# How would you handle this?



## ofogao (Jan 16, 2014)

I'm asking this mortgage based question on behalf of my brother in-law who lives outside of the GTA.

Here it goes:

Like I said, he lives outside the GTA in a bungalow that is worth about let's say $425 000. (remember outside of the GTA) and he has no mortgage.

He's in the process of doing some touch ups here and there but it isn't ready to be sold, according to him. ( I agree)
With his work schedule they could have the house ready in two months. He insists on doing everything himself, like painting etc.

A home for $850, 000 has come on the market that he and his wife love. They have looked at a few homes and are certain this is the one. They are ready to put in an offer.

Here's the part where they need some advice. (I didn't offer any because I have no idea)

They have about $350 000 cash plus what ever their primary residence sells for, but it will only be sold two months from now.
He doesn't have a mortgage to carry now but doesn't know how he would finance the purchase so that it allows him to use the money from his current house when it sells?

So lets say he sells for $400 000 after expenses and buys for $850 000 with expenses and puts down $350 000 cash. He's left with a $500 000 gap/mortgage and two months later he wants to put down another $400 000 leaving him with a $100 000 mortgage when all is said and done.

What should he do? bridge loan? open 6 month mortgage? Heloc? Heloc and mortgage?

Also, for those two moths he would be the owner of 2 homes, would he pay capital gains on the sale of his 1st home? How much would that be?

Any advice would be appreciated.

cheers


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## Just a Guy (Mar 27, 2012)

Let's go in reverse order...

No, he would not have to pay capital gains on the two months...you have up to a year to sell without question, sometimes more if you can justify (a slow market for example). 

Bridge loans are often more expensive.

Personally I like HELOCs as they give you flexibility and you don't need to apply for credit later if you need it. TD has a product that allows you to lock in a portion exactly like their mortgages, but as you pay it off the credit becomes available. So he could lock in 100k and leave 400k open. If he only gets say $350k, he could then lock in $50k as maybe a variable rate mortgage...you can mix and match any amounts.

The drawback to a heloc is it appears on your credit report as the full amount. Mortgages don't. 

If he has a good credit score, his deposit should get him the house. His existing house, being mortgage free, may not help. I had a bank, one time, tell me my free and clear house was worthless in their eyes as it didn't have a mortgage on it, so it would be difficult for them to go after if things went wrong.

Personally, I'd get a heloc on the new place.


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## Retired Peasant (Apr 22, 2013)

We were in the same situation when buying our current home. We went into the bank and they recommended HELOC. That's what we did, worked out great. Like Just a Guy said, no cap gains to pay.


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## dougboswell (Oct 25, 2010)

National Bank has a good readvancable HELOC and another lender is bringing one out. If you are in the medical field you can get prime at National Bank on the LOC


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## OptsyEagle (Nov 29, 2009)

HELOC


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## tombiosis (Dec 18, 2010)

be sure to plan for a long time on the market just in case...and I would lowball the sale numbers, and anything above would be gravy...


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## ofogao (Jan 16, 2014)

Thanks for everyone's responses. Much appreciated. I've passed on the info.

I want to change the direction of this thread to what happened yesterday.

My brother in-law yesterday called the listing agent who lives about 45 minutes away from the house.

My brother in-law doesn't have an agent and doesn't want one. He does have an excellent lawyer and a ver good home inspector, according to him.

Like I mentioned before, the house in question here is one they like and one they saw about 2 years ago. Within the past two years the owner did some up dates and such. My brother in-law would like to visit the home and see it again. He called the listing agent and tried to get an appointment to see the home. The listing agent repeatedly told him to get an agent. My brother in-law responded by saying that he didn't need an agent. Then the agent told him that the house was too far for him to go to!!! He told my brother in-law he would call him back to schedule a meeting. 3 days and counting and no call!

My brother in-law is a bit confused. He wonders why the listing agent is resisting showing him the home. 
Is it because he's too lazy to drive the distance and show the home? Does he just want buying agents simply show the home themselves saving him the trip???

Would what you do if no phone call comes from the listing agent????


cheers


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## Just a Guy (Mar 27, 2012)

Why is your brother-in-law so resistant to getting an agent? It doesn't change the price of a house.

There are many realtors who just want to be listing agents. It's a lot less work. Technically, all you need to do is convince people you're the one who can best sell their house, put it up on MLS, then sit back and collect half the commission while others deal with driving to the place, showing it to people, writing up offers, holding the buyer's hand, arrange for inspections, help with legal, financing and a myriad of other issues that always come up.

Then there is also the potential "conflict of interest" involved in being a duel agent. Maybe this guy crossed the line in the past and got into trouble, maybe his broker did, or had a different agent who did and put a ban on it for his office...

From the sounds of it, your brother-in-law has a lot of "issues", especially when it comes to control and doing things "his" way, maybe the agent picked up on that and doesn't want to deal with him.

There are many reasons why the agent wouldn't want to do it. 

If he really wants the house, open the phone book, pick an agent and make his day with a fat commission for very little work. As I said, it won't affect the price as the commission comes out right off the top. It doesn't matter if there is only one agent or two. If there is only one agent he gets twice as much is all.

Btw, as I deal a lot with foreclosures, where the commissions are usually much smaller than normal, I deal with selling agents like this a lot. They often barely answer the phone when my agent calls them, let alone provide any "service" on their end.

P.S. If I were you, I'd stop trying to help as well...as I said, it sounds like he has "issues" which could come back to bite you.


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## ofogao (Jan 16, 2014)

Just a Guy said:


> Why is your brother-in-law so resistant to getting an agent? It doesn't change the price of a house.
> 
> There are many realtors who just want to be listing agents. It's a lot less work. Technically, all you need to do is convince people you're the one who can best sell their house, put it up on MLS, then sit back and collect half the commission while others deal with driving to the place, showing it to people, writing up offers, holding the buyer's hand, arrange for inspections, help with legal, financing and a myriad of other issues that always come up.
> 
> ...


Thanks for your help.

I'm actually looking out for my sister who is married to him. As for using an agent, I can see where he's coming from.

Why use an agent when he knows what house he wants? Why should an agent make 2.5 percent for no work or very little work? Couldn't he use that 2.5 percent in negotiating a better price? He just doesn't see the value of an agent in this circumstance.

I know this is an entirely different issue from my original question.

What do others think?


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## nobleea (Oct 11, 2013)

ofogao said:


> Thanks for your help.
> 
> I'm actually looking out for my sister who is married to him. As for using an agent, I can see where he's coming from.
> 
> ...


I've never used an agent, 4 purchases in. The way I see it, there's only one person bringing money to the table, so the buyer pays either way. However, assuming more than one person is interested, the house will sell for market price and that price will be the same if there's one agent, two, or none.
I bought a house in the same fashion (listed on MLS with an agent, I didn't have an agent). I called the listing agent and he was keen on showing the place. When it came time to submit an offer, we both signed an agreement stating that he was not representing me and could not offer advice. They have standard forms for such cases.
If he really wants the house and the agent is not forthcoming and he still doesn't want to use an agent himself, he can write a letter to the house owner or knock on their door and explain he's very interested in the house but the listing agent doesn't seem to be. That will get a response for sure.


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## Just a Guy (Mar 27, 2012)

Most agents are unwilling to cut their commission as a negotiating tactic, even if they get both sides. Not sure why, maybe to avoid the precedent, maybe to protect the industry as a whole...most outsiders don't see the value in a realtor to begging with considering the size of commissions these days.

Also, if you've ever looked at the realtor's agreement, contractually they can't discount the price by the commission based on the agreement the seller signed.

Not saying I don't see his point, just that the world doesn't necessarily work the way he wants it to, or thinks it should. Also not saying it's never happened the way he wants either, it's just unlikely and there is no incentive for the realtor.


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## Charlie (May 20, 2011)

my guess is the realtor doesn't think your brother in law is serious about buying.

Realtors I know love getting both sides of the deal. Or maybe your brother in law spooked him by suggesting a commission split. 

Can't imagine the seller would be too pleased about refusing to show to a prospective buyer.

--- As to what to do....email agent with a polite follow up. "Hi Bill, we spoke XXX and I understood you would call me to sched a showing. I'm still interested. Any chance you could have someone available to see the home by XXX.

emails provide a trail!


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## LBCfan (Jan 13, 2011)

Just a Guy said:


> .... Not sure why, maybe to avoid the president,



I doubt if Mr. Obama cares.


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## Just a Guy (Mar 27, 2012)

Lousy autocorrect...


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## Berubeland (Sep 6, 2009)

Tell him to go over to the house and drop a note to the owner in the mailbox. Screw this shitty agent that doesn't want to do his job.


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## AlMansur (Jan 25, 2016)

As a RE investor, I have seen some Realtors doing sloppy work. So I decided to get my RE Licence and not only do it for myself, but help others.
This listing Agent could get into some bother about this issue of not showing the house. 
My advice would be to get a cooperating buyer Agent to assist, buyer will not have to pay for the Realtor's services, s/he looks after buyer interests. The other main reason, would be to ensure the buyer does not pay too much for the house! Act promptly, as the house could get SOLD to someone else.

At the end of the day, it's buyer who will decide what price to pay!


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