Mortgage Secrets that Banks and Real Estate Agents Won’t Tell You

It is a reasonable assumption that real estate agents primarily focus on selling or leasing a property. However, this seemingly obvious statement is not strictly true. Estate agents place as high a premium on coaxing homeowners to list their property with the agency, as they do with selling the properties. Anyone who has registered interest with an estate agency or brokerage will have noticed they are suddenly inundated with a plethora of emails and phone calls with properties not yet on the open market.

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This a tactic to persuade homeowners that the particular agency will move the proverbial mountain to sell property and therefore are a suitable choice for selling your home. Likewise, it is often assumed that estate agents depend on the commission earned from the actual sale of property. However, it is less well-known that agents receive competitive commissions from successfully persuading a homeowner to “List” their property to the agency or brokerage. Estate agents can be ruthless in persuading householders to merely list their dwellings with the agency.

The complex issue of valuation of property is another area where public knowledge is somewhat sparse, to the detriment of the householder. Agencies offering “free” valuations are also aiming tactically to secure more properties to add to the portfolio already listed with the agency. Likewise, valuations can be somewhat over inflated, in an attempt to prolong the period the property is listed with the agency. A frequent browse of Zipmatch, an online property finder in the Philippines, shows how long the properties remain in the market as they indicate when a listing expires. The over-inflated property will take longer to sell, therefore remaining listed for longer, before an inevitable price reduction leads to an eventual sale. Agents are also known to dispatch “professional” viewers to browse at the property and create an appearance of response to the advertised sale, persuading the householders to retain the services of the agency for longer.

Switching topics from secrets of property selling to property purchase financing, it is always worth shopping around various banks and lenders, as is more than possible to get a better deal elsewhere. (assuming that the prospective borrower meets the criteria). Borrowers need to be wary of interest rate “lock” time frames, meaning the documentation on the loan must be completed within 30 days to avail of the prevailing interest rate on offer at the initial application for a mortgage. This is of particular relevance in times of rising interest rates.

Equity is a key factor in determining the amount of interest payable over the duration of the mortgage. The relationship between equity and interest rates is inverse; the higher the equity the borrower has, the lower the amount and percentage of interest payable will be. Banks will always tell potential borrowers the minimum amount of equity they need to raise to qualify for a loan (often 8% to 10). However, they will be more hesitant to disclose what the amount of equity is to qualify for the lowest possible interest rates the financial markets will bear.