As a buyers’ agent, you connect with clients at a critical junction in their lives. For most people, buying a property requires significant financial and emotional investment. The service you offer assists in ensuring their needs are met and helps reduce the intrinsic stress associated with purchasing a property. And this value must be clearly reflected in your service offering and fee schedule.
Structuring your fee schedule
“There is no industry standard for buyers’ agent fees,” says Jacque Parker, director at House Search Australia and deputy chair of REINSW’s Buyers’ Agents Chapter Committee.
“As a rule of thumb, most buyers’ agents charge a percentage on the purchase price, usually on a fee schedule of fixed price brackets. However, there are plenty of buyers’ agents who will charge a flat fixed fee.
“What you charge depends on many factors, including the size of the search area, the scope and degree of difficulty of the property search, the property type and whether or not a full or partial service is included. But at the end of the day, the most important thing for consumers is to find the right buyers’ agent that can give them the right level of service to suit their individual needs.
Parker says most buyers’ agents charge their fee in two parts.
“The first is an upfront non-refundable engagement fee (usually 20-25 per cent of the total fee),” she says. The balance of the fee is paid upon unconditional exchange or settlement of the property.
“Additional charges might be incurred for out-of-pocket expenses during the search, however these need to be agreed upon upfront and with the written permission of the client prior to search commencement.”
Valuing your service offering
Parker says services, like fees, vary depending on what you are engaged to do.
“For the most common service, a full search, you should be under written contract with your client,” she says.
“This agreement stipulates that you will assist them in searching, sourcing, assessing, negotiating and securing a suitable property for a specified exclusive contract period (usually 90-120 days).
Like in any business, Parker says fees should be reviewed and adjusted according to consumer demand, supply and service inclusions.
“What you charge and what you offer are a reflection of the level of your services and experience,” she says.
Market forces impacting pricing
In the current buyer’s market, you may wonder whether you should lower your fee because better market conditions make your job easier. Conversely, you may consider increasing your prices in a seller’s market when there is less stock.
Nick Viner, principal of Buyer’s Domain and REINSW Byers’ Agent Chapter Committee member, says while market forces can impact pricing and consumer perceptions of value, maintaining the integrity of your fee schedule is critical.
“In a weak market, you may find other buyers’ agents are desperate to retain clients and so they slash their fees,” he says. “I generally do not lower my fees and often tell prospective clients tempted by an offer of lower fees from another buyer’s agent that you get what you pay for.
“I’m often amazed by how little other buyers’ agents charge. I think they are doing themselves and our industry a disservice given the enormous amount of work involved in satisfying our clients’ requirements.”