Happy Hump Day. I hope you are getting through it with flying colours. With this weather, what’s not to like? For us at Bosley Real Estate, Wednesdays are Mastermind Days. We believe in the power of inter-office discussions so much that we actually hold two per week, one Uptown and one Downtown. Great discussions every week, so if you missed today, you missed some great conversations follow-up discussions about Bully offers. So let’s get started.
If you are a buyer these days, chances are you are feeling the fatigue of the chase. It is getting tough out there and I have talked about some interesting ways buyers are trying to get any added advantage. This post will touch on one. One such advantage, potential as it may be, is to have your agent try to submit an offer ahead of the offer date. This is known as a Bully Offer. You have to know your stuff to either make a Bully Offer or to present one to your clients. The discussion at Mastermind today centred around whether or not you disclose the contents of the offer before presenting. Lets say an agent wishes to submit a Bully Offer. The listing agent asks what the terms are but the buying agent doesn’t want to say. We have been taught not to talk price before the presentation but Bullys are a little different. Our group agreed that they would communicate the details of the offer to the client before presentation. Here’s the thinking on that. If I have a listing and you call me with a Bully Offer, I want to know that it is worth my client’s time. If the house is $499k and your Bully is for $640K I will go to the end of the Earth to get this information to my clients. For a Bully of $520K I will still try to find them but I probably won’t recommend that they take the time to look at it. We also talked about agents who say they can’t get in touch with their clients. Do you actually expect me to believe that your clients cannot be reached? Today? Seriously? No phone? Seriously? That just doesn’t fly (unless they are actually flying, but most likely they will touch down in the next few hours). So when they say they can’t be reached, what the agent is really saying is “I don’t really want to work tonight to get the best price for my client”.
The take away on this is pretty simple and goes back to something that I focus much of my energy on. Give your clients all the possible scenarios when you list their home. Let them know that the house might not sell on offer day, it might sell in multiple offers, or they might get a Bully offer. Outline the disadvantages and advantages of each situation and let them decide what to do. If the clients categorically do not want to look at offers BEFORE the date set for offers, have them put it on paper. Scan it and send it to your phone so that you can forward it to potential Bully Offer agents. Simple. Yes, it is a lot more work, but you need to be prepared for any eventuality.
If this is Wednesday, it must be Mastermind. One of my favourite days of the week. What I like most is when everyone talks at once. While it is a bit chaotic it is great to see that everyone wants to add their two cents into the conversation. It’s a clear indication that everyone is interested and paying attention .
Today, we were happy to have Joe Sammut from Mortgage Architects http://www.mortgagegate.ca/index.htm come in to talk a little about the mortgage market. Some agents had expressed some concern that buyers were getting into financial jams before closings because properties were not appraising out. Joe was quick to point out that he was not seeing this trend however he focused the discussion on a couple af main points;
- Yes, bank appraisers are being more conservative and some secondary lenders ( non big five banks ) are using “fire sale appraisers”.
- Whether you are buying or simply refinancing, it is important to remember that appraisers don’t appraise over value. That is, don’t ever expect that $500k appraise at $550k.
- Paying over the asking price will pretty much guarantee more than a quick drive by appraisal.
- For the most part, the lender looks at three key lending criteria; occupation, down payment and credit.
- There is some tightening for self-employed people, offshore investors and new immigrants.
So the question of the day was; how do we ease the stress of financing? Not surprisingly the work starts with us on the front lines. It is important to have an honest conversation with your buyer from the beginning. Don’t be afraid to ask the big questions;
- If there is a shortfall between the appraised value and purchase price, do you have the means to make up the difference?
- If the interest rate goes up, will the mortgage payment still be manageable?
- Are you aware of the closing costs involved with this purchase?
- Do you have enough money available to do minor repairs or improvements?
The take away here is that communication is the key to a successful real estate transaction. You are working with a buyer to find them a home that they can afford. If the client is unwilling to provide you their mortgage details at least stay in contact with their mortgage broker to make sure you don’t sell them something they can’t afford. It is important to either have a strong understanding of the mortgage market or have a good broker who is an available member of your team. Perhaps that’s why they say that behind every great real estate agent is a great mortgage broker.
Naturally I hope to hear from you if you have anything to add to this post. Have a great week!