Did you know that the agent selling a property is appointed by the owner/vendor and is actually working for the vendor? They have a duty to attain the best price for the vendor and at all times to act in their best interests. In return the vendor pays them a commission or success fee once the property is sold.

Whilst the selling agent is obliged to refrain from being unfair to the purchaser, their duty is to look after the interests of the vendor. Ethically, they have to refrain from advising the purchaser against the best interest of the Vendor.

This situation applies even if the agent showing you around is not the listing agent. As long as they are being paid by the vendor [as sub-agent of the listing agent], they have to work in the Vendors best interests.

An astute purchaser should appoint a well informed agent to act on their behalf. It is similar to an attorney who represents one party as opposed to both parties. The purchasers agent will represent and advise them in every aspect of the negotiation and purchase even if it is to the detriment of the vendor. In return, when the sale is finalised their agent will look to the purchaser for a success fee which should be negotiated when the authority is signed.

A success fee is usually a percentage of the purchase price. However, a fixed fee can be negotiated regardless of the purchase price.

Another method of payment could be an hourly rate, for the time spent with the purchaser for negotiation and general research and advice. This is payable regardless of whether a purchase is made and is called a Consultancy Fee. The value of the consultancy fee can vary according to the seniority and experience of the consultant.

The fee must be negotiated prior to appointment and should be recorded on the Authority to Act.

Buyer Agents do not simply fill in the Offer to Purchase on behalf of the purchaser. Being well informed they should provide:

• Detailed information about the community and the real estate market.
• Access to the entire marketplace for the purchaser.
• Help in the selection of a property and assist in preparing the offer.
• Negotiate the best price, terms and conditions for the purchaser.
• Verify the value with sales evidence.
• Advise on finance, directing them towards a reliable finance consultant.
• Facilitate verification of property condition e.g. building inspection, title search, zoning and boundaries (Surveyor).
• Management of conveyancing process (Settlement Agent).

The buyer in a real estate transaction actually needs more help than the vendor. All the specialised services will be done by others such as Surveyors, Mortgage Manager, Settlement Agents and the like. However, the buyer needs competent advice on where to get help in all of these.