Last week I ran into a situation with a client who didn’t understand what they were signing. Fallout was expensive for them.
The client sells their Toronto home and moves to the Okanagan for a well-deserved retirement. We both grew up in her BC and would love to come back one day. They went on an expedition and found a patio house in Osoyoos that ticked all the boxes.
They created an offer that included a fairly standard two-week funding eligibility clause, but did not add a clause that covered the sale of their home in Toronto.
They returned to Toronto and arranged financing with the bank, including arranging bridge financing in case the sale of the house was not completed before the purchase was due to be completed. I put my house up for sale on my first day. In a few viewings he has been two weeks and no offers at home.
Meanwhile, there was an offer to back up at Osoyoos’ house. My client had six weeks left before they were due to close on their new home. rice field. He told them it would definitely sell. No worries.
And he said even if it didn’t sell, they would be a funding option.
Based on the trust of the real estate agent, they excluded the loan terms and finalized the purchase in the Okanagan.
It’s been a week. Two weeks have passed. 3 weeks have passed.
Fast forward 10 days to closing their new home. Crickets. Not an offer for them to consider, not even a modest offer.
They called the bank and asked how they could arrange an alternative loan. The bank sent them to a broker in Ontario, who contacted me. Most private lenders prefer larger centers and many private lenders are currently underutilized as more and more clients have to go the private route.
After an incredibly busy and stressful week, our client just completed the purchase of their new home.
I mentioned at the beginning of the story that this was an expensive journey for the client. Because the request was last minute, the private lender who provided the approval rushed to charge the extra. Lawyers almost doubled the rush fees. The client is currently receiving a monthly payment of $3,500 for a new home, plus mortgage payments for the current home until the current home is sold. This cost the client at least $40,000 more. This is an amount that could have been avoided.
Rolling the dice in home sales was still a risky move in the past few years, but the prospect of selling a home typically quickly and often with multiple offers favored the seller. With the rapid rise, the market has definitely cooled, making this a very risky proposition.
In a previous column, I talked about the risk of being sued because an investor chose to walk away from a property and felt it would hurt less than going ahead with the purchase if the property were to drop in value significantly. In this case, I truly feel that the client did not understand the implications of their decision to form the company rather than sell it.
If you’re thinking of moving now (or in the future), the importance of working with a trusted mortgage professional cannot be overemphasized. Do your best to take the emotion out of the home buying process and consider the possible consequences of moving on without a solid sale.
There are always other houses. Losing a significant portion of your hard-earned money puts a dent in your wallet.
Make sure you have someone you trust to guide you through the process.
This article was written by or on behalf of an outsourced columnist and does not necessarily reflect Castanet’s views.