Verbal offers serve one purpose; to "save time" for "professionals" who get paid well to not cut corners.

There's only one way to avoid misunderstanding when negotiating to buy or sell a home. That is to have the complete details in front of you.

Transcript

Over 27 years in the business, I've literally been involved in hundreds of negotiations and they often unfold the same way.

The buyer's agent writes an offer and brings it to the seller's agent who presents it to the seller, who writes a counter-offer and returns that to the buyer's agent.

And the buyer wants to try another number, and rather than write a new offer, their agent suggests that "well, I'll just call the seller's agent, and I'll discuss it with them."

And usually, they're looking for a concession in the range of a couple of thousand dollars to bring the deal together. But they haven't taken the time to actually write another offer, and my response to them is always the same. I'd be happy to present that to my seller if you would bring me another offer.

And oftentimes that buyer's agent calls back after a half an hour or an hour and says "it's okay, my buyer decided to accept the counter-offer." And my perception of what's happened here is that somebody just doesn't want to take the time to write another offer, and they convince the buyer to close on that counter.

If you're involved in a negotiation, do not fall for the verbal "let's discuss this" position. Insist that your proposal be put on paper, or on an electronic document as the case may be today.

As the old saying goes, a verbal offer is not worth the paper that it's written on. And that's why the Real Estate Act, one of the definitions of an offer is that it is made in writing.

So insist that your agent put that offer in writing so that you know that it's being presented and considered by the seller.

Good luck.

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I'm upping my Facebook and Instagram game. Follow me to receive updates on the Saskatoon real estate market and insights I've gained managing thousands of real estate transactions.

TeamFisher.com hosted nearly a quarter of a million user sessions and displayed more than 1.2 million pages to our visitors in 2019. If you have a Saskatoon area home you'd like to sell, we know how to get people looking at your home. Reach out to me directly to engage our team and learn about our processes.

I’m always happy to answer your Saskatoon real estate questions.  Reach out by voice or text at 306-241-6676 or email me at norm at teamfisher.com

Norm Fisher

Royal LePage Vidorra

The Canada Mortgage and Housing Corporation (CMHC) announced mortgage default insurance rule changes this week that will impact home buyers using their service in three significant ways.

This two-minute video provides an overview of how the new rules, effective July 1, 2020, apply. 

Transcript

When you purchase a primary residence in Canada with a down payment of less than 20%, you're required to purchase mortgage default insurance through one of three Canadian providers that offer service in Canada, CMHC being the most prominent of those.

This week, CMHC announced some changes that are coming July 1 to their program, and I had an opportunity to talk with Tyler Hildebrand at oneSt. Mortgage yesterday, and he's brought me up to speed on those changes.

The most significant of the three is the change to the debt-service ratio. That is the percentage of your income that the lender will allow you to spend on mortgage service, property taxes, and heating. Prior to July 1, CMHC's limit is 39% of your gross income. That's gonna drop to 32%. That's gonna affect your buying power by roughly 10%. So a $400,000 house pre-July 1, 360 afterward.

The second change that's also fairly significant is at least one buyer on the application, the mortgage application has to have a credit score of 680 or higher. A credit score is a number that a credit bureau puts together based on your past performance in repaying your debt, and perhaps the amount of debt that you're carrying now. You're definitely gonna wanna revisit your mortgage broker and find out if your preapproval is still good because this is gonna affect a lot of people.

Finally, they're eliminating the ability to borrow any portion of your down payment. You previously could put some portion of your down payment on a secondary line of credit, and you can no longer do that with a CMHC-approved loan after July 1.

There are still two other mortgage insurance providers in Canada; no details on whether or not they'll follow suit. But as for CMHC, effective July 1, those are the new rules.

________________________________

I'm upping my Facebook and Instagram game. Follow me to receive updates on the Saskatoon real estate market and insights I've gained managing thousands of real estate transactions.

TeamFisher.com hosted nearly a quarter of a million user sessions and displayed more than 1.2 million pages to our visitors in 2019. If you have a Saskatoon area home you'd like to sell, we know how to get people looking at your home. Reach out to me directly to engage our team and learn about our processes.

I’m always happy to answer your Saskatoon real estate questions.  Reach out by voice or text at 306-241-6676 or email me at norm at teamfisher.com

Norm Fisher

Royal LePage Vidorra

This short video will shed some light on what a lender is looking for when they view your mortgage application and gives you three things that you should not do just before, or after you apply for a mortgage loan. Doing any of them could derail your purchase plans.

Transcript

When you apply for a mortgage loan, the lender has one major question in mind, will you pay back the money we're lending you? And they don't just guess at that.

They're gonna look at your credit file to see what kind of history you have on making good on your promises. They're gonna look at your current employment status and your history to ensure that you have a stable and reliable income to service the loan. And they're gonna look at your total debt to make sure that you're not overextending yourself.

With that in mind, here are three tips, things that you should not do when you're about to apply for a mortgage or you've just applied for a mortgage, but not yet closed on your home sale.

Number one, don't make any major purchases that would require you to take out another loan. The lender will almost certainly recheck your credit before closing, and if you've purchased a $50,000 car with an $800 a month car payment, that may disqualify you from buying the house that you've selected. In that case, you'd be unable to close. And you'd actually lose your deposit when you collapse that sale.

Secondly, don't make any employment changes. Those can send up red flags and make lenders nervous.

And finally, don't open any new credit accounts. If you open a $50,000 line of credit, the lender may become nervous. They'll almost certainly view that amount as a debt, even if you haven't taken any money out on that credit account.

So, follow those three tips. You should be fine to make it to the finish line and get into your new home.

________________________________

I'm upping my Facebook and Instagram game. Follow me to receive updates on the Saskatoon real estate market and insights I've gained managing thousands of real estate transactions.

TeamFisher.com hosted nearly a quarter of a million user sessions and displayed more than 1.2 million pages to our visitors in 2019. If you have a Saskatoon area home you'd like to sell, we know how to get people looking at your home. Reach out to me directly to engage our team and learn about our processes.

I’m always happy to answer your Saskatoon real estate questions.  Reach out by voice or text at 306-241-6676 or email me at norm at teamfisher.com

Norm Fisher

Royal LePage Vidorra

Buyer Beware: This real estate commission plan could have your agent working against you.

If you're in the market to buy a home you should definitely be aware of this potentially problematic commission plan that could have your agent working against you. This two-minute video explains how, or review the transcript below.

Transcript

Home buyers occasionally ask the question, how does a real estate agent get paid to help me buy a home?

And in this province, in most cases, the real estate commission that the buyer's agent earns is paid for by the seller or generated by the transaction, and in most cases, it's a percentage of the sale price.

Commissions are problematic in the sense that, as a buyer's agent, I'm charged with the responsibility to help you get the lowest price, but I actually get paid more money if you pay more for a house. So you can see how that can be problematic.

In Saskatchewan, most real estate listings pay on a declining scale, though, so I might earn 3% on the first $100,000 of the sale price, 2% on the second $100,000, and 1% on the balance, so ultimately, if you pay an extra $5000 for a house, I make an additional $50, and I would say, for most people, that's probably not enough to influence them to bad behavior.

But not all commission programs work that way. In fact, there are some properties on the market from time to time that work on an inclining scale, and an agent might be offered 20% on the final portion of the selling price. So if you pay an extra $5000 for a home, they get an extra $1000 in their pocket, and you should know that.

So when you're ready to write an offer on a home, ask the real estate agent, what is the commission being paid on this home? You have a right to know that, you have a responsibility to know that, so that you can understand whether or not there might be some biases at play there, that you should take into account when you're deciding how much to pay.

Ask.

You have a right to know.

________________________________

I'm upping my Facebook and Instagram game. Follow me to receive updates on the Saskatoon real estate market and insights I've gained managing thousands of real estate transactions.

TeamFisher.com hosted nearly a quarter of a million user sessions and displayed more than 1.2 million pages to our visitors in 2019. If you have a Saskatoon area home you'd like to sell, we know how to get people looking at your home. Reach out to me directly to engage our team and learn about our processes.

I’m always happy to answer your Saskatoon real estate questions.  Reach out by voice or text at 306-241-6676 or email me at norm at teamfisher.com

Norm Fisher

Royal LePage Vidorra