Do I Need a Buyer's Agent to Buy an Investment Property?

You don't need a buyer's agent to buy an investment property. Plenty of people do it themselves. The real question is whether the fee is worth what you'd get in return. Here's how to weigh it up.

What a buyer's agent does

A buyer's agent works for the buyer, not the seller. Depending on the service, that can include working out your brief and budget, searching for properties (including ones that never reach the portals), assessing the numbers, negotiating the price and managing the process through to settlement.

That's different from a sales agent, who is paid by the seller and represents the seller's interests. If you're buying new through a developer's sales team, remember that the people showing you the package are usually working for the seller.

What they cost

Fees vary a lot, but the common models are:

• Percentage fee. Commonly in the range of 1.5% to 3% of the purchase price plus GST for a full service.
• Fixed fee. Anything from a few hundred dollars for auction bidding only, to roughly $20,000 to $25,000 for a full-service search, depending on the agent and the city.
• Hybrid. An upfront engagement fee or retainer, with the balance payable on settlement or purchase.

Ask exactly what's included, when each payment is due, and what happens if no purchase goes ahead.

Are the fees tax deductible?

For an investment property, buyer's agent fees are generally not deductible against your income in the year you buy. They may form part of the property's cost base for capital gains tax purposes. Treatment depends on your circumstances, so check with your accountant.

When a buyer's agent can make sense

• You're time-poor and don't want to run the search yourself.
• You're buying in a market you don't know well, or interstate.
• You want help with a specific strategy such as a dual key, rooming house or co-living, where the builder, council and numbers all matter.
• You'd like someone to negotiate for you and keep the process on track.

When you might not need one

• You know the area well and enjoy the research.
• You already have a trusted team, such as a broker, conveyancer and property manager.
• You're buying something simple and have the time to manage it.

Questions to ask before you hire anyone

1. Are you licensed, and what's your track record with the type of property I want?
2. Exactly how are you paid, and could you receive any commission or incentive from a builder, developer or seller?
3. What's included in the fee, and what costs extra?
4. What happens if the purchase falls through?
5. Can I speak to previous clients?

The payment question matters most. You want to know whose interests the agent is financially aligned with.

How Investlogic approaches it

Investlogic is a guide and project partner for property investors, helping with finding the right property, securing it and managing the build. We provide property sourcing services and don't give financial advice, so we work alongside your broker and accountant. If you'd like to see whether our approach suits you, take the Property Match quiz.

This article is general information only and is not financial, legal or tax advice. Investlogic does not hold an Australian Financial Services Licence. Fee ranges are indicative of commonly published figures and vary by provider.