A good agent can help take the stress out of buying or selling a home.
Real estate agents are plentiful in Australia, which can make it difficult to sort the good from the bad. Understanding what a real estate agent does will give you a much better starting point for comparing agents so that you can find the right one for you.
What do real estate agents do for the buyer?
There’s an important distinction between real estate agents generally and buyer’s agents specifically. A buyer’s agent works on behalf of buyers to research, find and negotiate properties for purchase. They generally specialise in this area of real estate, and do not sell property.
A buyer’s agent can represent buyers at auction or in a private sale and may help negotiate the best price. This can lead to substantially less stress for the buyer, as they’re able to engage the services of an expert in bidding and negotiation.
Buyer’s agents may also have access to a wide range of properties, some of which might not be advertised. They are usually paid either a flat fee or a percentage of the property purchase price.
This service is distinct from that of a real estate agent that’s holding “open homes” for buyers. While a real estate agent can help you find their advertised properties or provide information on properties they’re showing, they ultimately work for the seller, and will prioritise the interests of the seller over those of the buyer.
What do real estate agents do for the seller?
A real estate agent’s job comes down to one priority: getting the best price possible for the seller. How they go about this will differ from one agent to another.
Real estate agents will market homes to potential buyers in a variety of ways. They may employ a mix of traditional advertising like signs, window displays and newspaper ads, as well as digital advertising on platforms like Domain and realestate.com.au.
A good real estate agent should also help you make your home more marketable. They should have tips on how to increase your property’s appeal to potential buyers, such as interior design suggestions or advice that will increase its curb appeal.
Real estate agents can also offer advice on realistic pricing and the best methods of sale. A good agent will have knowledge of your local market and understanding of the demand for similar properties. They can advise you on a realistic expectation for a sale price, and whether you’re likely to get a higher price through auction or through a private treaty sale. Agents can also help negotiate with potential buyers, and advise you on whether to accept an offer or wait for a better one.
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Auctions versus private treatiesWhen you’re selling your home, one of the decisions you’ll have to make is whether to sell via an auction or a private treaty. A private treaty is a standard purchase wherein your real estate agent negotiates with individual buyers on an acceptable sale price.
A private treaty can cost less, as it often has less marketing and advertising expenditure. It also allows you to include specific terms and conditions in your contract of sale. The downside of a private treaty is it can take longer to find prospective buyers, and your home may sell for less than it would at auction.
An auction, meanwhile, allows you to find potential buyers quickly and set a minimum reserve price to ensure your property is valued fairly. It can also lead to a larger profit, as the competitive nature of bidding can drive up the sale price. However, the advertising outlay for an auction can be significant, and you’re still responsible for these costs even if your home fails to sell.
How do real estate agents get paid?
An agent gets paid a commission for the sale of a property, which usually amounts to a percentage of the purchase price. This varies depending on the state or territory where you live. While no state or territory has a specific cap on the amount of money a real estate agent can earn, the average commission ranges from 2-3.5%.
This percentage can seem like a lot, especially for properties worth millions of dollars, but in reality agents don’t end up pocketing all of it. An agent working for a real estate agency will split their commission with the agency they represent, usually at a rate of 60/40 in favour of the agent. Research from PayScale shows the average real estate agent earns a little less than $50,000 a year.
How does someone become a real estate agent?
Real estate agents must hold a licence for their state or territory. To obtain a licence, an agent will have had to attain a certain level of education and training. Most states require at least a Certificate IV in Property Services, though Western Australia requires a Diploma of Property. Some states, like Victoria, require agents to first spend a period of time working under another licensee before obtaining a licence of their own.
There are also conditions that will exclude someone from working as a real estate agent. In most states and territories, people who have a criminal history or have been declared insolvent cannot become real estate agents.
What are my rights when dealing with a real estate agent?
Consumers are protected by a number of regulations when dealing with real estate agents. The Australian Competition and Consumer Commission (ACCC) outlines a range of obligations for real estate agents to ensure they meet the rights of consumers. Agents cannot:
- Intentionally mislead consumers
- Lead consumers to a wrong conclusion or impression
- Give consumers a false impression
- Hide or omit important information
- Make false or inaccurate claims
According to the ACCC, it doesn’t matter whether an agent meant to mislead or deceive you. It’s your perception of the conduct that matters. The ACCC also requires that agents:
- Disclose all information relevant to the price of the property
- Advertise a selling price based on a reasonable market appraisal or a price the seller has indicated they are likely to accept
- Don’t make false claims about the price of the property
- Don’t underquote the property to attract interest
- Don’t make false claims about the property’s location, characteristics or allowable use
How do I find the best real estate agent?
There are a number of factors to consider when looking for the best agent, including their local expertise, their sales history, their marketing strategy and your own individual preferences.
What if I have a complaint?
If you feel a real estate agent has misled or deceived you, or if you are otherwise unsatisfied, start by contacting the agency they work for. Each real estate agency will have its own internal processes for handling disputes. If you’ve contacted the agency and still don’t feel your complaint has been resolved, you can contact the relevant consumer protection agency in your state or territory.
With so many different real estate agents and agencies in Australia, it’s important to find one that will work for you. Comparing agents helps you do this - and it should be a lot easier now that you know more about how it all works.