Hiring a buyer’s agent can be an eye-opener into buying the right property and avoiding costly mistakes. But one of the most common questions potential clients have is: how do buyer’s agents get paid? Understanding the fee structures of buyer’s agents will help you when deciding whether to engage one for your property search.
In this article, we’ll break down the different ways buyer’s agents charge for their services, what you get for your money, and what to watch out for when comparing fees.
The Main Fee Structures for Buyer’s Agents
Buyer’s agents can charge clients in several different ways. The most common fee structures include:
1. Fixed Fee
A fixed fee is a set amount agreed upon before the search begins. This structure provides transparency and predictability, as buyers know exactly how much they’ll be paying from the outset.
Pros:
Transparent pricing with no surprises
No incentive to push higher-priced properties
Easier budgeting for buyers
2. Percentage-Based Fee
Some buyer’s agents charge a percentage of the property’s purchase price. This percentage can range from 1% to 3%, depending on the agent and market conditions.
Cons:
Higher property prices result in higher fee
Less predictability compared to a fixed fee
3. Tiered Fee Structure
A hybrid approach, some agents offer tiered pricing where fees vary based on the price of the property. For example, an agent may charge a $17,000 for budgets up to $1 million and $20,000 for budgets $1M-$1.5M
Pro:
Transparency of fee
Con:
Buyers at the low end of the tier are paying the same fee as buyers with budgets at the top end of the tier
4. Engagement Fee + Success Fee
Many buyer’s agents charge an initial retainer or engagement fee (non-refundable) to start the property search, with a success fee paid upon purchase. This ensures the buyer's agent is compensated for their time even if a client decides not to proceed with a purchase.
Pros:
Commitment from both parties
Balances upfront costs and success-driven fees
5. Hourly Rate
A less common approach, some buyer’s agents charge an hourly rate for specific services, such as property inspections, price evaluations, or negotiations.
Pros:
Ideal for buyers who only need partial services
Pay only for what you need
Cons:
Can be costly if the search takes longer than expected
Each step is in the process is interdependent. Selecting only partial services can compromise the effectiveness of assessing and negotiating on a property.
What Do You Get for Your Money?
The value of a buyer’s agent fee depends on the range of services they provide. Most full-service buyer’s agents offer:
Property search: Identifying on- and off-market opportunities
Inspections: Attending and evaluating properties on your behalf
Price research: Comparing recent sales to assess value
Due diligence: Assessing positives and negatives including council planning items, zoning, development applications, at the minimum.
Negotiation: Securing the best price and terms
Auction bidding: Providing strategic bidding at auctions
Transaction support: Managing the process through to settlement
Do Buyer’s Agents Receive Commissions from Sellers?
A legitimate, independent buyer’s agent only represents the buyer and does not accept commissions from sellers or developers. However, some companies that call themselves buyer’s agents work under a vendor-paid model, where they are paid by property developers to sell stock to buyers. This creates a conflict of interest, as these agents may be incentivised to push specific properties rather than act solely in the buyer’s best interest.
To avoid conflicts of interest, always ask a buyer’s agent:
Do you accept any commission from sellers or developers?
Are you completely independent?
Ask if the buyer's agent will be required to pay a referral fee to the person who introduced you (e.g. real estate agent). Note: in NSW buyer's agents are allowed to pay real estate agents a referral fee for referring a buyer, as long as both the payee and recipient are both licensed real estate agents. However, referral fees must be disclosed to the client. There are also other rules around referral fees outlined in NSW Property legislation.
Is a Buyer’s Agent Worth the Cost?
A good buyer’s agent can save you money, time, and stress, but whether they are worth the cost depends on:
Your experience and confidence in buying property
How much time you can dedicate to the process and upskilling to take on the task yourself
The buyer's agent experience in purchasing property
The buyer's agent's local market knowledge
The buyer's agents licensing (in NSW sole operates must have a Class 1 and Corporation license from at least 3 years of experience working for another Class 1 real estate agent/buyer's agent. You can check their license history on the Fair Trading website).
If a buyer’s agent prevents you from overpaying or buying the wrong property, their fee may be a small price to pay for the value they provide.
Final Thoughts
Buyer’s agents offer different fee structures to suit various buyer needs. Understanding these options helps you make an informed decision about whether to engage a buyer’s agent and what payment structure works best for your situation. Always clarify fees upfront, check for conflicts of interest, and ensure the agent is aligned with your goals before proceeding.
If you’re considering hiring a buyer’s agent, ask about their pricing model and services to find one that best matches your requirements. A transparent and experienced buyer’s agent can make the property-buying process significantly smoother and more successful.