Far out Friday: Quite possibly the world's worst broker commission, ever

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Imagine the commission on this home loan: The local council in Stoke, Staffordshire, in the UK is offering homes for sale at £1, or A$1.49 in a desperate bid to reinvigorate the local property market.

With the average up-front commission rate in Australia standing at 0.66%, that would leave any hypothetical broker involved with a heady sum of A$0.0098 upfront, plus a monthly trail of around A$0.0026.

The UK’s Daily Mail newspaper reports that, as well as a boarded-up building, the owner will receive a £30,000 (A$44,574) low interest loan to renovate the property as part of the £3 million scheme funded by the council and the government.

Unfortunately, the buildings in question reside in one of the area’s most crime-riddled neighbourhoods - and any potential owner must renovate the house and live in it for five years before they’re allowed to sell.


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  • Phil in Finance on 22/02/2013 11:29:08 AM

    You can assume a mortgae loan would not be required for a <$1.50 purchase price but may be needed for the renovations that would cost much more depending on the property condition?
    House property replacement insurance would be the real minefield in this situation. It may encourage "accidental" fires or be simply uninsurable for replacement based on the purchase price?

  • Ian on 22/02/2013 11:15:34 AM

    You forgot to deduct aggregator fee's from the commision. A flat fee model could turn out to cost you money to write the loan, those "lucky" to be on a percentage split might just stay in the black. I hope they don't have capital gains tax on owner occupied homes in the UK that could be a nasty sting in the tail in five years time.

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