24 Nov Distressed sales – has the price been cleared?
Motivation to sell
More than ever, agents will need to be very attuned to clients’ reasons for selling. Rarely will a seller be inclined to candidly speak of their personal financial position, and understandably so. The irresistable conclusion is however that you must establish whether a seller’s motivation to sell is not so much their own, but rather brought upon them by their bank.
These types of sales are, regrettably, on the increase, as are potential pitfalls not usually present in a regular conveyance.
Mortgage insurers and mortgagees are hard to budge once a deal is done. Sometimes, due to poor communication between mortgagees and defaulting sellers, some mortgagees expect to receive the full proceeds of sale. If the mortgagee has not taken into account commission to be deducted, it may refuse to release its mortgage. This can result in a seller being in default in an otherwise unconditional contract, the mortgagee refusing to move, and the sale falling over.
To limit this risk we suggest:
- Confirm with the seller that they have sought clearance from the mortgagee on the ‘net’ amount available, after deduction of commission;
- Ask them to get a confirmation email from their bank that they’ll settle for $X;
- Ensure you’ve got enough deposit in trust to cover commission as it will be difficult to call for a cheque at settlement;
If the above can’t be sorted, call us for a special condition we can tailor for the deal to ensure that the seller is not in default on settlement day, and enable us both to work together to try to negotiate an acceptable result for the seller.