Brokers may want to follow the lead of this Alberta veteran. He’s increasingly working for Realtors to create the kind of vendor-finance deals that win buyers time to quality for traditional mortgages, while helping sellers with tougher-to-sell properties.
“The mortgage industry has tightened,” says Chris Richards, with Mortgage Intelligence operating out of Red Deer and Calgary, “but that hasn’t changed the demand for housing, which is driven largely by employment. So what we’re seeing here is growth in interest, or demand, for these kinds of deals and Realtors are finding that they don’t have the knowledge or expertise to fully handle them.”
That’s where Richards now comes in, working not for the buyer or the seller, but for the real estate agent handling the vendor financing deal.
“It’s easy for sellers and buyers to get into these types of transactions but that’s where DIY train-wrecks can happen,” he says. “Realtors and lawyers aren’t trained in mortgage finance. This is a financing play, and knowing the rules is essential.”
The trick is successfully executing the strategy, including the exit strategy, argues Richards.
As an expert in structuring the financing terms of the mortgage end of those agreements and pre-screening the buyers, Richards’s contributions are seen as integral to not only ensuring correct structuring but also an exit strategy for the buyer, one that usually ends with a “take-out” mortgage with a prime lender.
Some Alberta analysts expect to see a rise in the number property sales financed by the seller as the economy attracts inbound workers in search of high-paying jobs. Many of those workers are young and not necessarily with the full down payment and guaranteed employment needed to immediately secure bank funding, but don’t really want to rent.
More and more Realtors are willing to take on the role of brokering those deals, but only under the guidance of a mortgage professional.
If all goes to plan, the Realtor handles the trade in real estate, and the mortgage broker handles the advice and expertise in financing these complex originations as well as any subsequent mortgage deal involving buyer or seller.