In this podcast, Gary McGowan, an experienced realtor and investor, shares a story about a recent property sale that didn't go as smoothly as planned. The story revolves around a buyer who was unable to close on the property because their lender identified some issues with the property that needed to be fixed before closing.
The property in question was a home in the Greater Toronto Area (GTA), where the market had recently cooled off, providing opportunities for both buyers and sellers. The property was listed at a competitive price and received multiple offers, ultimately selling to a buyer who had a home of their own to sell. As part of the sale agreement, the seller allowed the buyer an extension on the closing date to give them time to sell their home.
The buyer completed their home sale and submitted an amendment to the closing date, which the seller accepted. All was going well until about two weeks before the closing when the buyer's lender called to submit an appraisal. This is not unusual, as lenders typically want to verify that the home is valued at what they are lending for. However, in this case, the appraisal report identified a few issues with the property. Specifically, there was a small crack in the foundation, and there was some surface mold in one of the bathrooms.
The lender declared that they would not fund the purchase until these issues were fixed. This put the buyers and sellers in a difficult position, as the sellers did not want to pay for the repairs and the buyers were unwilling to move forward with the purchase unless the repairs were made. The buying agent stepped in and helped to negotiate a solution where the sellers agreed to make the repairs, and the buyers agreed to purchase the property at a slightly lower price to account for the cost of the repairs.
In the end, both parties were able to come to an agreement, and the property was sold. However, this story highlights the importance of understanding the risks and challenges that can arise when buying or selling a property. It's crucial for buyers to be prepared for the possibility that the lender may require repairs or improvements to be made before closing, and for sellers to be aware of the potential for issues to arise during the inspection process. In this case, open communication and creative negotiation helped to find a solution that worked for both parties.