Investment tip: Should you pay extra for property advice?

While most investors try to avoid the extra cost for Lender’s Mortgage Insurance (LMI)—the additional premium payable on the mortgage for homebuyers who opt to pay a small deposit and tip over the 80 per cent-line for loan-to-value ratio, which protects the lender in case the buyer defaults on the loan—the siblings welcome the additional expense just so they can enter the market as soon as possible.

According to them, their research has made them confident to make investment decisions, but as they absorb the information across different resources, one of the recurring themes is the importance of engaging with professionals, particularly buyer’s agent.

Their knowledge and expertise will definitely add value to their portfolio, but the extra expense may require them to save up more for the ongoing professional fee and delay their journey for a little longer.

Are buyer’s agents worth their weight in gold, even if it means delaying wealth-creation?

In today’s market, most budding investors are adamant to enter the property market as soon as possible due to unpredictable fluctuations happening even in the bigger markets such as Sydney and Melbourne.

However, Propertyology’s Simon Pressley believes that the key to making the right investment decisions is having the right information.

He said: “It’s true that in the time it could take you to save the extra 10 per cent, who knows where the market might move at. But really, this is about giving yourself the best chance of making the best decision possible, and key to doing that is having the best information.”

“They're talking $350,000 to $400,000, but even if it was half that, it's still a lot of money. This is one of the biggest financial decisions that anyone ever makes. It’s really important to increase your chances of making a really, really good decision,” the property strategist highlighted.

While engaging with a professional does not give any guarantee of success, it certainly increases an investor’s chance of making a better decision.

“If it was medicine, you can save yourself the cost of a doctor's fees and try to self-diagnose on Dr Google, but your health's really important so you want to get that right. You can lodge a tax return online and not pay an accountant but would it be lodged well? You can have a crack at renovation or you could pay a really good builder—which will get the better product at the end of the day?” according to Mr Pressley.

Before ultimately seeking property professionals to work with, investors are advised to establish their goals, needs, strengths and weaknesses in order to find the right people to guide them through their wealth-creation journey with ease.

Finding a good agent 

When looking for a buyer’s agent, Mr Pressley strongly advised investors to seek those that are specialised in the segment of the market that they are trying to buy in.

In order to maximise your wealth-creation opportunity, try to avoid jacks-of-all-trade, according to him.

The property strategist said: “There are buyer's agents that will specialise in helping someone buy a renovator and those for family homes or the first home buyers’ market. That's all really, really important. Those buyer's agents will do a great job for that segment of the market, nut anyone who tries to be a jack-of-all-trades is a master of none.”

Ultimately, the best asset that any professional should have is extensive research because, whether you already have an idea where to invest or are merely looking into options, the quality of information you get can draw the line between success or failure.

Moreover, your buyer’s agent must be working in your best interest. If they try to sell you something, then they might be harbouring ulterior motives on your partnership.

“A genuine buyer's agent doesn't have a stock list. They don't have photos of houses and apartments in their window—that would make them a sales agent. A genuine buyer's agent will sign a document with you as the buyer appointing them as your professional, then you be paying them directly. The buyer's agent is working 100 per cent in their client's best interests,” according to Mr Pressley.

Finally, the most reliable buyer’s agents are members of the Real Estate Buyer's Agents Association of Australia (REBAA), the industry body for buyer’s agents across Australia. “ If they're on the list, they're probably worth having a chat to,” he concluded.

Tune in to Simon Pressley’s episode on The Smart Property Investment Show to know more about the preparations needed for starting a property investment journey.