Mortgage frenzy

Back in January, I shared my thoughts about the challenges that potential buyers are having trying to buy homes right now.

I likened it to an episode of The Amazing Race.

I’m starting to feel like its more a season of the series as opposed to an episode. It is not just our market. I’ve spoken with mortgage colleagues, and it sounds like clients are facing the same challenges across the country.

I finished my last column with my desire to see a more balanced, less frenetic market.

During the last month, I’ve seen a few sellers scrambling to buy a property once their home sells. Purchasers are coming in with highly desirable offers – writing offers with figures well over the asking price and tight closing dates.

Due to overwhelming volumes, lenders are starting to bog down. Turnaround times are creeping up. And due to the prices offered, I’m seeing fewer homes pass lenders’ AVM systems so more appraisals are being required by lenders.

If you haven’t heard the term before, google explains that AVM stands for Automated Valuation Models.

AVMs are statistically based computer programs that use real estate information such as comparable sales, property characteristics, and price trends to provide a current estimate of market value for a specific property.

An AVM report provides a written summary of the results.

Part of what we do as mortgage brokers is find the right fit for our clients. Each lender has different niches, policies, and procedures. At the beginning of March, I submitted to one of my favourite lenders that normally has approvals back within 48 hours.

I waited 12 days for an approval on a straight forward purchase with amazing clients. The approval came with one of the conditions being an appraisal to confirm the value.

Appraisers are being inundated and in some centres are booking a week to 10 days out.

This is a serious challenge right now because I’m seeing offers with five or seven days for subject removal. With the market as hot as it is, sellers are not keen on signing extensions.

Home inspectors are swamped and also booking over a week out in some cases.

To add another level of complexity, lawyers and notaries are swamped. One of my clients went to four different lawyers before she could get someone to act on her behalf for an April 30 closing date.

Apart from the stress of trying to make sure all of these moving pieces line up for our clients, my major concern is potential buyer’s remorse down the line.

One of my clients received a brilliant offer on his home, with a closing date of (you guessed it) April 30. He was fortunate to nail down an accepted offer on a home that seemed to check all the boxes. I had an approval in place for him. Then he panicked.

He collapsed the offer he had in place, thinking he would find something else that he would be happier with. He wrote an offer on another property and we finally have an approval in place on the second home.

Chatting with him last week, he said that this was certainly not his dream home but there was nothing else available.

This felt frustrating to me. Clients are panicking and writing offers on properties they don’t love to make sure they have a roof over their heads. This can be an expensive game if you decide you truly hate the home and need to move again.

If you are trying to buy a home, please try to allow for at least two weeks for subject removal for your financing. Touch base up front with whomever you want to work with for your legal documents to make sure they can act on your behalf.

Most important, be patient with the team that is working so hard to help you buy your dream home. There is a lot of work that happens behind the scenes, and in the whirlwind of activity and emotion it’s important to maintain perspective.

Quick reminder – if you are a homeowner, don’t forget to complete your declaration for the Speculation Tax. This needs to be completed by March 31.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.