5 THINGS NOT TO PUT IN YOUR LISTING
Many times, realtors will put things in the listing which could make financing the property difficult for prospective buyers. Often these are small, subtle word choices are red flags for lenders; justified or not. While it is always mandatory to fully disclose all elements of a property, the MLS listing isn’t the ideal place to editorialize. In the past year I have seen each of these phrases and had to deal with the fallout while trying to get my clients, the buyers, their financing.
Here is a list of 5 things to keep out of your MLS listing when selling your property:
1. “As-Is Where Is”
This one is semi self-evident. It isn’t a car you’re selling, it’s an immobile home. While many realtors will put this when a home has deferred maintenance, is in need of repair, or they are trying to signify that no updates or repairs will be undertaken by the seller, it is a huge red flag to lenders. Lenders see this statement to mean, “property is in horrible disrepair” or may think that there is something inside the property that might be distressing such as a horrible mess, fire or water damage, or rodent infestation. It is best if the listing just sticks to a statement of the facts.
2. Handyman Special
While it may seem innocuous, this statement tells the lender the home may be in a serious state of disrepair. It may, in fact, just be dated in the interior, but the lender doesn’t know this, and will always assume the worst. It is best to stick to a statement of the facts describing the home, not the long term potential that one could realize if one repaired a property that is in poor condition. Most times, if a handyman is looking at buying a property and repairing it and fixing it up for resale, he will do the “handyman special” math himself.
3. Investment Opportunity
In this real estate market, all properties seem to be an investment opportunity. However, if a lender sees this, they may look a little deeper to ensure the borrower doesn’t plan on building on the land and bulldozing the home. If the words “investment opportunity” are paired with pictures showing a tired, turn-of-the-century house that should be torn down and re-built, it could spark concerns if the buyer really does intend to live in the existing home as-is. While the statement may be absolutely true, it is again best to leave the listing as a statement of facts and let people do the investment analysis for themselves (as they surely will do so anyways).
4. Build your dream home!
Similar to the previous one, if these words are accompanied by pictures of a dilapidated home on an expensive lot, the borrower better have plans to build or the banks may see this as a property that the borrower intends to tear down and treat it accordingly. It is perfectly fine to market the property to potential builders, but by doing so, if a prospective buyer truly does intend to live in the home (at least for the foreseeable future) this statement can cause the banks to do a double-take and ensure that the primary value isn’t in the land. If the person intends to bulldoze and build, then this is a moot point, as presumably they would have construction financing in place.
5. Upcoming Assessment
When buying a condo, everyone (banks included) are worried about future special assessments on a building. Oftentimes, the upcoming assessment may be for something such as an elevator repair, or repaving the parkade. These are minor issues that can easily be explained. However, if the listing doesn’t have clarification in the text, banks will assume that there is an envelope repair going to be undertaken and may worry that they’re dealing with a “leaky condo” given the number of problem buildings that have been identified in BC. During the purchase process, the buyers will always review the minutes, and this assessment issue will come to light at that time. There is no need to words to this effect in a listing when the buyer will ultimately determine this in the due diligence in any event.
While all of these phrases are perfectly legitimate, and have their application, the point of this article is to demonstrate that the verbage that is used on an MLS listing can affect a lender’s perception. Rather than using well-worn phrases that often are self-evident bits of info, it is better to keep the listing to a statement of fact and specific attributes of the property. If these phrases are being used in a listing to sell your property, and if financing has been an issue on any past offers, they should at least be looked at.
Rowan Smith, MBI, AMP
Senior Mortgage Planner / Partner, DLC – City Wide Mortgage Services
Direct Line: 604.657.6775 | Direct Fax: 1.888.282.5760 | E-mail: rowan@citywidemortgage.ca | Website: www.rowansmith.ca
City Wide Mortgage Services An independent member of Dominion Lending Services
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