By Tim Stokes
Question: When you're buying a home, especially for the first time, whose advice can you trust? This particular topic is quite an important one.
There are many people involved when you buy or sell property. The most obvious one is the real estate agent. The agent or salesperson has a legal contract with the seller to try and get them the best price possible. The agent is not usually paid anything until the property actually sells.
There is often a mortgage broker involved. The brokers job is to get the purchaser the best deal on finance possible. The broker is almost always paid by the bank, or lending institution that provides the finance to the buyer. In a similar scenario to the agent, the mortgage broker is not normally paid until the deal is confirmed (i.e the property sells and the finance is approved).
How can you be sure then, as the buyer, that you are getting truly independent advice when the livelihoods of the agent and broker are dependent on a deal going through? Can you rely on the agent or the broker telling you about the leaking exterior, the well-known neighbours from hell living across the road, the apartment block planned on the vacant lot next door, etc etc…
I think the answer to the above question is a firm no. You simply can’t rely on getting independent advice from those who are paid on the basis of a successful sale. Of course nobody wants to work for nothing. That’s fair enough. Why would someone puts hours of effort into advising a client, for potential nil payback? Human nature dictates that people want to be paid for their efforts.
So what is important here?
I think the most important aspect for the buyer is recognising the specialised role that each property professional plays in the real estate game – recognising the fact that some property professionals are only paid when you have bought something – and finally, choosing to get their own, independent advice before committing to a purchase.
This article is used with kind permission from Homewardfound.co.nz, a resource of free articles and information for first home buyers and newbie investors.
Visit www.homewardfound.co.nz for more information.
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