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As most of you know the 2020-2021 market has been something of a rollercoaster, especially for buyers. With almost every home selling with multiple offers and over asking, the financing condition has become a large topic of conversation between my clients and I. My sellers ask why it is necessary if the buyers are stating they are already pre-approved and qualified and my buyers are getting frustrated when losing to a lower offer because the other offer did not have a financing condition written in. Today, I am going to talk about the importance of the financing condition if you are taking out a mortgage on a home and why I still strongly encourage it, even in this market.


First off, lets start by talking about what the financing condition is. The financing condition is there to protect the buyer in the occasion that the lender (bank, credit union etc.) or the mortgage insurer (we will go in more detail about this later) does not approve the buyer for the amount necessary for them to purchase the property. Without this condition, if the lender does not approve the mortgage, the buyer still technically bought the property under contract and is at risk of losing their deposit and even more, the potential of being sued by the seller for breaking contract. Usually deposits range from $10,000.00 to $20,000.00 here in Manitoba but in a market like we are in, some buyers will increase that amount to make their offer stronger, thus resulting in a big hit to the pocket book if financing doesn`t end up working out.


Now most buyers are probably thinking, “Well that all sounds a little scary, but I`m pre-approved so why wouldn`t the lender approve me?” There are many reasons why even after getting your pre-approval that financing can still fall through and it is very important that you understand all of these risks before writing an offer without the financing condition in it. 


Buying a Home in Winnipeg ManitobaAppraisals: Banks and other lenders rely on the “appraised value” of a home to deem if it is worth the amount you are asking them to lend you. They will often times send in their own appraiser to the property after the offer has been accepted to determine its value as they want to make sure if you default on payments, they will recoup their investment. In a market where buyers are offering 80K over the asking price, there is always a chance that the appraised value and the amount offered do not match and, in that case, it would be the buyer’s responsibility to make up the difference in value IN CASH. Unfortunately if there is no financing condition and the buyer does not have the cash to make up that difference the buyer will not be able to come up with the cash necessary to close resulting in a loss of their deposit and once again the chance of being sued by the seller for breaking contract.


Changes in financial buying power: Buying a home can be long process for some and life still continues to go on while you are in that process. Unexpected bills, job loss and large purchases are just some of the reasons why your buying power may have changed between being pre-approved and getting an accepted offer. Just because the bank told you 6 months ago that you were pre-approved for a certain amount does not mean that after purchasing a brand-new vehicle that they will still lend you that same amount of money. I always recommend getting a new pre-approval every 3 months to ensure you are still qualified for the necessary amount to purchase the property we are offering on.


Interest Rates: Most lenders will lock you in at a certain interest rate for 90 days once you go through the process of being pre-approved but like I had just mentioned, sometimes the process can take longer. If interest rates have changed between when you were first pre-approved and when you receive an accepted offer you may no longer be qualified for the amount necessary to purchase the property you offered on, ESPECIALLY if you are writing at the top of your budget.


New “Stress Test” guidelines: Have you ever heard of a stress test? This is a “test” in where a lender will have to qualify you at a higher interest rate than you are currently being offered so that if interest rates rise in the future you will still be able to afford your monthly payments. During busy markets, like the one we just experienced, the government may impose an increase to the amount they are testing you at to limit the buying power of buyers so that the sale prices of homes can equalize or level out a little to keep the market more consistent.


Mortgage Default Insurers: This is a big one. Mortgage default insurance is required by the Government of Canada when a home buyer is putting less than the 20% down payment typically needed to qualify for a conventional mortgage. If you are putting down less than 20% not only does the lender need to approve your mortgage but the mortgage default insurer does as well. Mortgage default insurance insures the lender NOT the buyer in case of default. There are 3 mortgage default insurers in Canada; CMHC (Canadian Mortgage and Housing Corporation), Sagen (formerly Genworth Canada) and Canada Guaranty. Each one of these insurers have different qualifications on which properties and which buyers they are willing to insure and which they wont and for the most part we are completely blind to what those qualifications are. In my experience, this is where financing falls through the most often and unfortunately the hardest to predict. I have seen them deny financing based on outdated electrical, shared well systems, location, asbestos and a multitude of other factors that we cannot control.  The financing condition really comes into play here.


Competing Offers in Winnipeg

Due to the market we are experiencing I am unfortunately seeing more and more buyers writing offers without the financing condition even though they are taking out a mortgage. As I have now explained, this can be a huge risk to the buyer but also to the sellers who may need to put their home back on the market if the buyer ends up not being able to close. If you are selling your home and there is an offer without a financing condition make sure your agent is asking the right questions; are the buyers taking out a mortgage or paying cash, if they are taking out a mortgage, do they have a back up plan if they are not approved? How much are they putting down?  Have they been pre-approved? These questions can help you assess the risk involved in accepting that offer.  Also, you will want to make sure they have put down a big enough deposit to cover any costs that may arise from the deal not closing due to the default of the buyer, this is especially important when you’ve received multiple offers as you may be declining offers of more qualified buyers that have financing conditions.


Now buyers, there are ways we can still write a strong offer even with a financing condition. Making sure you have an up to date pre-approval is a must. We can include your pre-approval letter in the offer so that the sellers are able to see you have done the work and are qualified to purchase their home. We can also make the deadline for financing as short as possible by staying in close contact with your mortgage specialist/broker prior to writing an offer. Here in Manitoba we typically see financing deadlines within 2-3 business days of the offer being accepted, although I have had some superstar brokers get it done in less than 24 hours! We can also write in detail (and should) a summary of how much you are planning on putting down vs how much you will be taking out as a mortgage. The more information the seller has the more confident they will be moving forward with your offer.


After everything I just touched on, unfortunately it might still come down to removing your financing condition to get you the house of your dreams. If that is the case, you now know all of the risks involved in doing so and you can be prepared to make an educated decision on how much risk you are willing to take. I always recommend having a back up plan in the event financing doesn’t go your way but sometimes you need to just take the risk in life!



Best real estate agent in River Heights Winnipeg#AgentAshton


Ashton Augert

Phone: (204) 781-1767
Email: Ashton@JenniferQueen.com

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I LOVE goal setting. Every year in November, I begin to plan out goals for both myself and my team for the following year.  This past November was a bit trickier – 2020 was a year that nobody could have anticipated, and it has kind of clouded my ability to think proactively about what to plan for in 2021. After many discussions with the team, we have decided that 2021 will be a year of getting out of our comfort zones.  For the majority of us, this means putting our faces out there more. And by putting our faces out there, I don’t mean the perfect, photoshopped, and pretty side of us.  I mean the raw, vulnerable, imperfect shots that show just who we are at our cores. To that end, here is an imperfect shot of me and our son, Asher, born June 30, 2020.

Realtor Mom in Winnipeg Manitoba





This year, we plan to put out a lot more video content.  Answer me this, does anyone actually like being on camera?  I sure don’t!  It took me 8 years and about 100 comments that I didn’t look like my original head shot from when I started in the business, to finally agree to take a second round of headshots.  We did a new round of these headshots and family photos in 2019 and now have a goal to do them annually with 2020 being an exception because, well, social distancing of course! Toward the end of 2020 we hired Simon, who has a background in Broadcast and Television.  For people that don’t like having their photo taken, trust me, being on film is a whole new ball game.  He has already had us each film 15 different segments which are going to be airing throughout the year across our various social media platforms.  It is funny how easy it is to talk to someone in person, but the second lights and a camera are pointed at you, you can’t even remember your own name!



This year, we also plan to give back to a community that has done so much for us.  It almost seems unfair, that our businesses were booming in 2020 when so many within the community suffered.  We have all increased our efforts to support small businesses whether it be regularly ordering take-out from our favourite local joints, creating jobs for those that were impacted within their own industries, curating prize baskets and closing baskets from local artisans - but it truthfully still doesn’t seem like enough for us.  In 2021, we plan to highlight many of the small businesses so that they too can have a booming year.  We rise by lifting others, right?  So, if there are any businesses out there that you feel may be suffering and could use a spotlight on our social media, let us know. 



This year we also plan to work more heavily on the education component side of our business.  In some of our discussions we discovered three things:

  1. We handle a lot of relocations to and from Winnipeg.
  2. There are a lot of unknowns out there for both the selling and buying process
  3. Some people find Realtors kind of scary and intimidating.  Like if you give them your number, they will never stop calling you.


Realtor Family in Winnipeg ManitobaTo that end, we plan to generate more content that helps to address all of these concerns.  For instance, in the works currently is: a series on what it is like to live in Winnipeg, an educational segment highlight FAQ’s for buyers and sellers alike, and more in-depth interviews with our agents just to demonstrate that we sincerely do have your best interests in mind and won’t spam the heck out of you if you reach out!  Are there any questions you would like addressed by us?  Please reach out.  We plan on generating content that our current and future clients will find useful, and always appreciate the input!





This blog is admittedly scattered, pretty much as scattered as 2020 was, so I do apologize. In trying to sort what my takeaways were from the past year, I did find a few recurring themes. Going into 2021 I hope to take some lessons learned in 2020 with me.  Namely:

-          Money can’t buy what matters the most

-          Slowing down is not a bad thing

-          Time with family should be treasured

-          Hugs are underrated

-          We are all more resilient than we give ourselves credit for



We have set some pretty big goals for 2021.  While the world may look a little uncertain right now, I am cautiously optimistic that we will achieve those goals no matter how bumpy the road may be. So, cheers to the year gone by and to the upcoming year: 2021 … we got this!



Happy New Year, everyone!



Top Realtor in Winnipeg Manitoba, Jennifer Queen

#AgentJen


Jennifer Queen

Phone: (204) 797-7945
Email: Jennifer@JenniferQueen.com

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