by John O'Rourke
on Wednesday, January 24th, 2018 at 1:08pm.
Real estate transactions are never done until the title is transferred. Until that time, a real estate transaction can be a puzzle with a piece still to put in place, there are often bumps in the road and unexpected issues that need to be addressed, both on the side of the buyer and the seller.
The best way to prevent deals from going sideways is to prepare as best you can. In our region many of our clients live out of town and often rely on us as their representatives to undertake much of the due diligence required to make their purchase or sale go smoothly. This may sometimes include having tough conversations, doing some work upfront and being open to collaborating when things get a little challenging.
Here are some of the most typical hurdles in a transaction and how to navigate them.
Appraisals Homes and cottages that do not appraise high enough to meet the lenders requirements. This is not a huge problem in our area but it can be, particularly in strong markets, where multiple buyers compete for the same property. The price sometimes ends up higher than the listing price and will very likely not have comparable sales to substantiate it. It actually creates a new comparable for the area. Even if multiple buyers have offered to pay a price, a third-party appraiser, who isn’t part of the deal, sometimes won’t agree on the seller’s price.
The best way to avoid appraisal issues is for the REALTOR®, the buyer and their mortgage broker to work closely once there is an accepted offer. Understand the appraisal process and make sure the listing REALTOR® is present at the time of the appraisal to tell the story to the appraiser. Seeing an accepted offer price and address on paper is one thing. But to know there were 25 people through the home or cottage in 3 days and 6 offers received provides color and context.
Inspections It is the biggest fear the buyer and the seller have…the call from the inspector stating that there are problems. The inspector found some major deficiencies with the home. When that happens, the deal can easily fall apart.
Unexpected inspection issues, particularly large ones, can cause scared buyers to walk away. For buyers who still want to move forward with the home, it means renegotiating the purchase price or asking the seller to undertake repairs prior to closing. Another round of negotiations means the transaction can collapse quickly if both parties can’t work together.
When this happens, it’s helpful for all parties to put emotions aside and work together. If the buyer wants to buy, and the seller wants to sell, it means compromising, particularly for the seller. If this buyer walks, the next buyer could have the same problem. In this circumstance a well-trained REALTOR® will likely be the glue that can hold the deal together.
One of the best ways to avoid transactions going south due to inspections is to have the property inspected before going on the market. Iron out any issues that may arise and then price the property accordingly.
Remorse Somewhat surprisingly this happens sometimes, even here in lovely Muskoka! There is a period of second guessing that sometimes results in a buyer or (rarely) the seller wanting to cancel the transaction.
For the buyer, it happens more often in situations where there are multiple offers and bidding wars. A buyer gets caught up in the excitement and wants to compete, only to find themselves scared and feeling remorseful once the dust has settled.
For the seller it can be as simple as they are faced with moving away from a place that is filled with memories.
Again a well-seasoned REALTOR® can often reassure the parties involved and bring a perspective to the situation that is not tainted with the emotions that a buyer or seller inevitably have to deal with.
At Royal LePage Lakes of Muskoka we have a great team of REALTORS® who you can be assured will be able to guide you through all the possible hurdles that may arise in a real estate transaction.