5 Mortgage Deal Killers Every Realtor Must Know (And How to Rescue the Sale)

Welcome to the Close More Deals podcast. I'm your host, Scott Dillingham. Today, I'm gonna talk to you about the five biggest deal killers and what we can do about them. I think high level two, the most important thing is tell your client to be fully transparent with us. I think that's the thing.

Like, clients will come in and they'll hide stuff or they'll limit stuff. And at the end of the day, if we just had all the information up front, it would be so much easier for the client because it's okay if these challenges or situations arise. We can always get through it. But the the the first one I wanna discuss with you is appraisal issues. So I've I've got them all up here on my screen, and and I'm gonna make sure we touch on them.

So what's happening in certain markets, right, is is appraisals are coming in undervalued. So this one's a tough one because we do have the least control with this, but there are still options that we can do to help make the deal a success for you. And, again, please keep in mind, I'm telling you resources that I know that we have access to. If you are working with a different broker or bank, these options may not be available because not all lenders support this. Okay?

But what we'll do is we'll order a second appraisal. That's really it. We'll we'll first actually, we dispute the appraisal. So we get recent comps, and we show the appraiser why we believe that they're wrong. If the comps are good, usually we can get the appraiser to up it, but if not, we'll order a second appraisal.

Now here's where a broker comes in fantastic because sometimes the lenders won't support a second appraisal. You're stuck. So we'll just say, okay. We'll forget you then. We're going to another lender.

And we just easily change, and then we're we're good to go. So that is an option. Obviously, these appraisers have to be approved and on the lender's approved list, you can't just pick anybody and, you know, get a good value and hope it works. Like, it's it's gotta be approved by the lenders to to make it work. The second issue that we find is undisclosed debts.

So clients will, either not you know, they'll hide debts or or maybe there's something on, you know, a different credit report that the client's aware of. Primarily, we use Equifax. Everyone uses Equifax. That's kind of the gold standard in Canada. So it doesn't always show everything.

Sometimes there are things on TransUnion. Sometimes they have debts that, you know, it doesn't show on their credit report, but when the lawyer does a search on the borrower, they uncover these different things. So I think on this one, truly the best is disclosure. If you're working with, you know, five percent down, you're stuck. Those debt ratios, those banks and lenders, they're forced to be at 44% because it's it's an insured mortgage.

Where you can get away with certain things is I previously mentioned in another episode where some of the banks will factor in a minimum payment against all of your debts where others won't. And then we look at child tax benefit, and there's there's different things that we can do to still optimize it. We have very much seen it where clients, you know, their one bank said, oh, you have too much debts. We can't move forward. Those debts were fully disclosed to us, and we are able to still make it work with other lenders.

So it's not that we can't do it. It's just that disclose upfront. Because what happens is if if there's deadlines or or timelines and we're up against them and then we discover the client lied and there's no more time. Right? It's it's game over where if we know all these debts upfront, we can strategize, and make it work.

Another thing is job changes. Clients think, you know, oh, you know, I got approved. I can change jobs and stuff like that. No. What you wanna do is tell your client if you're changing your job, don't do it until after you take possession of the property.

There's rare cases where, you know, they're changing their job and they're gonna be buying in the new city. Obviously, that's something that needs to be disclosed, but if your client wants to change their job, tell them no. Now there are some caveats here as well. Right? Like, if if they're changing their job and they're gonna make $30 a year more and the employer is willing to not have a probationary period, maybe this person was was headhunted.

Right? In those scenarios, that's okay. So we'll go over it, like, if there's ever a scenario there. Another challenge is condo status certificates. The reason why this is such a challenge is usually it's the lawyer who checks all this, and they check it right before closing.

So as as a realtor, you can have that be a condition, right, built into your offer where you ask for proof of satisfactory funding in the status certificate. Right? You can look at the condo fund reserve, and you can see if there's funds there. So I encourage you if you're buying a condo to do that upfront. Newer condos are generally less risky for this than older condos because they don't have additional expenses.

Like, there is expenses, but they're not going to have all these different repairs and maintenance issues than an older condo would. So it does help to minimize things. Okay. And then lastly, our property issues, such as environmental concerns, zoning, quality of the home. We see a lot of clients that buy these properties that are extremely distressed, and the lenders, they don't want anything to do with them.

So there's programs for that. Right? So we had it where a client bought a home, CMHC wanted to do the appraisal. They went out there. They said this place is terrible.

We're not doing it. So then I went back to the lender, I'm like, okay. Well, let's do a a purchase plus improvements, and let's address all of CMHC's concerns, and then let's resend it in for approval. We did that, and they approved it because they knew it was gonna come up to a certain level that they wanted it to be. So there can be workarounds there.

Also, the zoning one, that one's tricky, especially if it's like a mixed use property or a home that's zoned agricultural or a a home that's zoned commercial in the city, but it's not used for commercial purposes. Those are rare, but I'm sure everyone here listening to this has seen that. Right? It it's it it is common. It's rare, but it's it's it's still quite common.

So in those scenarios, we have lenders that fully accept mixed use buildings. We have lenders that'll make exceptions if it's commercially zoned, but it's a residential property and it's only use as residential. So there's there's different things that we can do that, again, just directly going to your bank or lender. You're gonna miss these opportunities. So, again, I hope this helps and it shared some insights on how we can help you to close more deals.

Looking forward to working with you. If you found this show valuable, please like and subscribe. And of course, book a call with someone on my team. It's in the chat below. We all have a deep level of understanding of what's going on in the market.

Plus, we have an underwriting team and all these different things that make, you know, getting your clients approved a priority. So, anyways, looking forward to seeing you next week. Take care.