As a former mortgage broker, I was known to tick off more than a few real estate agents by asking that insane question of would-be home buyers: "How much are you willing to spend on housing each month?" We'd then look at some papers, run some numbers, then I'd shoot out an email to the buyer's agent that would say something like: "Your client qualifies to buy a house worth $1.5M, but due to other priorities in their family life they want to spend only enough to buy a house worth $750k."
Fast forward to the return email from the agent: "I hope you didn't ******* tell them that's all they should spend!!!???"
Yeah, kiss that big commission good-bye, dirtball. By running the numbers to calculate both the maximum purchase price and the preferred purchase price, I may have just kept a property out of foreclosure, helped a family send their kids to college, or made saving for retirement a little easier.
Family financial planning is not as simple as it once might have been. Complex and ever-changing tax codes, the uncertainty of Social Security, the dismantling of the American healthcare system...
Life has, indeed, become complicated. Creating a road map to family financial success, including how much to spend on housing, is best done by qualified financial planners before the buyer begins a home search. As real estate professionals, our standard of care should include referral of a buyer to a financial planner, the same way we recommend they get a roof report or property inspection from qualified inspectors.
As Dirty Harry Callahan said, "man's got to know his limitations..."
Yes, this is rocket surgery...
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