Is there such a thing as a market being too hot? If you ask some of our members who are seeing deals stolen from right under their borrower's feet, their answer would most certainly be a resounding yes.
The Wild West of bidding wars is causing many purchasers in need of financing to take some concerning risks by entering into unconditional, firm contracts or contracts with insufficiently short subject removal dates when they need to find financing. In many cases, they are not qualifying for financing on their purchase, which is leaving them to scramble for solutions.
Even with interest rates being as low as they are, arranging financing has been challenging for some borrowers impacted by the pandemic. Tighter lending criteria, drastic shifts in income, credit problems stemming from unemployment, and time off due to illness can take a gold-level client off the housing podium altogether.
We also hear that rapidly escalating housing prices are causing many appraisals to come in light due to an insufficient number of comparables to support contract prices. If you are a numbers inclined individual, check out this article on the Greater Toronto Area to see just how problematic this has become over in Ontario.
With difficulties in getting deals done, recently, we have seen a correlating increase in mortgage-related fraud, which benefits no-one in the marketplace.