The Art of Selling Privately or Not

The Art of a Nearly Non-Deal

I think this is the one...

Perhaps you found someone looking to sell their house privately, someone who wants to avoid the thousands of dollars of commission a Realtor would make for doing nothing more than getting someone to sign some papers from a Real Estate For Dummies handbook. Perhaps this sounds like a great idea in the short term – maybe it’s family, maybe it’s an acquaintance you've known for years. 

Perhaps you should rethink that idea before everyone gets too excited and starts planning renovations or Mexican holidays.

Now I’m not advocating entirely for one way or the other – there are thousands of private sales that go through without a hitch. There might be a few small hiccups along the way, but as long as everyone is negotiating in good faith, happy is as happy does. Unfortunately there are also thousands of Realtors out there with more than a few that push potential clients into a house that they may not be happy with in order to receive that juicy commission. Like everyone else, when looking for a Realtor, ask for referrals. There are plenty of good Realtors out there and there are bad ones which gives the others a bad name and is why private sales or Do-It-Yourself companies like The Property Guys have become such a popular option in recent years. 

That said, here’s some warning signs that you should be wary of when attempting to purchase privately and trying to shave a few thousand dollars from your mortgage by using a do it yourself kit. If you step back and remind yourself that this is a deal worth perhaps hundreds of thousands of dollars, when and if a delay happens everyone can continue to work diligently to making the deal happen. That said, the most stressful factors in attempting a private sale (from my own personal experience);

What is Success and How do I Get Some?

"Nothing Gives the Illusion of Success Like a Boat" - Arrested Development

Success is one of the most subjective words in the English dictionary and follows shortly after it in the dictionary as well. It's a great word in getting rid of your S's in Scrabble and also a great word to attempt to spell without Spellcheck. It's the opposite of failure, which is generally acknowledged in most catchy quotes about success as being necessary to define actual success.



Yet it remains an elusive concept, an ever-changing ideal that is rarely ever fully achieved by most people. It's an abstract term that means different things to every person on the planet. It's the attainment of a personal goal on one hand, it's the acknowledgement of that goal by strangers on the other.

Often people confuse success as being based on material possessions. We see celebrities and are conditioned to think that they define success; fame, wealth, the amount of magazine covers they are on. We see someone driving a more expensive car than us and think that person is more successful. Someone has a bigger house than us and that person automatically is deemed more successful, despite us having no idea how they got that house or that car. Perhaps they inherited it, perhaps they are a mechanic taking it for a test drive. We don't truly know most people's level of success but we project it on them. We automatically equate what we see and judge as a measurement of success without any true evidence.

Our society has tended to forget that success is not just about wealth or about fame. It's about achieving something desired or attempted. The confusion lands mainly in that for most people success does not come until it is acknowledged by external sources, such as their bank account or the publicity they receive.

As car fires go, this was a great success. 

Take writing a book. It's a huge task that involves hours of isolation by a committed person. It involves a knowledge of basic story structure, plot, spelling and punctuation. To complete a book is a major accomplishment, Yes. But does that make it or the writer a success? Not particularly.

Yet, if that writer is published, does that make them a success? Maybe.

What about if that writer wrote a book and it was purchased for $2 million even before it was published? Does that make the writer a success?

Most would say 'Hellz Yeah! $2 Million for a book? Where's the paragraph key?'

But what if it doesn't sell anything? What if it is ridiculed by their peers? Is the writer still a success then?

Devin Townsend's career arc never went higher.

Depends on their own personal definition of what ultimately is success. It's a term that can keep moving. You can say it's an accomplishment of a goal. Simple, elegant. You accomplish that goal and then you can say 'hey, I've succeeded.'

But then what?

Most businesses/people who have accomplished their goal aren't satisfied, so their goals are continually adjusted. It's why businesses are never satisfied with just profit, it has to be record profit. People are never satisfied with what they have, it's why Christmas was invented and why China is a superpower.

Most people believe that happiness lies once they have achieved their goals but study after study has shown that is not true. There is no goal line to cross to achieve happiness. It's an ever-changing goal that is never satisfied. That is humanity's view of success. Unattainable.

The guy with 12 rings just laughed.

We live for that temporary success that comes from achieving a set goal. It comes from your own personal valuation of achieving that goal. It comes from not looking outside yourself for valuation but from within. Nobody is the best at anything. Society is set up in a way so that the 'winners' are always changing. Records are made to be broken. Money is made to be moved around. Most sporting events, where winning is the only definition of success, only grant that acknowledgement for a few months before the cycle begins again to determine success.

But that is a success that is defined by the second, more popular definition, that with success comes fame, wealth and prosperity. People's names are etched forever in history or until someone comes along and is more successful.

There's a certain mythology around success. That with hard work and determination success will follow. That's utter bullshit. The world is full of athletes, poets, politicians, farmers, suicides, Pauly Shore, students, etc. etc. that have worked hard and tried their best but ultimately have failed at achieving that distinction in which society has judged them to be successful.

Bill Gates didn't become world-famous because he worked hard and was determined to create the personal computer. He became world-famous because he was born at the right time in history, had wealthy, influential parents that supported his curiosity and actively encouraged it, he went to a university that allowed him unlimited access to it's relatively new computer labs and was able to meet people with the same interests (such as Steve Jobs) that he was able to relate to and discuss abstract ideas and concepts that otherwise would never have happened. He didn't have to work to pay his rent, tuition, etc. He had a vast amount of free time that he dedicated to his hobby and he took that passion to the next level and created one of the most life-changing inventions in history.

There has been much said about the 10,000 hours concept; where for a person to truly excel at anything, a certain dedicated devotion must occur. Michael Jordan was an exceptionally gifted athlete, with good genetics, access to basketball courts and coaches but also an ability to spend an exceptional amount of time practicing basketball. That is what elevated him above others. This is the same of most professional athletes today. Hockey parents invest a lot of money in their child's hockey time as it has been proven that those with the most 'practice' hours have the best chance of hockey success.

One guy's definition of enough success was to just have this
picture taken as a Beatle...

The Beatles became one of the biggest names in the world through music because it was the right time in history, they were young and had an opportunity to practice for 8-12 hours a day in German pubs before they were considered a success. They came along at the same time as the medium of television, which created an incredibly vast audience for them across the world. And, they were talented, musically-gifted kids who decided to play music instead of join the army.

Success is a personal definition that each individual has to decide for themselves. Is it the amount of people who know who they are? Is it the type of car they drive or the size of their home? Or is it something else, like how you treat strangers you never met? Or how polite your kids are? Is it the amount of DVDs you own or is the amount of DVD's you have given away?

Ultimately, success comes from the attainment of goals set by the individual and the willingness for that person to see they have achieved that goal and take happiness or pleasure from it.

And a boat.

The Art of A Non-Deal

More often than not, a mortgage broker is where some people turn to when all else fails (and by all else, that usually means their bank). A mortgage broker is sort of like a tow truck driver. We will arrive shortly after you call and with a few questions, try to get that stalled application to the nearest garage and get everything going so that you can move into your new home with the least amount of hassles. I know, it's a mixed metaphor but so is real estate.

Although some of us may not look it, in theory we are mortgage mercenaries; going where others fear.

We all graduated from Whassa Mater U.

Truth is, some applications just can't be done no matter what. It's a hard truth to bear but when the balance of the 5 C's are against you, you're going to be in for a bad time.

To review the 5 C's;  Character, Conditions, Capacity, Collateral, Credit

Perhaps it's wrong of me to write a blog post of where I failed to be able to provide financing to potential home purchasers. I should be writing about all the successful mortgages I've been able to put together, with amazing interest rates, rock-hard options and a chocolate waterfall thrown in to boot.

Those will come later. But if you are reading this you are for some reason interested in mortgages either now or in the future and like Canucks GM Mike Gillis and his 2 starting goalies dilemma, you want to learn from past mistakes and avoid any long-term commitments and signing anything that lasts 10 years.

Booyah! Yeah, I went there!

Case Study

Once there was a couple who wished to purchase a 2010 mobile home in Alberta, Canada and had been refused by their major commercial bank for a mortgage of <$140,000.
The couple had both gone through bankruptcy in the previous 5 years and were currently renting the home from the man's brother who wished to sell it to him so he could buy his own home. The husband had been working in the construction industry for 17 years but in a new job for the last 8 months. He worked a rotating 9 day schedule with an estimate >$68,000 a year income. He was a co-signer on to 2 vehicle loans, a 2011 Jeep Patriot and a 2008 Jeep Wrangler.

The Five C's of Credit

This will be a short review of one of the fundamental measuring sticks of mortgage applications and their success rate; the Five C's, in no particular order.

Before we begin, I myself do not hit all 5 C's so if you feel a bit frustrated about the difficulties in finding a house or mortgage in your price range, I hear you. The US housing crisis of 10 years ago continues to have trickle effects in Canada as lenders continue to require higher and higher thresholds to qualify for real estate while real estate itself continues to say 'can't hear you, i'm too high above your price range'.

THE FIVE C'S

It says here you are a professional hockey player?
Anything other than the sweater as proof?

Character - some say this is the most important C of them all yet others will repeat that old poker proverb of 'money talks, bullshit walks' when it comes to applying for a loan. This C ties in with the last C (credit) as huge factors in determining whether a lender is willing to take a financial chance on you for at least the next five years.

The Solution - Talk the talk. Learn from your mistakes and create the story that makes the lender believe that you are a person of honor and high credit. Show them that letter of reference from your long-time employer. Say you are personal friends of George Clooney, then prove it. Might help, might not. Depends if they've seen Leatherheads.

"Why Me?" asked the Mortgage Broker, "let me tell you."

To Bank or Not To Bank, that is the question.

Hobbits not included.

You found your dream house. Now you want to take the leap and buy it. Time for a mortgage and what's your first thought? Your bank, of course. You've been giving them your money for years, why wouldn't they want to return that loyalty by giving you hundreds of thousands of dollars so you can buy your dream house?

But did you know that your bank rarely gives you the best rates and products? Most homeowners prefer the convenience of renewing their mortgage every four or five years automatically without shopping around, so they rarely receive the best rates and programs. It's like how your telecommunications company offers great deals for 'new customers only', while their current customers still pay premium rates, despite their loyalty. If they already have your business what's their incentive to offer you the best mortgage out there?

You will Discover This Free New Post is Guaranteed to Make You think 'Mortgage Broker'

There's a lot of things to consider if you are thinking of jumping careers into a completely new field in a futile bid to ward off the specter of our imminent demise which will (unless 'science' gets in the way) claim us all in the next 100 years.

Because apparently, NASA becomes sponsored by the wine industry

I decided to juggle the mind field of mortgage brokering after some recommendations from family. This is on top of my job as a care aide, father, husband, volunteer firefighter and part-time writer for a popular webzine (if you live in the United Kingdom and still have an opinion of Christopher Nolan's Batman). I sometimes get them confused as on top of all these responsibilities, I also need to sleep.

The other day, slightly distracted by thoughts on my various career paths, I came across a minor accident; a few vehicles were pulled over to the side of the road and a few people were attending a middle-aged man with no visible signs of injury. He wore motorbike leathers and seeing as how there was no motorbike visible, only a slight skid mark that went over the side of the road into the bushes, it was pretty self-explanatory.

As all first responders, professional or volunteer should do, I identified myself to offer my trained assistance;
"Hi, I'm a mortgage broker, do you need any help?"

It took me a brief moment for my ears to catch up to my words as the 1/2 dozen assorted strangers looked at me. Too late, I corrected myself;
"I mean, I'm with the fire hall."

But by then it was too late, I lost their business.

"Are you looking for a variable or fixed rate?"

What's the Big Deal? A Baseball Analogy of the Latest Interest Rate Hike.

(Disclaimer; I am not a mathematician nor to I like baseball, however I am a certified mortgage broker and have played slow pitch a few times so that makes me super-qualified to write this post)

Recently, most of the Big 6 Canadian financial institutions announced a slight rise in their interest rates. Most of Canada didn't know about this rate increase because A) it was pretty small, only 1/5 of 1%   B) it's the middle of August when most of Canada is still in Summer vacation mode and who the hell cares C) the CFL and MLB is in full swing and who the hell cares D) you already have a mortgage and don't want to think about it for a few more years but should care.

Granted, 1/5 of a percent isn't much to get excited about. It's like that guy on 1st taking a step off  the base. Maybe he's getting ready to steal second, maybe not. It's pretty far to second. Nobody gets too excited about one little step off the base, right? Canadians have other things to do other than think of real estate.

Canadian Real Estate; (l to r) bank rates, Canada's Minister of Finance, Bank of Canada

Dating Real Estate and your Mortgage Broker

"What is a mortgage broker?" said nobody during my high school career fair.

Well, thanks to the UBC Sauder School of Business, now I know the official version and have the paper to prove it.

But that's boring. Let's assume that nobody under 21 is interested in reading this, because let's face it, mortgages are a pretty dry subject matter. But not if we compare mortgages to your sex-life, which I am pretty confident nobody ever has but for the sake of argument, I'm going to give it a try.

Getting a mortgage, much like getting laid while single (or if already in a relationship, getting involved in a three-way) is a tricky slope; we have all been down the soul-sucking route when looking for prospective mates, from puberty through your 20's and on and on until you find that right someone you were meant to be with. So it is with real estate.

But much like reading Maxim for dating tips isn't the same as actually dating, just saying you are a mortgage broker isn't the same as actually brokering mortgages. Our (my) business is built on referrals, much like most blind dates are. Some blind dates are good, some are bad. And the best are the ones when you wind up being completely compatible with each other and live happily ever after.

This has 'bad idea' written all over it.

Debt Ratio, Loan to Value and say what what?

Memories before Responsibilities

or 

How I finally Learned What Debt Ratio Meant. 

I remember when I was a young boy, lying outside on the back lawn, looking up at the stars and thinking how cool it would be to have a tent.
Then I was a young man, lying in the back of my car, looking up at at the stars through the sunroof and thinking how cool it would be living in a house.
Then, when I was a slightly older man, lying in my bed in a house with 4 other roommates and thinking how cool it would be to have my own house, one without roommates.

His Retro Winnipeg Jets shirt only got him so far...

But I had no idea how to start. I saw a 'For Sale' sign on a nice house, called the realtor and quickly hung up after she told me how much it was. I found out that the first thing I needed to do was find out how much of a house I could actually afford. I realized that I should be looking at something a bit smaller, like a stand-alone carport or maybe fulfill that childhood dream of getting a tent.

Discouraged, I began to learn the backside of home purchase; what a mortgage was, why that interest rate thing I continually heard about on the news was so important. How could someone on my relatively low income ever afford to live without roommates? So I made an appointment with my bank's financial consultant.

"You Want to Buy a House? hahahaha" - my dad

Now is the time to buy a house (or condo, apartment, cottage). Everyone involved in buying houses says so. Heck, I'm saying it because financial institutions want to pay me money to get people to come borrow hundreds of thousands of dollars off of them, securing their financial security for decades to come (the institutions, not you).

Statistics that I am pretty certain exist somewhere show that most people prefer to live in some type of domicile that can hold not only all their stuff, but perhaps even have sanitary facilities, a lockable door, electricity and windows without bars.

Expectation

So why should you wait? If you are like most people you probably are waiting because you saw those for sale signs on people's lawns, checked out the price on the internet then sadly looked at your bank account or paycheck and thought WTF?

Reality

The concept of purchasing a residence of your very own slides quickly away as you wonder how the heck anyone not born in the sixties or seventies who is not on television or in banking can afford to buy such a luxury when you are still budgeting to pay off your student loan, your credit card and/or returning bottles for bus fare to get to work and back.

A nice compromise but for the travel. 

There is a sense of security that comes with having your very own place, but also a sense of ... 'Uh oh'... if you decide to buy a house that you can live in but not do much else. It's often called 'house poor'. All your disposable income you thought you had at your fingertips is destined for 'house-related' things. Perhaps you need a new fridge or have neglected to factor in property taxes. You have crap windows so your heating bill triples during winter. The roof has started to leak or you have a severe bug infestation which would make Mike Holmes shake his head in disgust at how a house like yours could possibly even be in existence.

We will have to tear out the kitchen and
may as well finish your basement while we are at it.

If you already are a home owner, you know what I am talking about. You need to pay for all of these unexpected expenses somehow. If you don't have kids maybe you can bring in a couple of roommates, forget the concept of privacy for a couple of years (and maybe your television when they move out in the middle of the night). But I'm getting ahead of myself.

What Did It Take to Get Here?

So you are thinking of becoming a mortgage broker?

Perhaps you saw an ad for a mortgage broker and thought- man, that sounds interesting. It's like all the glamour of being in real estate without having to do all that selling and meeting people a realtor has to do. Sign me up!

Big mistake.  

Like Michael Cera with a mustache mistake...

So why did I decide to do it? 

In my case I have 2 relatives that are mortgage brokers; a cousin in a city 500 kms away and a sister-in-law 150 kms away. This is very important because you will soon learn that you are going to be just another fish entering an already full pond that has a limited amount of earning potential before you appeared. It's much like the Cory Schneider and Roberto Luongo goalie conundrum. There is only so much net to go around...  

However, they helped me in answering a few questions i had about the industry and didn't yell at me to back the hell up on this career path. The only problem in hindsight is that they have over 20 years experience between the two while I had none.

It's not glamorous, it's not overly rewarding. It's a job. A lot of being a mortgage broker is based on earning commission, meaning I don't have a set wage, I earn a portion of what I bring in. Yet I'm not really selling a tangible; I have to convince people that I can save them thousands of dollars in the future if they are open to getting a mortgage not from their current bank (which 90% of homeowners do, citing convenience as their primary reason).  

My job is to help people see past their personal banks. Banks are making record profits for a reason; they make the best return they can on the people they serve, which is you and me. That won't change, however I can shop around for the best deal that makes sense to people in their own unique situation, at no cost to the person wishing to purchase or refinance their home. 

People can still be loyal to your bank but when it comes to hundreds of thousands of future dollars, it's best to get the best rate possible. That's what banks expect and they certainly don't want their valued (and profitable) customer to find out that some private lender with little name recognition may save them thousands of dollars in interest payments alone over the course of their mortgage.
I digress.

The Beginning of Another Beginning...

To quote Steve Miller;

Some people call me the Space Cowboy, some call me the Gangster of Love.

Some people call me Maurice, Cause' I speak of the pompetous of love...

This is an approximate visualization of the
inner me.

I've been many things over the years, none of that which defines me as a whole. I've had more jobs than apartments, more apartments than relationships. I've gone from getting trophies to getting cancer. I've been bankrupt 2x over and owned my own house. I've fought and lost more times than I have fought and won. I've created memories that will be mine alone and shared memories with others who may not remember things the way I do. I've met great friends and lost great friends. They, like the scenery around me is ever-changing. And I am grateful for every one I have met, and every one that is still with me. I am grateful for every view I have seen, every laugh that has come my way.

I've been on adventures and not-adventures, outward discoveries and wayward inflections. I have fleeting images that remind me of how small I am, of how different the world can be, of the fun of being high in my twenties and the fun of actually being a Space Cowboy, if for just one night.