Realtors as fiduciaries; a stupid idea. Mortgage brokers as financial advisors; an even dumber one.
I have an idea for you would be and existing homeowners out there. Stop hiring mortgage brokers and Realtors to help you with your most important asset. Instead, hire a property manager and pay her a monthly fee to "manage" your real estate affairs. Now this person should have sufficient training or expertise in providing advice on real estate brokerage and mortgage financing. They should probably be a licensed real estate broker in the State of California so they could enter your home in the MLS and get access to wholesale mortgage rates. I'think that you could probably get pretty good advice for about $99/month for a 5 year management contract.
Does that sound expensive? Let's take a look at the potential savings:
The average Californian refinances their home every three years and moves every five years. The median loan amount in California is $350,000 and the median home price is $450,000. If the property manager can save you 1.5% on each mortgage transaction, and 2.5% on each real estate sale, that's $5250 in mortgage fee savings and $11,250 in real estate fee savings every 5 years. Think about it, that's quite a bargain for $99 a month for a five year management contract!
How will this happen? Your property manager will be knowledgeable in things that mortgage companies seek so you can get proactive advice about credit management. When it comes time to refinance your loan, your property manager will be able to help you document your credit and income package and explain how things like yield spread premium work. She'll have sufficient contacts among the lending community to get your loan processed and approved for about $750...at wholesale mortgage rates!
Your property manager will be a licensed real estate broker so that they can give you access to the MLS. Gone are the exclusive listing agreements that can hold you hostage! Your property manager will be able to structure an attractive compensation package enticing agents to show your home. My guess is that the first thing she'll do is offer a 3.5% fee to buyers' agents to bring buyers to your home. She can propery leverage the MLS to your advantage! She may advise you to hire third-party vendors prior to listing your home like a staging expert or a property appraiser so that your home shows better and your home is priced properly.
The potential of this new profession is astounding! There are tons of underemployed but bright Realtors and mortgage brokers who would welcome the fee-based relationship. No longer would thy have to "hustle for deals" but can become "fee-only real estate advisors". The naysayers will scream that a good Realtor or mortgage broker gets paid for performance; I agree. However, a fee-based property manager will be able to identify those high performers and structure compensation agreements that look out for your best interest.
Crazy idea? Perhaps, but when real estate morphs from a roof over your head to a retirement plan, it starts sounding more and more sensible.
