DAVID COOPER / TORONTO STAR
Whether you’re looking for a condo or house, just make sure the value of the property you’re bidding on will be accepted by your lender – even if you have a pre-approved mortgage.
Many buyers get pre-qualified for financing before they start looking for a home. This means that they find out in advance the maximum amount that a lender will provide to them based on their income. The mistake is thinking that no matter what home you buy, the lender will just give you the money you need, provided that it is within your approval limit.
Buyers need to realize that just because a lender pre-approves you does not mean they will lend you all the money. The property you buy must, in the lender’s opinion, be worth what you paid for it.
Most real estate agreements are conditional for a few days on the buyer arranging satisfactory financing. In many cases, however, the buyer waives the condition before the lender conducts an appraisal of the home itself. Even worse, in most bidding wars, buyers do not even include a condition on financing, hoping that their pre-approval will be enough.
In the last two months, I have seen two situations where lenders requested an appraisal of the property just days before closing, and when the appraisal stated that the house was not worth what the buyers paid, the lender just cancelled the loan. The buyers had already paid the deposits and were preparing to close. Now they faced the possibility of losing their deposits and getting sued.
In both cases, we were initially able to arrange for an extension of the closing date to give the buyers time to solve their problem. In one case, the mortgage broker got creative and was able to find the buyer a new mortgage, albeit at a higher interest rate and for a shorter term than the original mortgage. Still, the deal got done.
In the second situation, the buyer had purchased a brand new condominium from an original investor, who flipped it just before closing. The original price was $200,000 when the development started four years ago, but the buyer today paid $240,000. The problem was that when the bank asked for the appraisal, the appraiser said that since other investors closed at the original price of $200,000, he would not agree that the unit had in fact appreciated to $240,000 today. The buyer was fortunate to have relatives who lent him the shortfall to close the deal.
Buyers, when you are looking at potential lenders to assist with your home purchase, ask in advance how long it takes them to do their appraisals. Many lenders can get this done within 3-4 days, so that you can have assurance that you will get all your money before you have to waive any financing condition.
Be very careful about bidding on a home without a financing condition, unless you budget an additional 10 per cent down payment in reserve, just in case the lender surprises you just before closing with a reduced loan. Being prepared will assist you in closing on time, and with the right amount of money.
Mark Weisleder is a Toronto real estate lawyer. Contact him at mark@markweisleder.com
By: Mark Weisleder Real Estate, Published on Fri Jun 14 2013
You were a incredible help during our recently sold home! The photographs you took were brilliant stunning! Your expertise is second to none. Futhermore, you brought a full sized coach filled with possible buyers to our home for viewin. This is truly amazing! Buring our listing period, we view many offers from other agents. But they weren't able to get the price we desired. Together with yor trememdous connections fo clients, you brought just the right purchaser for our home. Finally it was listed and sold by your own clients, in which we were very satisfied with. Both of you were thorough an thoughtful and we will certainly recommend you to friends & family who are looking for an honest, sincere, experienced and hardworking realtor.
Bonnie & Daniel, we can't find enough compliments to say how much we appreciated your hard work in selling our Bayview Hill property for us. Your ongoing communication with us has been superb, and we felt like you were not only our real estate representative, but a close friend as well. In addition, home renovation can be a very overwhelming process for all home owners. But you two were always one step ahead and provided us with everything we needed without overwhelming us in anyways. It was so impressive seeing a coach of 30 potential home buyers came into my house for showing. This is so fascinated and incredible. We never saw any other agents selling houses like this! I believe this could only be done by your because of the years of experiences and you guys are truly the real estate pioneer of Bayview Hill.
Within one week after listing, our home was sold for the price above our expectations! We would highly recommend you to anyone either selling or purchasing. You are very passionate and we have found you to be the best real estate agent we have had the please of dealing with. Thanks again for everything you guy did for us and congratulations on a job well done!
We would like to extend our gratitude for your professionalism and hard work in selling our house in less than one week. We were highly impressed by your knowledge f the local market and key community contacts, which assisted us in selling our house quickly and efficiently. It was a pleasure working with both of you, as you each brought your unique skills and expertise to the table. With Daniel's excellent negotiation skills and Bonnie's keen eye for design and detail, the two of you make the ultimate realtor team.
We would highly recommend your services to anyone looking to buy or sell !
I would like to recommend both Daniel and Bonnie for their professionalism in the services they provided us during the sale of our home in Bayview Hill located in Richmond Hill.
They were both very helpful in assisting us to ensure that we are ready to put our hoe on the market along with their expertise in knowing what our home should be listed at. Can't imagine that they can produce much higher than asking price and more importantly that the sell price is higher that other local agents quoting us!
Both my husband and I would recommend their services as theya re experts in their field, they were very ethical in how they managed the sale of our home. We have deep impressions of the integrity of Daniel: walking his words. Both Bonnie and Daniel, the # WAN team works very closely at every issue personally. Most definitely we would recommend them to anyone who wants true professionalism, honesty and mostly that they work for the seller.
Dear Bonne and Dan,
First of all: THANK YOU BOTH for every way you have helped us accomplish out goal of selling our home for the highest value. When we decided to sell our home, where we have lived for 25 years, we inerviewed 5 real estate agents with signs in our neighborhood. The Wans had far more knowledge, experience, and success in our area than anyone else, wih 22 years in Bayview Hill and over 1000 homes sold -- plus they live here, have raised their chrildren here, and care deeply about our community. We also related to your enthusiatic, tireless, supremely ethical style of work. Our home needed some preperation before listing. Again your expertise in identifying, prioritizing what to do (and what not to do) and even finding an independent contrator to complete the work excellently, on a tight time schedule was amazing. The contractor was as gracious and as tireless as you both, working 16 hour days to finish on budget, on schedule. Also, your community contacts and stellar reputation in the town of Richmond Hill were invaluable in overcoming any issues. Selling any house seems very stressfull, and you were there for us, no matter what time of day (or night), no matter what issue. We never met anyone who works harder than you. Even after our home went under contract, you stayed in touch constantly, communicating and strategizing to ensure completion of the sale in a way which met OUR interest to value our home at the highest possible price. While we noticed other agents lower prices, perhaps to meet their own needs during the process. But the best bonus was far more important than money; as a result of our admiration and joy in working with the Wans, we became friends, a friendship we hope lasts a lifetime. By the way, if we ever have another house to sell, we will choose Dan and Bonnie again, for all the best professional reasons.
THANK YOU.
Bonnie and Dan,
Let me first thank you for working os hard and late to make this sale possible. I first did not appreciate your offer to help and took your honest effort with suspicious.
You have to understant that after previous two "sales" and countless other agents who decieved us and wasted so much of my time I was hesitant to give try to someone unknown to me.
I am glad I chose you. I am sorry again for not realizing you as a hard working and outstadning gentleman.
I appreciate your work and will recommand you two to anyone looking for the house to buy/ sell.