Agents Acting Crazy!

by Darrin DeRoches May 15 - 21, 2014

I recently wrote about multiple offers and how some are working while others are falling flat on their faces. This is a little more insight into how agents are acting crazy.     I was in a multiple offer situation with two other offers. The usual back and forth happened and it came down to my offer and another offer which had conditions. The sellers were trying to get top dollar, which is understandable. The next move was where the crazy part came in. The agent asked us to go up another ten thousand and the property would be ours, since we did not have conditions. My buyers did not want to raise their price, but the agent told us it would be ours. I stepped into the office and told them that we would go up the ten grand and sign the deal. I stepped out so that they could do the paperwork, and twenty minutes passed. The agent walked out and told me that they were going to go with the offer that had all the conditions. I asked about her ethics and the seller’s word but greed stepped in and they wanted every dollar out of the deal. Again, no sour grapes here but you told me it was ours and then you figured you could squeeze out a few more dollars and take a chance on the deal with the offer that may not close due to conditions.     The agent then has the balls to ask if we would wait the five days for the conditions to play out and if the other offer did not close, would we still be interested? It the old adage “that a bird in the hand is better...”. This agent and seller just bold faced lied to me and now they want us to wait with another ten grand in our hand to buy their property if the other offer falls through. I told them that my clients still wanted the house, but that we would not pay the extra ten grand and told them to call me when the other deal falls apart since they were over paying with conditions and I doubted that the bank would approve the deal.     I spoke with another agent who had the same type of issue this week with the same company who did a “hold off” offer where no one made an offer. This agent then made an offer just ten thousand under asking since there was no competition. The seller’s agent brought back a full price counter offer. So, you overpriced the property to where no one wanted to make an offer and you promised your sellers that they would get competition and top dollar and now you want the buyer to pay full price to make you look like you know what you are doing. The buyer agent tore a strip off the agent and then countered with just under asking. Another property this week that did not get any offers after holding off offers dropped 20 grand and the agent is calling around begging for offers. Crazy agents – price your property right and let it hit the market – cause excitement and garner multiple offers if it is worth it. V     Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at sold@uniquerealty.ca.

CHMC Cuts Second Mortgage

by Darrin DeRoches May 8 - 14, 2014

Here we go again with the mortgage rules getting tougher and tougher. The CHMC has decided, in all their wisdom, not to insure a second home for individuals looking to buy either a cottage, income property or even a second home in a divorce. They will not insure the mortgage to a second property and without insurance you cannot secure a mortgage unless you put down 20 per cent, which in turn will save you thousands of dollars on the insurance.     So what are you options with this new rule? As we just mentioned, you put down 20 per cent and you can get a mortgage just about anywhere. You put the second mortgage into a family member’s name and gift them the down payment. The last option is not to buy the second home. Actually, there is another option by using private–sector mortgage insurers.     Genworth is the most popular insurer who will still allow a second mortgage but they tightened up their lending practices. The property can only have one unit in it. So no income properties with them. You can buy the cottage but no duplex or even a nanny suite for your aging parents if it has a self–enclosed apartment in the house. Genworth would allow you to buy a property for yourself to live in or a family member, but not now. Think of a divorce situation and you would like to have income coming in with a second unit — not now. Rent or hope your ex–spouse can qualify on their own.     This new rule will allow the secondary market to charge even higher insurance rates for these second homes and devalue the price of income properties since only those with 20 per cent down will be able to buy them. If you are thinking of buying a home in the near future, you may want to consider buying an income property first and qualifying with as little down as 5 per cent. This will then create a great investment and in a few years look to buy a second home for yourself since it will be only one unit and all of the insurers will give you insurance with 10 per cent down instead of paying 20 per cent and higher rate of insurance.     I have clients this week who are using this strategy so that they can look back in 20 years with a great investment property and a family home. This may seem simple but it can make them over a half of a million dollars by buying the income property first and qualifying for more and putting down less.     This change of insurance by CHMC happens on May 30th so most people would not be able to do anything about it and worst of all, most people do not even know anything about it. Information is key and using a broker who is on top of the market can save you thousands today and make you a million over the next 20 years. V     Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at sold@uniquerealty.ca.