MORTGAGE BROKERS AND BUYER’S AGENTS – ARE THEY WORTH IT?

For many budding homeowners, searching for a property can be a stressful and time-consuming experience. Purchasing a property is likely to be the most significant investment you’ll make in your lifetime, and it can be baffling if you’re not sure what is going on.

Luckily, you’re not on your own and can choose to leave the nitty-gritty up to the experts. There are professionals whose very job is to help navigate your journey towards property ownership. Mortgage brokers and buyer’s agents are two key players that can play a major role in securing your dream home and save you thousands of dollars at the same time.

If you’ve been wondering whether these professionals are essential and how they can help you – read on. We are here to help demystify the process!

So, what is a mortgage broker?

Taking out a mortgage can be one of the biggest financial commitments most of us will ever have to make.  A mortgage broker is either a person or institution that acts between buyers and lenders – essentially, they help you secure a home loan that’s right for you.

A mortgage broker’s key responsibilities include:

  • Assessing your finances to measure borrowing capacity;
  • Suggesting lenders and products to match your needs;
  • Determining what type of home loan is best for you; and
  • Helping you understand the paperwork and t&c’s before signing any contracts.

Pros

As a financial intermediary between yourself and a lender, mortgage brokers can help you get the best home loan available, especially if you aren’t too confident or experienced in the property-buying process. These guys offer a helpful and efficient service particularly if you’re a buyer with a more complex financial situation such as self-employed.

A broker can suggest a whole range of products that suit and meet your needs, enabling you to compare more than just one option. Several fees are usually involved in taking out a home loan, but in some cases, mortgage brokers may be able to waiver any extra fees that come with working with lenders, saving you time and money.

As experts in the mortgage sector, brokers are constantly dealing with banks and across the ever-changing lending criteria. It can even be worthwhile talking to a broker before you are ready to buy as they can give you invaluable advice to improve your credit score and insight into what banks are looking for.

Cons

Despite having sourced a great deal, ‘good faith estimates’ cannot always be relied upon, and in some cases, lenders can change the conditions based on your application.

When working with a mortgage broker, it’s also best to clarify any fees upfront to avoid being surprised by costs later on. Whilst most earn commission from lenders, there may be extra costs that spring up once you’ve secured a loan.

Should I get a buyer’s agent?

Finding a property that is the right fit for you can be time-consuming and demanding, not to mention an emotional rollercoaster when the reality of the inspection doesn’t match the dream of the property advertisement. We all know a “renovator’s delight” when we see one!

A buyer’s agent is committed to representing your best interests – they are licensed professionals who evaluate properties on your behalf if you are looking to purchase. They also help you find a suitable property within your budget and perhaps the biggest feature of all, they negotiate the purchase price

A buyer’s agent’s key duties include:

  • Understanding exactly what you are looking for (location, price range, suitability and market value);
  • Researching properties and shortlisting ones that meet your goals;
  • Providing expert knowledge about market trends/growth; and
  • Bidding and negotiating properties on your behalf.

Pros

A buyer’s agent can save you valuable time. When it comes to searching for your dream property, they can take the legwork out by doing the research for you.

Buyer’s agents can also organise strata reports and have access to properties not yet on the market. However, it’s the skills, relationships with real estate agents and overall expertise that you pay for. They provide expert local market knowledge, presenting you with all the facts to make an informed decision about your property.

If you find yourself quite time poor or lacking the knowledge and experience within the big property world, then a buyer’s agent will undoubtedly help you find the perfect property at your preferred price.

In today’s competitive market with many buyers frequently outbid at auction and constantly missing out on buying property, buyer’s agents can be seen as a way to get an advantage on other buyers out there and help speed up the property ownership process.

Cons

You might be thinking, “But what about the cost?” Some may consider the use of a buyer’s agent a high-end service reserved for luxury buyers.

Depending on the services you require, a commission may be charged at up to 3% of the final purchase price. This can end up being quite costly, and needs to be weighed up against potential savings – with emotion removed from negotiations it is likely that the buyer’s agent will snap up the property for far less than you would have been prepared to extend to.

Another factor to consider is how fast the real estate market can move and how much rapidly escalating prices might cost you compared to a buyer’s agent fee. For example, if it took you six months to find a property you may find your property has increased by $100,000 during that time, compared to a buyer’s agent fee of perhaps $30,000.

Communication is also crucial, and if the buyer’s agent does not understand your needs, it may be difficult to make suitable recommendations. A good buyer’s agent should be able to save you from buying the wrong property.

Getting a second opinion and consulting the professionals can be a wise choice given the complex nature of buying property. However, it is essential to understand everything involved in doing so whether it be any surprise costs or extra steps you hadn’t considered.

Coposit can also take the stress out of saving for a deposit and applying for a home loan by allowing you to secure a property with just $10k, paying the rest in weekly ‘coposits.’

So, if you’re thinking about kickstarting your property buying journey, just know you’re not alone and there are experts available and at your disposal if you wish to use them.