Katerina Georgieva · CBC News
Source: https://www.cbc.ca/news/canada/windsor/sold-your-house-what-comes-next-1.6004632?fbclid=IwAR0PFvCpmX099-35s-0NXGDPvrEumVZr_nUKZ5leBedzIlkFJ7FDeYUdQOo
Michael Margaritis sold his home for a huge profit, but securing a home afterwards was still a tedious process. (Katerina Georgieva/CBC)
Michael Margaritis just sold his 4.5 acre Oldcastle property for $1.35 million.
But soon he and his family were in a race against time to purchase a new home.
"I was a rich man without a house," he said.
He said the selling part was easy, but what followed was a struggle.
Margaritis had gone from a seller cashing in on a hot housing market, to becoming a buyer trying to buy a home in that same market. It's a tough transition that many sellers are facing, with home prices on a steep and steady incline. And one that takes many sellers by surprise.
He bid on four or five homes with no success — and he was resistant of engaging in bidding wars which he feels are unfairly driving up the prices of homes.
"It's unethical, or dirty," he said.
"They told me, if you don't go up, you will never get a house. We had to get a house because we have to get out of here."
Eventually he and his wife bid $804K on a Windsor house listed at $700K. The day the offers were being looked at, he said his realtor told him to go up to $850K to seal the deal. Margaritis resisted, but finally settled on $825K and the house was theirs — though Margaritis insists the house isn't worth the price tag.
"I was a poor man when I came to this country," he said.
"And I don't like to throw money away, especially thousands, hundreds of thousands."
He added that the reason he bought the home that he did was so that it was large enough to house his daughters and their spouses, because he worries they'll never be able to buy homes on their own given the climate of the market.
What followed was another road block. The closing date of the new home is May 13, while the closing date of his current home isn't until the end of June. This meant that he needed a mortgage to help cover the costs in the interim.
But given that both he and his wife are pensioners, together making around $75K, it was a difficult process.
"With that money, the bank cannot even look at you," he said, despite the fact he had a number of additional assets.
Though he finally was able to secure a short-term mortgage to cover the period between closing dates, it was a stressful experience during which they felt stranded.
According to Damon Winney, the president of the Windsor-Essex County Association of Realtors, some of this stress could have been alleviated had the current home been sold after the new home had been purchased to ensure that the closing dates matched up.
Mortgage broker Rasha Ingratta says that in the past, the advice was always to sell first. But that the situation has flipped entirely in today's climate.
"Make sure you purchase a home before you sell your home because what we're finding is a lot of people are selling their homes — but [don't] have homes to go to," Ingratta said.
Margaritis is dumbfounded by the state of the market.
"It's easy to sell," he said.
"But when you buy, you'll find out that the money you got, probably won't be enough."
He's frustrated that so many homes are listed well below market value to attract more attention, suggesting that games are being played to "fool" people.
But Winney says that ultimately, realtors serve their clients by offering advice, never forcing their hands.
Damon Winney says it's "rare" for sales to fall through, but it does happen. (CBC)
"We cannot force them to do anything, we can simply provide guidance for them. If the seller and/or the buyer wishes to take our advice, it's given in the best interest of them, the client."
Winney also acknowledges the tough transition from seller to buyer.
"Their euphoric high that they've just had when they've just cashed out on the sale of their home, that's a marvellous time," he said.
"But it is the realization shortly thereafter that now you're in the mix with everybody else. But the thing they've got in their back pocket that a lot of people don't have is knowing that they've got a lot of equity position sitting in the sale of their home."
According to Ingratta, another issue that's been growing in recent days is that not all sales work out.
"There are more sales falling through than ever before," she said.
Winney says it's rare, but it does occur.
"When you put your heart and your energy into buying and sale of a home, because it's a very emotional process, when it happens, it's absolutely devastating for the parties involved," Winney said.
One of the key reasons why a sale might fall through is because of financing.
A buyer might be financed for a certain amount, and so they place a bid within that price range. If that offer is accepted at $500,000 for example, but following an appraisal, the bank decides the house is only worth $450,000, then you won't get the full financing on the house that you need, leaving the purchaser to have to make up the difference.
"And that's difficult sometimes when that's say, $50,000," Ingratta said.
She added that it's challenging to encourage clients to put any kind of financing condition on their offers, because in today's climate, that usually means you kill any chance of getting the home.
This is a risk not only for the buyer, but for the seller too. It forces them to consider whether or not they should accept an offer that's well above the estimated market value, at the risk of it hinging on a mortgage approval that could go awry.
In cases like that, where the financing falls through and the purchaser backs out of the sale, the seller gets to keep any deposit already given by the purchaser. Furthermore, the seller could choose to sue for damages.
According to Ingratta though, normally the house just goes back on the market, and in this climate, it'll likely sell for that same price or higher.
She added that some mortgage brokers do have access to their own systems to help them do a "desktop appraisal" to see if the house is worth putting an offer on, to help determine whether it'll appraise at the offer price. She advises all of her clients to do this before making a bid — especially in a market where houses are sometimes selling $100K, $200K over asking.
