If you’re planning on buying a home or an investment property, you’ll probably look to get some advice along the way. And with everyone seeming to have an opinion on the property market, with real estate agents not having a great reputation and the proliferation of investment “seminars” that are really developer sales pitches, where can you get fair & honest property advice?
Let’s firstly look at sources of free advice
Family and friends: These can be dangerous because they are well meaning and you trust them. But property is a complex beast and even if they’ve had some personal successes, their circumstances and life goals may be very different to yours. Plus, they are likely to be heavily biased in favour of what’s worked for them and not really understand the risks overall.
Mortgage brokers: Brokers are paid by the banks and not by you, so their advice is free to the consumer. Some are excellent, while some go the easy route and push you into packages that inflate their commissions. That said, I am very much in favour of working with a broker, so how do you find a good one?
Make sure they ask you a lot of questions, not just about your current situation but your future plans. You want to make sure that your loan structure gives you maximum flexibility, so don’t just focus on a low interest rate. Go with your gut instinct – if you feel they are pushy, run for the hills! And if they encourage you to fudge your figures, find another broker right away.
Sales agents: Real estate agents these days will offer you advice on property other agents are selling as well as what they have listed. They’re doing this to establish themselves as trustworthy in your eyes. This information can be useful but you have to remember that ultimately they are selling you something! And they are paid by their vendor, not by you.
Even when they are giving you tips on other agent’s listings, they will often use a subtle negative spin. And of course, when they are talking about one of their own listings, they’ll be doing the opposite. It’s called “objection handling”. That said, they know their market and can give you good tips, but just remember to think critically. And, whatever you do, don’t let a sales agent bid for you at auction.
Spruikers and seminars: I really hate to see a developer sales pitch dressed up as “education”. If you are invited to a free investment seminar where there’s any type of property being recommended, run for your life. This also goes for any get-rich-quick strategy that you’re being asked to sign up for.
Repeat after me: there is no way to get rich quick with property that doesn’t involve luck and huge risk.
Research: There are loads of online resources: blogs, investment magazines, videos like this, podcasts like The Elephant in the Room property podcast and many others. Invest your own time and cast the net wide. The more you research, the better feel you’ll get for reliable and trustworthy sources of quality information.
I’ve put together a list of free resources that I think are excellent. You can find the link below in the notes.
Now, let’s look at paid advice
Unfortunately, paying for advice doesn’t necessarily guarantee that it’s good, so here’s some things you need to be aware of.
Having a good Accountant is critical for making sure that your ownership structures are set up well and you aren’t paying more tax than you need to. But, some accountants know nothing about property. I’ve heard horror stories of people buying overpriced brand new apartments to negatively gear because their accountant told them they’re paying too much tax. Your accountant doesn’t need to be a property expert, they simply need to recognise that you need to get advice about the asset itself.
Most Financial Planners won’t discuss property with their clients because they don’t view it as a financial product or, tragically, because they don’t earn any fees if their clients invest in property. But whether we buy our own home or an investment property, this is a major financial commitment and really should be done with guidance. Ideally, you’d use an independent advisor, who charges a fee for service and recognises that property is an important part of the mix. If you are dealing with a financial planner who won’t discuss property other than to routinely talk you out of it, then you need to find another advisor.
When you are in the process of buying or selling real estate, a lawyer or conveyancer will need to be engaged to handle the contractural side. It’s really important, particularly when buying, to get a property specialist on your side. I’ve come across generalists who fail to recognise a whole host of pitfalls, especially when dealing with complex matters such as multifaceted strata buildings. Sure, they have professional indemnity insurance, but do you really want to run the risk of going down that path?
You’d be forgiven for thinking that now I’m going to say that the best place to go for fair and honest property advice is a Buyers Agent, but I’m not. Unfortunately it’s been all too easy to get a buyers agent license in recent years, so there are a number of practitioners who aren’t much chop. So, how do you choose a good one?
Check whether they are a member of REBAA and their state REI. This is no guarantee but it’s a good first step.
From the very beginning, are they questioning you deeply? Really drilling down to understand your long term objectives? Are they challenging your assumptions and opening up your mind to all of the possibilities before they make a recommendation? Are they listening to you? Really listening?
Check whether they are pushing a particular barrow. Question their recommendations. Are they advising you of the risks? If they are recommending that you buy in an area about to boom, do they offer an exit strategy as part of the plan?
Then look for local knowledge. A Sydney buyers agent who flies up to Brisbane or down to Adelaide every fortnight isn’t going to be able to give you the same advantage that a local expert can give you.
A trusted advisor knows their limits and is able to recommend the expertise of other advisors so that you, their client, achieves the best outcome. In my view, that’s the ultimate test for fair & honest property advice – whether they are prepared to send you to another advisor because what they have to offer isn’t really right for you just now.
Published: 8 August 2018
DISCLAIMER: The tips included in this video are intended to be of a general nature. Please contact us for advice that is specific to your individual circumstances. You may also need to get advice from other professionals such as an accountant, mortgage broker, financial planner or solicitor.