By Peter Dunn 8:58 p.m. EST January 4, 2014

I firmly believe in the importance of hiring a competent financial professional to help guide your financial life.  This probably doesn’t surprise you. What may surprise you is who I think is the most important financial professional in your life.

It’s not who you think. Consider the choices. Or course there’s a financial planner, an insurance agent, an accountant, and even a lawyer. But I believe the most important financial professional in any of our lives is a Realtor. A bad Realtor can create havoc in your life for 30 years or more, while a great Realtor can insure stress-free living within your financial limits.

Realtors help people make the largest purchase most of them will ever face — and take-on more debt than they will ever take on again. I don’t know about you, but to me, those two factors alone make the Realtor the most important financial adviser a person can have.

Here’s why most people don’t feel like I feel: I believe a financial adviser’s job, whether it’s a stockbroker or a Realtor, is to help prevent mistakes.  There’s an old adage in the investment world: The first step in making money, is not losing money. A great financial professional will assess the situation, calculate risks, and advise you on what not to do. Show me a financial professional that is a “Yes Man,” and I’ll show you a worthless financial adviser.

A great Realtor will tell you the truth, even when you don’t want to hear it. Here are the truths that a great Realtor will help you hear.

No. 1: Some properties don’t appreciate in value and may actually decrease in value, even during normal market conditions. This is a tough pill to swallow for a new home buyer, particularly an excited new home buyer. Some “brand new” homes in Central Indiana have fallen in value, during normal market conditions. This can create a series of very scary problems. Stagnant or falling home values can be especially troubling for people who force themselves into a low-price home, in lieu of being a renter. Homeownership should never be rushed.

No. 2: Determining the affordability of a home has become a tremendously subjective process. Unfortunately, home affordability is not determined by whether or not a financial institution is willing to loan you money. In my opinion, the online housing affordability calculators are the most damaging financial calculators on the market today. Loan approval is never confirmation that a purchase is objectively affordable. A great financial adviser (a Realtor) can prevent this exhale-inducing loan approval from becoming the catalyst of a financial disaster. But what Realtor is going to to speak up and potentially speak out of place? A good one. A really good one. I believe that a mortgage payment should not exceed 25 percent of a person’s monthly net income. But affordability doesn’t stop at payment affordability. I also prefer that home buyers have at least 10 percent of the value of the home to put toward a down payment. My theory is pretty simple, if you can’t scrap together 10 percent of the value of the home, then you are unlikely to be able to afford the rigors and costs of home ownership.

No. 3: There is a bad time to buy a home. This has nothing to do with real estate as an investment. In fact, unless you’re willing to sell your home at the drop of a hat, then it’s not an investment. Calling something an investment often justifies poor decisions. If there’s a right time and place to buy a home, then there’s obviously a wrong time and place to buy a home. I want a Realtor that sings this song. My advice to you: Find a great Realtor. Without a doubt, the biggest financial issues I’ve seen in people’s financial lives over the past 15 years, could have been prevented by a difficult conversation with an honest Realtor. When a true professional tells you something you don’t want to hear, listen harder. Don’t dismiss the truth.

Have a question for Pete the Planner? Email pete@petetheplanner.com or visit www.petetheplanner.com.

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