In real estate circles, there’s an old maxim that says: “Buyers are liars”.
Now that I’ve inadvertently offended 50% of potential real estate clients, permit me to explain to calm the waters. To be clear, I do not think this of most people; however, in my own work, I have witnessed some suspicious behaviours and thought to mention it for the sake of… education.
Currently, the residential real estate market is favoured heavily towards the interests of the buyer; a qualified buyer has a lot of leverage given the proportionally higher number of active listings from which to choose. Consequently, they have the luxury of taking their time and, when making an offer, can do so with conditions to safeguard their best interests (especially if they do not have a property to sell).
All fair and reasonable.
However, these favourable circumstances can enable some otherwise ‘unprepared’ buyers (and I’m being kind, here) to get further along in the process of purchasing a property than they might otherwise have done in a more balanced (or in a sellers’) market. This may result in deals initially coming together and then falling apart as true positions become clear during the period when conditions are to be fulfilled or waived. And that’s frustrating for everyone involved. Really frustrating.
Especially when you find out that such buyers were probably never going to be approved for financing, anyway. Even when they said they were going to be. Hence the maxim: Buyers are liars.
Just be honest.
Buyers: be honest with yourself and others. Be respectful of others’ time and heed their advice. And if you aren’t going to, don’t expect sympathy or bother with the crocodile tears after the fact.
Sounds blatantly obvious, doesn’t it?! And yet…
I have worked with clients who were less than forthcoming with their financial institution/mortgage broker with respect to income and outstanding debts – two key components of the mortgage qualification process – thinking they could sneak one past the goalie. You simply can’t do that. It will catch up with you; credit checks will reveal that maxed-out, high-interest credit card that you said you paid off (but haven’t). You can’t hide it… so don’t bother trying or lying about it. Just don’t. It was explained to you that paying off such debt was a precondition to being approved for mortgage financing – so don’t pretend to be surprised (or, worse, blame others) when you don’t qualify and subsequently cannot proceed to firm up on the offer you made to purchase. Such rules and conditions exist for your own benefit, after all – to save you from yourself.
… and don’t try to lie about being a first-time homebuyer when you aren’t one. Switching lawyers won’t help. It’s not cute to hear that you ‘forgot’ or that you ‘didn’t know’ about the closing cost component of Land Transfer Tax (calculator available here) when you’ve paid it before. And discussed it with your Realtor. Nice try. You’re an adult. Be responsible and act like one. It’s not OK to be willfully ignorant or to play dumb when you genuinely know better.
Qualifying for a mortgage isn’t a game and you won’t fool anyone by being misleading.
How to be successful as a buyer.
- Assemble the team of professionals you will need (i.e.: Realtor, Mortgage broker, lawyer, building inspector, mover, insurance provider, etc.).
- Be honest with everyone.
- Know your limit and stay within it.
Ask for help if you don’t know how to calculate a rough estimate of the expected total closing costs involved. Depending on purchase price, such costs will not be insignificant, either – which is important to remember when evaluating what you can truly afford. In my experience, rarely is the stress of bouncing up against the very upper limit of affordability worth it when evaluating which property to buy. Best to go with what you can afford comfortably – own your property; don’t feel owned by it.
As a buyer, working closely with a mortgage professional, lawyer and realtor – and being honest with everyone (including yourself as the buyer) – are essential to optimising your chance of successfully closing on your purchase.
Do things properly. Prove the maxim false. I challenge you to.