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The-Mortgage-Gal

Private sales can cost more

I work with clients who are trying to buy or sell a home privately.

Sometimes this is because they feel it makes sense. For example, tenants are buying the home they are renting from their landlord. Other times, it is because they want to save money by not paying a commission to a realtor.

Sometimes the process goes smoothly. Sometimes, not so much.

Many people underestimate the work that realtors do behind the scenes.

One of my first experiences with clients purchasing privately was quite the eye opener. My client was buying a rural horse property from someone she knew socially.

They negotiated all of the terms amicably and she took the information to her lawyer.

The lawyer wrote up a purchase contract for her.

She initially approached a chartered bank and at the last minute, the bank declined her file.

She called me to see if I was able to help her. I took her application and said it looked like I would be able to find a lender.

The lawyer drew up documents to extend the offer.

The insurer required an appraisal. Due to the location of the property, it took over a week to get the appraisal done.

The lawyer drew up another extension document.

The appraised value of the property came in considerably lower than the agreed upon price.  The buyer and seller renegotiated the price and dates.

The lawyer drew up an amendment document.

You get the picture. By the time her sale completed, her legal bill was almost $5,000.

If they had a realtor involved on the listing side, my guess is the home would have been priced appropriately from the get-go.

If the buyer had retained a realtor to help negotiate on her behalf (some realtors will do this for a flat fee charged to the buyer), the realtor would have been able to help her navigate these extensions and amendments without charging her $300 per hour which is what she paid her lawyer.

Last summer I worked with a client in northern B.C. who bought a home privately from his landlord. He downloaded a sale agreement and a property disclosure statement form and completed both. He and his landlord both signed.

We had an approval from a lender and were ready to move forward with the purchase.

The seller took her copy to her lawyer. Her lawyer said she needed a contract drawn up by a lawyer and that the document that had would not be suitable. It took well over a month for the landlord’s lawyer to prepare the replacement purchase contract.

Meanwhile, my client had to push the closing date back twice while waiting for his copy of the new offer. I still am not clear as to why the original offer was deemed not to be suitable as I see many clients use the same document.

There was a great deal of stress for my client as he felt he was being strung along. He had missed out on other properties while he patiently tried to sort this issue out. I was very grateful once his mortgage was eventually finalized.

Most recently, I am working with a young couple who are buying a private listing. The insurer requested an appraisal in this case as well. The appraisal came in with a value $20,000 less than what they have agreed to pay.

Due to the conditions in their market they are likely going to move forward and pay the higher price.

This means that they have to come up with the additional $20,000 as lenders use the lower of the purchase price or the appraised value.

If they had a realtor representing them, they would have gone back to renegotiate the price. As it is, they are afraid of offending the sellers.

Realtors put in many hours behind the scenes that most clients are not aware of. They work hard to make the sale or purchase journey as smooth as possible for their clients. They explain to their clients what to expect step by step as they move through selling or buying a home.

They also make sure to protect their clients by adding terms and conditions to do exactly that.

Perhaps most importantly, they help remove emotions from the equation and help buyers and sellers come to a mutually acceptable agreement.

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About the Author

Tracy Head and Laurie Baird help busy families find mortgage solutions. Together they have more than 45 years of experience in the mortgage industry.

With today’s increasingly complicated mortgage rules, Tracy and Laurie spend time getting to know the people they work with and help them to better understand the mortgage process. They support their clients before, during, and after their mortgage is in place.

Tracy and Laurie work closely with their clients, offering advice and options. With access to more than 40 different lenders, Tracy and Laurie are able to assist with residential, commercial, and reverse mortgages in order to match the needs of their clients with the right mortgage package.

They work closely with their clients to find the right fit, and are around to provide support for years down the road!

Contact them at 250-862-1806 or visit http://www.okanaganmortgages.com

Visit their blog at https://www.okanaganmortgages.com/blog

 



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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