Buyer's agent: what the role involves and what it costs

Westpac describes a buyer's agent, also called a buyer's advocate, as a professional who works for the person buying a property. The role takes in searching for and assessing places, and negotiating or bidding at auction for the buyer.

Westpac says clients include first home buyers, house hunters short of time, and investors buying in an area they do not know.

The distinction Westpac draws between a buyer's agent and a real estate agent is the client. A real estate agent works for the seller, who pays for the marketing and the sale. A buyer's agent works for the buyer, who pays for the search and the services that go with it.

Westpac sets out the stages a full-service agent may follow. The agent begins with the client, working out the kind of place the client wants: where the client wants it to be, how many bedrooms, how close to shops, transport and schools.

That picture becomes a buyer's brief, and from it the agent builds a strategy for finding suitable properties. Westpac says the agent will ideally provide a shortlist to look at, and that in a busy market an agent may make contact as soon as a matching place comes up.

If one property appeals, Westpac says the agent can carry out due diligence, give an appraisal and a view on current market value, and negotiate the purchase. After a sale, the agent might deal with a conveyancer, do a pre-settlement inspection, or introduce a property manager for a buyer who is investing.

There is no set rule on what a buyer's agent charges, according to Westpac. Some ask for a fixed fee, some charge a percentage-based fee, and some ask for an up-front retainer at the start of the arrangement.

Westpac notes that some agents promise a suitable property within a set period, six months for example, and charge nothing if they do not find one.

Westpac lists four reasons Australians might use a buyer's agent: experience, value, early access and saved time. Finding the right property takes time and energy, and Westpac suggests an agent may add value for a first home buyer who has missed out on sales, for someone investing in an unfamiliar area, or for someone who wants professional help with a next home.

Westpac also says there is no guarantee an agent will save money, and lists points to consider: independence and fee structure. Westpac notes that an agent holding a licence has to disclose any commission that comes from a realtor or another third party.

Westpac notes that a percentage-based fee structure can discourage an agent from negotiating a lower figure, since the agent receives less commission.

Westpac also suggests questions to put to a prospective agent, on experience, qualifications and local knowledge, and whether the agent will confirm in writing that no other commission is received.