Buying your first home? Here's what you need to know
Buyers | 25 June 2020
By the settled.govt.nz team
Most home sales in New Zealand involve just one real estate agent – the listing agent who is working for and is paid by the seller. While listing agents must be fair to all parties, their responsibility is to their client who is selling the property.
This is where buyers’ agents can help. A buyer’s agent searches and assesses properties and negotiates the sale on the buyer’s behalf.
You will be familiar with the role of buyers’ agents if you have watched the UK television programme, Location, Location, Location where Kirstie Allsopp and Phil Spencer help buyers in all aspects of the home-buying process as they search for their ideal home.
A buyer’s agent is a licensed real estate agent who works for and is paid by the buyer — agents cannot claim a commission from both the buyer and seller in the same transaction. In New Zealand, a buyer will typically pay around 3% of the value of the home they buy to the buyer’s agent. This fee is not related to the commission the seller pays to their listing agent.
If you buy a $600,000 property with the help of a buyer’s agent, you can expect to pay them a fee of around $20,000. What can you expect for this service?
Your buyer’s agent will be familiar with the area and is likely to have a good knowledge of properties on the market or coming to the market. This knowledge saves you time spent looking for your ideal property – your buyer’s agent will filter the options for you.
You are paying for the services of a professional negotiator who will negotiate with the vendor’s agent on your behalf. Negotiating for a home can be fraught for buyers and emotions can get in the way. A buyer’s agent may save you the equivalent of their fee in the final price you pay.
Working with a buyers’ agent can give you an edge in a competitive situation. The listing agent may prefer to negotiate with another professional rather than with an inexperienced buyer. Buyers’ agents are likely to pre-approve their clients, so the listing agent knows that finance is confirmed. That means less risk for the listing agent and vendor that the sale will fall-through and fewer conditions on the sale and purchase agreement.
An experienced buyer’s agent will be well connected to listing agents and potential vendors and is likely to learn about properties before they are listed, which means their client can make an offer as soon as the property comes to market.
The buyer’s agent fee pays for local knowledge of the area you want to buy in which is important if you are moving to a new part of New Zealand. A buyer’s agent will be familiar with council regulations, school zones, local weather, planning changes, and so much more. They can help buyers make connections with the community to make integration easier.
A buyer’s agent will also approach vendors who haven’t listed their property for sale, to see if they want to sell, so you have a wider pool of properties to choose from.
Time-poor professionals who value a professional service are most likely to use a buyer’s agent, including those looking for an investment property. A buyer’s agent will save buyers time looking for and at properties, completing due-diligence and working with the listing agent (if there is one).
Buyers’ agents are also used by people who value privacy and confidentiality. Discretion may be essential for sensitive commercial sales, and private sales, for example, to high-profile figures.
Buyers moving to an area, or country, they’re not familiar with may invest in the services of a buyers’ agent who knows the area well, especially if the buyer has not yet moved to the area. A buyer’s agent with good connections and knowledge of a neighbourhood can help a buyer integrate faster into the community.
First-home buyers are less likely to invest in the services of a buyer’s agent, but this is a group which may benefit from a buyer’s agent’s experience. Some first-home buyers contact a buyer’s agent when they realise how little they know. The right buyer’s agent will reduce your financial risk and may potentially save you the cost of their fee when they negotiate the sale price.
If you decide not to work with a buyer’s agent for your property purchase, have a look at settled.govt.nz instead. The website won’t take you to view homes or negotiate the sale price, but like a buyer’s agent, it will provide advice about buying a property in New Zealand.
Settled.govt.nz thanks buyers’ agents Maree Tassell and Julie Hignett for their help with this article.