There are different ways a Buyer's Agent can charge their clients for their full service offering, which is also known as a fully comprehensive search. Below I have outlined the 3 most common options out there:
% of Budget
Buyer's Agents basically charge you a percentage of the purchase price that you end up paying for the property you buy. Generally the fee hovers between 1-3% and the level of service may vary. A good question to ask is what level of due diligence they offer, and what third party fees are included. Beware that the 1% may seem like a good deal, but may leave you wanting in terms of service.
A staggered fee approach means that if your budget falls under the $1m threshold they will charge you less than if it's over and, more again of it's over $2m for example. It is paramount here to determine upfront whether the fee you pay will be based on your initial budget or on the eventual purchase price as this can make a big difference. I know from experience that budgets can move both up and down.
Then there are those that charge a flat fee, agreed up front. I fall into this category, as I believe it is the fairest on the buyer. There are a number of reasons for this:
Not every search is as intense as the next. Investors are typically less emotionally involved than owner occupiers and the decision to move forward to buy a property is usually decided by it's capital growth potential and nett yield. Therefore I charge investors less for a full search.
If a client were to pay the Buyer's Agent more for a higher purchase price, as per the % of budget structure, one could argue that the Buyer's Agent could be much less inclined to negotiate harder.
Just because you have a higher budget doesn't mean that I have to do more work and therefore charge more. In fact, I would argue that it is harder to buy a property in the $1-$2m bracket than the higher $3-$10m segment of the market. This is why the tiered fee structure doesn't work for me or my clients.
Most Buyer's Agents will charge an upfront retainer, which can be anywhere from $1,000 - $10,000 with the remainder of the fee due on exchange of contracts or the contract going unconditional.
Finally, the last thing to consider before signing on the dotted line is that the vast majority of Buyer's Agents will have a time period stipulated in their agency agreements. This is much like a ticking time bomb in my opinion. The moment you sign, the clock starts ticking and the closer you get to the end of the stipulated time period, the more pressure there is on you to buy. This is why I do not have a set time period in my agreement. I will always keep working until we have found the right property for you, and this may be as quick as 2 weeks or take as long as 4 months. On average my clients buy between 1-2 months, and I'd much rather boast on how well my clients bought instead of how quickly they bought.