With the property market changing as a result of price declines and regulatory interventions, investors are advised, now more than ever, to seek expert advice. How can property professionals help investors thrive in a changing market?
Following the release of the recommendations of the banking royal commission, which included a prompt to review the borrower-pays remuneration structure for mortgage brokers, property experts emerged in support of mortgage brokers who provide investors the ability to secure competitive finance.
Borrowers themselves have expressed their preference for the services of mortgage brokers through the Consumer Access to Mortgages Report, a study produced by Momentum Intelligence, which shows that Australians who use mortgage brokers have higher satisfaction levels compared with those who go direct to a lender.
Since the recommendations were released in February, the narrative has changed largely in favour of mortgage brokers.
According to Rethink Investing’s Scott O’Neill: “They might actually leave it as it is. It’s good to say some of these recommendations get lifted because it would’ve given more competitive advantage back to the banks, which is not what we want because that could lead to higher interest rates in the long term.”
“You need someone working for you to shop around for the best deal. With banks, you’re only presented with one or two products. In contrast, going to a mortgage broker will give you an insight on multiple products, which they can assess at any given time and give recommendations based on your circumstances.”
“A good mortgage broker has connections within the banks. They can speak to people at different levels and, thus, results happen quicker.”
While there are still investors reluctant to spend money on professionals fees, Mr O’Neill encouraged everyone to maximise the advantages of getting expert advice and guidance, particularly in a fluctuating market and tightening credit environment.
Apart from saving time and effort, investors can enjoy multiple options on strategy and ultimately acquire the necessary knowledge needed to thrive in the property market, regardless of its movements.
Whether it’s mortgage brokers, accountants, buyer’s agents or other professionals, Mr O’Neill advised investors to turn their focus away from the fees. Instead, look at the value that they can add to the portfolio.
“Think about how the fee enables you to be a better property investor. That’s a good way to see the world.”
Essentially, hiring property professionals counts as a business decision that will allow investors to improve their wealth-creation journey, according to him.
How exactly would investors know if they are getting their money’s worth?
Mr O’Neill said: “When it comes to spending money, everything should be a business decision. If a buyer's agent charges you $10,000, they need to help you make more than $10,000, plus save you more time. It needs to be a good transaction.”
Getting property professionals on board would also help investors explore different markets and ultimately diversify their portfolios.
“The ‘do it yourself’ attitude works when you’re buying in your local backyard, but what about when you’ve got to buy outside Sydney? You’ve got to go out, take good advice.”
“Another example: If I buy stocks, I’ll use a stockbroker because I’m not going to waste hour after hour researching just to try and pick a gap in the market. Hopefully, someone who does that 12 hours a day, five days a week is going to pick it for me. It’s quite reassuring, too.”
When seeking professional advice, Mr O’Neill encouraged investors to review not just the fee but, more importantly, the quality of advice that they would get.
“If you’re not paying for advice, you need to question the quality of that advice. Is someone getting a kickback from a developer? You need to make sure that the voice you’re getting is in your best interest. Not all advice is created equal,” he concluded.