Buying a house is costly, with buyers paying legal fees, stamp duty, and conveyance fees, not to mention the massive deposits needed when looking for homes for sale in Sydney, Australia.
Buyer’s agents help buyers find a suitable home that meets their requirements and often negotiate the purchase on your behalf. Depending on the services you need, a buyer’s agent may charge a fixed fee starting from $100 to attend an auction on your behalf.
For a full inspection, search, and negotiation service, you may have to pay a percentage of the home’s purchase price, which could be 3%, plus the goods and service tax (GST).
How a Buyer’s Agent Will Charge You
Buyer’s agents in Sydney charge based on the following pricing models:
- Fixed fee model
- The tiered fixed fee pricing structure
- Percentage of the house purchase price
They may also request an upfront payment or deposit through frequent installments, and you may have to pay additional fees depending on the services you need. Deposits are often deducted from the ultimate cost.
- Fixed Fee Pricing Structure
Often, buyer’s agents who work on a fixed fee arrangement don’t charge their clients based on the property price; instead, they have pre-set the cost of the service they render. However, the overall cost will vary based on the service offered, and may include:
- Full service, including searching, bargaining, and bidding
- Auction bidding only
- Sale negotiation only
Typically, a buyer’s agent’s full-service cost could be as high as $20,000. Of course, if you’re buying a luxury home, you may have to pay more, but what you’ll save makes hiring a buyer’s agent worth it. This pricing model lets you know the cost of working with a buyer’s agent upfront, although you might end up paying the same, no matter the cost of your home.
- Tiered Fixed-Fee Pricing Arrangement
This pricing structure differs from the fixed-fee structure, because the fee will vary with the property price. Buyer’s agents often set a fixed fee for each predetermined house price bracket–for instance, for a house selling between $250,000 and $500,000, you may have to pay $7,000, and for a house costing between $500,000 and $800,000, you may pay a buyer’s agent fee of $10,000.
With this pricing arrangement, you know the cost of hiring a buyer’s agent upfront, and you may pay less if the sale price lies in a lower bracket. However, you may still wind up paying the same as a person buying a more costly house, because the price brackets are often wide-ranging.
- Percentage Pricing Structure
If a buyer’s agent uses this structure, their fee will depend on the purchase price of your home. Thus, any increase in the sale price will affect your buyer’s agent fee. Most buyer’s agents charge between 1% and 3% based on their service. Buyer’s agents often charge a low percentage for partial services and a high percentage for full service.
However, there may be a conflict of interest here, because the buyer’s agent must find you a property at the lowest price. With this structure, a low purchase price means a low fee for your agent. To solve this issue, some agents charge a high percentage for properties selling at low prices.
With this model, you get to pay according to the price of your property, so you may wind up paying less than a person buying a more costly house. The only disadvantage of this pricing model is that you won’t know the exact cost of hiring a buyer’s agent until price negotiations are done.
Cost of Hiring a Buyer’s Agent
The cost of buying homes in Sydney is higher than in other cities in Australia, so the buyer’s agent fees are also higher. On average, expect to pay between 1.5% to 3.0% of the property sale price or a fixed fee between $8,000 and $21,000, with an average of $12,000 in the region.
A negotiation- or bidding-only service in Sydney will probably be $1,000 per home; however, you should note that most buyer’s agents in Sydney charge separately for things like pest and property inspections. They also have different fees for partial service and prefer only bidding or negotiating at auctions.
Buyer’s agents in Sydney charge their clients based on the fixed fee pricing model, the tiered fixed fee pricing structure, and the percentage of the property sale price. But the ultimate cost of hiring a buyer’s agent will vary depending on the service rendered. For example, an agent may charge less for partial service, and for a full service, they’ll charge more.