A guide to buyer’s agents and their fees. Part 1

How do you know when you’re getting what you want, and what you’re paying for when it comes to buyer’s agents and their fees?

Or if you’re not?

Every property is different, and every buyer is unique. In the real estate market, the goal of any buyer’s agent is to understand the factors that shape real estate purchases and push for the best possible result for their client. But as a prospective buyer, how do you know that you’re getting what you pay for when it comes to the services of your buyer’s agent?

In this article series, we’re going to unpack what enlisting the services of a buyer’s agent can do for you as a prospective buyer in the real estate market. Further, we’re going to detail how you can ensure that you’re getting what you pay for when it comes to a buyer’s agents fees.

We’re going to show you what a good buyer’s agent does, and what to look for in a buyer’s agents’ efforts to tailor their strategies to your purchasing criteria and budget. Read on here to learn more about how Cohen Handler can help you make the purchase that works for you.

What is most important to you as a buyer?

Understanding the Way a Buyer’s Agent Adds Value


Understanding the way that a good buyer’s agent adds value is key, and it will shape the way you approach budgeting for the services of a good buyer’s agent. First, let’s look at one of the major traps so many prospective buyer’s find themselves falling into – shopping for the cheapest deal.

For a great number of entrants to the real estate market, the sheer cost of purchasing a property can give prospective buyers pause at the question of voluntarily adding any further costs of the project. But that is just it, the scale of the investment that buying a property represents makes it all the more important that you get it right.

“A buyer’s agent’s job is to protect the buyer. Not just to do a deal for the sake of doing a deal. We stop you from overpaying.” says Cohen Handler Associate Leon Jacques. When it comes to ensuring that you are getting what you pay for – both for your property and the guidance of a buyer’s agent – the ‘cost-effective’ option simply doesn’t cut it.

Some of the less experienced buyer’s agents out there will present their services at a heavily discounted rate, in an effort to draw business and gain traction. Most buyer’s agents’ fees will start at one per cent and move up depending on the service type the client wants.

In terms of the fee structure, most buyer’s agents offer several options with prices differing accordingly:

  • Full service: search and purchase
  • Evaluation and negotiation
  • Auction bidding service

There are a number of different ways to structure a fee agreement. For example, it could be a fixed fee for auction bidding or a percentage of the sale price for the full buyer’s agent service.

If your buyer’s agent isn’t starting from this baseline, you have to ask yourself why. Do they lack experience perhaps? Do they lack contacts within the industry? Is their property sales knowledge not what it should be? When considering dealing with a buyer’s agent with overly enticing fee’s, there are plenty of underlying issues to consider also.

“Inexperience can be a significant factor.” says Cohen Handler Associate Leon Jacques. “With that also comes the eagerness to do the deal, based on the fact they have little or no income or business coming in.”

A lack of experience, especially in appraising what a property is really worth, can end up costing you much more than you might have saved in fees.


A key buyer’s agent role is to ensure the client is not overpaying.

Value for money


Experts surveyed about the value of buyer’s agents, by Australia’s leading consumer advocacy group Choice, point to the crucial importance of the services provided.

“A buyer’s agent can offer real value when it comes to valuing the property and securing the deal,”  said Vince Mangioni, Associate Professor in property economics and development at the University of Technology, Sydney.

He believes a crucial part of the services that buyer’s agents offer is to help their clients understand what a property is worth, so that they don’t overspend and so that they don’t overspend and avoid missing out. In the majority of cases, this is something the client would not be able to do without their agent’s experience and expertise.

If you want to find the best house for you, your family and your lifestyle, you need access to the best service, the greatest expertise and the deepest experience. The property market is a very competitive one.


Breaking Down the Fees of the Best Buyer’s Agents


In your initial discussions with buyer’s agents and the fees they charge, you should be questioning them about five key areas:


  1. Price: What is the cost of the services you provide?
  2. Expertise: What areas do you specialise in?
  3. Experience: How long have you been in the industry?
  4. Connections: What are your relationships with seller’s agents like?
  5. Off-market: What percentage of the properties that you purchase are off-market?
How can you be sure you’re getting what you’re paying for when it comes to buyer’s agent fees?

In our dealings with our clients over the past 10 years, these are the factors that people looking to purchase property consistently want to see most in a buyer’s agent.


How do housing costs compare for using a buyer’s agent vs going it alone?

They say time is money, and nowhere is that more true than in property. Cohen Handler can cut your search time dramatically, and in the process saving you a significant amount of money on your deposit and thus on your mortgage. Let’s look at an example. Sydney’s median house price was back over $1 million as of March, growing at an average of 2.5% per quarter over the last year. With buyers spending an average of nine months looking for a new home, you could be paying more than $75,000 for the same house in Sydney at the end of your search compared to at the start. With Cohen handler achieving an average time to buy of between four to six weeks for our customers, you could be saving tens of thousands of dollars by getting us to supercharge your search.


Are buyer’s agents’ fees tax deductible?

Under certain circumstances, buyer’s agents’ fees can be deducted from your tax obligations, but two things have to happen for this deduction to take place. First and foremost, the house must be bought for investment purposes – if you are looking to buy a home for yourself and your family, you cannot claim buyer’s agents’ fees back on your tax return. However, if you are an investor buying the property income-generating purposes such as rent, these fees may be deductible, but not immediately. The second of two triggers is that you must dispose of the property. The sale of an investment property will in most cases attract capital gains tax – as buyer’s agents fees were used to help acquire the property, they may form part of the cost base of a capital gains tax asset and can reduce your tax obligations in the financial year in which you sell the property.


How do I select the right buyer’s agent?

In much the same way as a lawyer is your advocate and your guide within the legal system, a buyer’s agent represents your interests as a buyer throughout the real estate process while providing the guidance you need to make informed decisions about your financial future. As such, choosing a buyer’s agent is similar in practice to choosing a lawyer or any other real estate professional. Take time to meet the buyer’s agent prior to retaining their services and ensure you understand their background, their approach and their ways of working intimately. Do they know the location you want to buy in well? Do they understand the unique market forces applicable to the type of property you want to buy? Do they have experience in successfully facilitating similar sales? More broadly, do you feel they are invested enough in your goals to proactively help you reach them? Do they inspire confidence in you with every conversation? Are they approachable with questions? The answers to these will help determine if the agent is just trying to move you along or is truly willing to be the partner in this journey you need.


What will our buyer’s agents do for you?

At Cohen Handler, we pride ourselves on a holistic, strategic approach to buyer advocacy. We work to understand your underlying reasoning and long-term goals, allowing us to proactively recommend courses of action that look beyond the next quarter and the next purchase and aim to help you build a strong portfolio and a happy home for your family now and into the future. To that end, our services take a variety of forms in order to best suit your individual needs. From assistance during the search and inspection stage to auction bidding support, negotiations guidance and more, we help shorten your path to your next property.


Use Case – Consider What You Need From Your Buyer’s Agent


Cohen Handler Associate Michael Connolly was recently knocked back by a potential client who opted to go with a rival buyer’s agent instead, due to their lower margin.

However, the client soon discovered a lower margin, also meant a lower level of service.

The cheaper agent she opted for, didn’t source or visit any properties for her. Instead they simply forwarded her a list from property websites to inspect on her own.

When such an approach proved, understandably, futile, the woman came back to Michael to secure his services in her search for a new home. With a far better understanding of why some buyer’s agents undercut others on their fees.

“It didn’t work out for her. She wasn’t happy with the service that was offered,” Michael Connolly said.

“She was not getting access to off-market properties (Cohen Handler purchases around two-thirds of our properties off-market and pre-market) and was frustrated at not getting access to more stock. She kept hearing our name in the market and was continually asked why she wasn’t working with Cohen Handler. So, she saw the value in signing with us.”

It’s another buyer beware scenario. So what’s the solution?

Stay tuned for the second part in this series about buyer’s agents and the fees they charge.

To learn more now, contact Cohen Handler today.