I am new to this site but hope someone may have some advice. I listed my house for sale at the end of January and the first couple to see it made an offer that we accepted. The offer was conditional on financing and inspection with 7 days to obtain this. On the last day the buyers backed out with "cold feet" which really seemed to be a financing issue. Since then we have had 3 more offers which we have accepted that have fallen through because the buyers could not get financing approval for various reasons. Each time we accept an offer the house in effect comes off the market for 7 to 10 days while financing is sorted. Our agent says that what has happened is just bad luck but we are really starting to wonder - Is our agent doing her job!? After the first 3 offers fell through she said the market was falling and that we had to lower our price. We did so and the next day got the fourth offer which also fell through this week. I am more than a little unhappy and sick of going through this over and over. Is this a normal situation or is something wrong? How can people keep making offers on houses they can not get the money to pay for and should our agent be doing something to prevent this. I would be happy to hear some opinions on this because everyone we know is telling us to find a new agent.

if the next offer is not at asking price, dont except it. Maybe, just maybe a serious buyer will come back with full price offer...thus may turn your luck around and put you at ease that they can qualify, and do want to purchase...just a thought.

What rotten luck! Four!!! That's really weird! It is not likely the fault of your listing agent.

Afterall, she isn't the one bringing the unqualified buyers - it's the buyer's agents that should be making sure their clients can afford the place before even setting foot in it.

I always ask my buyers to get pre-approved for a mortgage before we go out looking at places. It saves this kind of situation from cropping up.

That said, with prices being so high these days many buyers are not really fully aware of what they can and can't afford. Often, they tell their buyer's agent they "think" they can afford $X, but when the mortgage approval is submitted it comes back lower than they'd expected. Again, good reason for a pre-approval.

The good thing is that your place is desirable and obviously priced right (read: your agent did her job pricing it correctly) since it's had 4 offers!

The bad news is that these offers have all died on you.

That isn't something your agent can control. I know it is frustrating, but don't blame your home team! Blame the other side - the buyer's agents that are bringing unqualified buyers into your home and wasting your time and money.

I hope you get another offer soon and that it goes through for you. Good luck!

Thanks for the input. I was wondering what our agent could have done about this situation. She seemed to trust the agents on the other side and even let the last one know what had happened to us in an effort to ensure it didn't happen again. I guess it really is bad luck.

How about only accepting offers from buyers who are already pre-approved? That way your house isn't off the market for a week only to find out the buyers can't obtain financing.

We thought in some of these cases that they were pre-approved but it seems that the pre-approval that a bank might give you over the phone is not always what you are allowed when you actually provide all of the specifics of your financial situation. I think some of these people may have been about as up front with their banks as with us! I think that you are right though - we will have to insist on financing being in place before we accept anything - otherwise I am sure agents will start to wonder why the house has been conditionally sold so many times without going through.

One further question. Since we have had 4 offers with the latest last week, would you say the price is right? We have the feeling that because the agent is getting a little fed up that she will suggest another price drop. We are not overly happy with doing this but would like this to be over sooner rather than later as we are building a custom home that is set to close mid July.

As an agent normally representing the Seller, I almost always counter, with the condition that the buyer authorizes lender to release any and all information regarding the loan application to the seller's agent.
Your agent then may be able to decipher the credit app or find out exactly where the loan is in process, etc. and Always be prepared to go to plan "B".

[QUOTE]Originally posted by unhappy in ontario:
[QB] We thought in some of these cases that they were pre-approved but it seems that the pre-approval that a bank might give you over the phone is not always what you are allowed when you actually provide all of the specifics of your financial situation.


There is a difference between being pre-qualified adn pre-approved. Pre-qualified is just giving someone your information and they do the math to figure out what you can afford. You want buyers that have been pre-approved, meaning their loan officer has verified at least some of the information they have provided and pulled their credit report. Of course, things can always happen to make a deal fall through, but it's best to start with a buyer that has been pre-approved.

If you have received 4 offers on your house that were close to asking price, I'd say it's priced right.

You may want to tell your agent to stipulate to all buying agents when submitting offers to submit a Pre-qulified letter and nothing less. This may cut the waste!

Is it possible that your home is priced higher than the lenders appraisals? It would seem to me that there is some common reason why 4 deals fell through.

I am not sure that our house is priced higher than the appraisals. It is selling at the same price as others in the neighbourhood even though we have many more recent upgrades such as a pool and extensive landscaping and a newly renovated ensuite bath and new very high end kitchen. The house is also full hardwood floors. The others in the area don't have any of these things and some are even priced higher.

The reasons we have heard for financing falling through are also different in each case. Two of them were situations very specific to the buyers. I guess the only things we are not sure of is if we can believe what we have been told.

Unhappy –

Sorry you’re having so much trouble.

There’s no advantage to an agent making up reasons for the deals to collapse.

And 4 buyers agents didn’t intentionally waste their time either.

Did any of the Buyers carry out the home inspection ? Just wondering.

It sounds like you feel your home is priced to the market, maybe even showing better value than the competition, which is a good thing. The fact that you’ve basically had buyers standing in line for the last week tells me the market feels price is not an issue.

However, you may want to look at sold prices for similar homes – your agent can do this for you. If your market has experienced a quick jump in values – the homes currently for sale may be priced expecting that trend to continue. An appraiser looks at what buyers have paid – not what sellers are asking.

In certain markets – entry level and move-up homes have gained so much in value that the families that would want to buy them are reaching to their limits to make a deal. If the home is priced above the recent sales – (not over priced) - and if the buyers are at their maximum – there may be a void between the banker and the appraiser that can’t be filled. Young families with huge mortgages seems to be a trend – some get scared.

If that’s the case - you wait for the market to support your price – or you lower to allow the appraisal to work. It depends on you situation.

Cheers and Good luck -------- Happy April Fools Day Dave

Thanks for the input. On the inspection issue, the people who made the first offer did do an inspection that we did not hear the results of. Because we were worried that there might have been something there that we did not know about we hired an inspector ourself - the most respected one in the city who is also an engineer and the former head of engineering at Carleton University. He said that the house was in very good condition for its age (12 years) and that things such as the roof, furnace etc. were so well maintained they should last longer than the usual expected life. All in all he thought it was a great house in great shape and he was particularly impressed with the level of upgrades.

As for houses selling in the area/price range, it would seem that from what we have heard our house is the most desirable and the only one getting offers. Some have sold at both higher and lower prices but they are all different so I am not sure how to compare. We have been told by our agent that our location is better than the others for sale in this range right now.

It certainly sounds as if you have a great house in a desirable location that is probably priced competitively. If that is true, then you need better qualified buyers!

I second the idea of requiring a lender letter with any offer; not a prequal and not from a broker, but a full fledged commitment letter from a lender who has verified credit, assets and employment. Will it limit the number of offers? Yes, but offers are of no value if the buyer doesn't have the means to purchase your house.

Granted, I'm in a market where I don't write an offer without a lender commitment, but even in other markets, this is a good idea if you want to avoid wasting a lot of time. Sort of separates the wheat from the chaff, as they say.

Unfortunately, In Ontario the financing process is different.

The banks don’t commit to a specific home until an agreement is in place.

Even if a person is “pre-qualified” or “pre-approved” the banks will not commit without examining the documents and the property the mortgage will be registered against.

That’s likely where the deals are falling apart. In some parts of the market – home values are going beyond the buyers ability to pay.

It’s a very bad sign.

We’re seeing more and more buyers using the 95 % or even 100% financing options just to get into the market. Banks are being very careful about how they put these deals together.

Having associates in the Ottawa area I know the market is nuts right now - Not knowing the price range, I can only assume your stuck in the area between desire and affordability.

Every area has a ceiling for CMHC financing – if you’re on the edge of the max., and offering great value you may be attracting too many people who “just can’t quite put it together”. It may actually be to your advantage to raise your price, eliminate the borderline shoppers. You will reduce the pool, but may get better qualified buyers looking. Again, it depends on your situation.

……………. Dave