Save time-poor buyers time by performing video inspections, researching the property, answering agent and vendor queries, project management, etc. If a buyer were to be looking for a long period of time, they will likely take out multiple pre-approvals which can damage your credit score (and depending on your broker, cost you money). If you’re looking for a broker check out Newcastle’s best mortgage broker Castle Finance Solutions.

Due Diligence

Investing resources into the RIGHT property, and making sure you don’t miss out. Legal checks, building and pest inspections, and strata reviews all cost money. Doing this on the wrong property and not purchasing it will stack up costs over time, especially if you miss out on multiple properties. We can help limit wasted opportunities by only investing resources into a property where there is a degree of certainty that you will win. Through gauging buyer activity and relationships with real estate agents, buyers agents are privy to extra information that helps determine how likely it is that they will be able to purchase a property. In some cases, this means letting a property go and not performing due diligence checks due to the knowledge that there is a stronger buyer on the opportunity. 

Saving You From Negotiations

Finally, navigating a negotiation is extremely important. Depending on the sale plan of the property, knowing when and how to attack it is critical. For instance, we had a client who had an offer of $1,020,000 rejected, despite being told offers over a million would be accepted. They didn’t know whether to rely on the information the agent was giving them and felt like they were being misled. This was a pre-auction offer, and our client was prepared to pay up to $1,110,000 to acquire the property. Based on our assessment of the situation, we advised the clients to let it run to auction. At auction we were able to purchase the property for $1,045,000, saving the clients $65,000 on what their next offer would have been.

If a promise sounds too good to be true, then that’s usually the case. There are many other ways that buyers agents will save you money. If you want to learn more and save money, time and stress when buying property, get in touch for a free consultation to find out how we can help make buying property simple.