Many people do not realize that people could always post on MLS by using a discount brokerage. Just because you can do something doesn't mean you should! I guess I could direct my own investments if I really wanted to, or I could pay a professional who does it for a living, who is insured and get a higher return to give me the freedom to continue living my extremely hectic life.
You may think you will save yourself some money by using a discount brokerage or by selling on your own but it can actually cost you more money, time, stress and maybe even a law suit if you are not careful.
This topic has become more prevalent as of late in the media.
People have always been given the choice to work with a Realtor to sell their home, they could try selling on their own or they could have gone with a discount brokerage.
I came across some information that will probably make you think twice about listing your home with a discount brokerage or just a company that will post your listing on MLS for a nominal fee.
With mortgage fraud on the rise and not to mention the rising mortgage delinquencies, many banks won't consider financing private sales anymore because they are not protected.
So basically this means that unless a buyer has a massive down payment or they are paying cash for your home, it will be increasingly more difficult to sell your home without a real estate agent.
Excerpt below taken from canadianmortgagetrends.com:
"Private Sales Under Scrutiny"
This is a lender e-mail we got this morning.
Effective immediately, we will no longer be accepting Private Sale Agreements on ANY submissions.
It is unfortunate that we need to make this decision, but the reality is that Private Sales are too often linked to property or LTV misrepresentation and we are seeing more of these now as the credit market tightens up.Our statistics gathered are now also showing a very high percentage of delinquency in deals that were funded with private sales.
Certain lenders (not just this one) are scrutinizing private sales much more closely in our falling real estate market.
This particular lender said it will consider some exceptions on private listing companies if they are comfortable it is a bona fide "arms length sale."
There was also a new program launched by Home Trust at the end of October. Home Trust has historically been a more lenient lender in the market place. Willing to consider financing under their sub-prime label that would not often fit the box of more conventional lenders.
Below is what Home Trust had to say about the new program and clearly confirms a private deal will not be considered.
"Credit Assist is designed for those who don't meet insurer guidelines and have 'bruised credit'. It's meant to be a 1-year solution to help people get back on their feet. After one year, the idea is for the customer to renew into a prime mortgage at more favourable terms.
Here's a summary of the key points:
Max. LTV: 85%
Term: 1 year term
Fee: 1.50% (purchases) to 1.75% (refinances)
Minimum Beacon: 520 (lower evaluated case by case)
Registered As: A 1st and 2nd mortgage (The 2nd is fully open)
Income Type: Verifiable only
Max. Amortization: 30 years
Property Type: Owner occupied and owner occupied rentals
Private sales: Not allowed
Fee to Renew: $400
Lending Area: Marketable urban and suburban properties in Ontario
The 3 insurers are not commenting formally just yet on how the financing will be considered when a vendor is simply using mls.ca for advertising but they are diligent in their additional actions required for consideration of financing when clients are not working with a licensed Realtor.
The long and short of it is that a mere listing on mls.ca does not provide the same level of comfort for lenders as would a client who is adequately represented by a licensed Realtor. Lenders are assured that when transactions happen under licensed representation the Realtor is registered under provincial laws that govern exactly how real estate can and cannot be traded. Realtors must adhere to a code of ethics and maintain Errors and Omissions insurance. There is opportunity for recourse and a Realtors knowledge on subjects like legal issues are expected to be up to date.
The peace of mind for the lender is simply not there where mls.ca has been used solely for advertising purposes.
All financing transactions are better considered where clients are represented by licensed, educated, insured professionals.
Please let me know if you would like any additional information on this topic.
Dimitrios Kalogeropoulos - Sales Rep.
"Agent DK"
Contribution:
Anna-Marie Plessl, AMP
(416) 924-2110 0ffice
(416) 924-2111 Fax
(416) 817-3964 Cell