Seven questions that will help test "expert" advice

Everyone thinks they’re a bit of a real estate expert, and while that makes for fun family BBQs, it doesn’t necessarily mean you should take everything as gospel.

When anyone offers you their two cents (and sometimes more) on the property market, it’s worth asking the following questions to determine how much you can actually rely on the details.

Some of these you can ask to the individual themselves, while others are for you to consider.

Here’s our seven questions to be asking:

1. Who is paying them?
   
   Following the money has always been a good strategy in real estate. Someone you are paying is more likely to have your best interests at heart.
   
   For instance, a buyer’s agent that you pay a fee to is more likely to be working for you and giving you good advice than the real estate agent who is receiving a commission from the vendor’s sale. Find out where they get their money from, and any conflicts of interest that may arise from kickbacks or commissions.
   
   
2. What data is this information based on?
   
   Asking to see the statistics and source material behind someone’s assertion can help you out.
   
   Everyone’s interpretation of information differs, and it’s worth figuring out if you agree with the interpretation being provided by the guru you’re speaking to.
   
   You may also discover issues in their source data, or a selective choice of information. Head back to the source. If they are hesitant to reveal their statistics and sources, it’s time to be wary.
   
   
3. Do they have any personal experience with what they are telling you?
   
   Personal experience can give someone a specialised level of expertise, and a mentor who has “been there” can quickly point out issues with your renovation plans, or tell you what you might need to watch out for. This can be invaluable.
   
   However, beware of the expert who hasn’t done it themselves before and relies on living through others’ experiences. Certainly, not every person must have personal experience, but it can help understand where they’re coming from.
   
   For those who have invested and been burnt in the past, you may also find that there is some personal bias and risk aversion. Ensure that you know what experiences they have had so you are aware of any potential bias.
   
   
4. How much professional experience do they have?
   
   For those in the industry, it’s worth knowing what education they’ve had and for how long they have been in the profession.
   
   While this doesn’t mean that anyone without that level of industry experience cannot provide good information, and certainly doesn’t suggest that all industry veterans are well placed to assist, it does allow you to be on your guard.
   
   For those that are not in the industry, such as family and friends, it’s worth knowing what their other qualifications are. There are many overlapping and useful details
   
   
5. Why are they offering you the information?
   
   As above, if you’ve paid for the services that is one reason someone will provide information. Otherwise you want to know whether they’re selling you something or trying to do a good deed.
   
   Understanding the motivations of the expert will go a long way to explaining the type of advice they’re dishing out.
   
   
6. Is the information ratified by any other experts?
   
   Knowing whether many other professionals or knowledgeable property buyers agree with this individual can help you find out problems before they affect your purchase.
   
   Look for the arguments other experts have made against them, either in news articles online, forums or just by speaking to them, and think carefully about whether these counterpoints have much ground. Take the opposing arguments to that expert to really test their advice.
   
   
7. How have they made their advice relate to you?
   
   If their advice is generic, it’s worth being wary.
   
   If they know nothing about your finances, tolerance for risk, background and future plans, then it’s likely not prudent for them to be suggesting a first time buyer drops $800,000 on a mining town investment. The more they ask about you, and the more flexible they are around your personal circumstances, the more likely they are actually considering what investment suits your profile. There is no one size fits all for every buyer.