John, they are commonly known as 'buyers agents'. and have been around for a few years now. Fees vary but 2.5% is a ball park. Alot require an upfront fee to cover their DD costs then a balance worked out on % of sale price.
I personally do my own DD, organise a air ticket, accommodation, car hire etc and fly over myself for 7-10 days to make inspections and offers. Basically all up I can cover all this for under $1800 which isnt really coming out of my pocket as its paid via equity from my LOC funds (OPM).
From the viewpoint of a BA...
2.5% is hardly ballpark, Rix
You ideally need to shop around on both service offered and fees, as some BA's charge commission (often in a price range/sliding scale scenario) whilst others, such as myself, prefer fixed fees. After all, my philosophy has always been that a fixed fee is fairer, given that often the same amount of work is entailed in a search for a $200K property as it is for a $1m property. A non-refundable retainer is also mandatory as there is much groundwork in searching for a property, as many of us know only too well! It's not comparable to buying a new car or plasma screen...
Alternatively, our fees vary based on the complexity of the search, which includes parameters such as the size of the search area, the type of property being sought and the strategies employed to locate the specific property. Some buyers have stricter criteria than others, which necessitates more work (eg private canvassing) whilst other absentee purchasers require more detail in the way of reports, photos etc than buyers who are able to physically inspect.
Investors often take more time than home purchasers, as we also arrange rental appraisals, interview and assist with PM selection, take the time to recommend particular value-add renovation ideas and conduct pre-settlement inspections as well.
As each client differs in their needs, this is taken into account in the fee structure, just as it is with many other service providers.
Rix, whilst I agree with you that a well planned interstate trip can reap benefits, it doesn't exactly provide you with the luxury of time that a BA can, in that you're often under pressure to buy something in the short allotted period that you've allowed yourself. I've personally bought interstate a few times myself now and can attest to this. It's a great learning curve and you can really develop a "feel" for an area after 40 inspections or so, but after a few weekend ventures the novelty can wear thin, especially if stock is limited and you don't find what it is you're looking for, or, worse, the properties don't quite live up to the high expectations purported by the ad pics and the agent's spiel. I've known investors to settle for second best when they simply couldn't be bothered to make another trip. It happens.
Naturally, holidays are also used up (not everyone wants to spend their week looking at properties when they could be on the beach with their family/friends) and then when do you leave time to renovate?
If I was to purchase interstate now, in a place that was new to me (eg Victoria, WA, SA, NT, Tas) I'd use a BA as it's simply not worth my time and effort to organise myself efficiently enough in order to make as fully an informed decision as I need to when it comes to purchasing a property. Besides, my time is too busy already spent searching for others
Different kettle of fish altogether if property is your fulltime business