Clarity clients Andrew Goodwin and Catherine Prince are settled into their new home now – but it wasn’t without a struggle. Photo: Thomas Lucraft.
In Matt Rastar’s experience, the vast majority of home settlements go off without a hitch. The phrase you want to hear from your broker when it doesn’t is, “That’s ok, leave it with me”.
These were exactly the words the Clarity Home Loans mortgage broker spoke when his clients, Andrew Goodwin and Cathy Prince, found themselves in a home-buyers’ nightmare.
The couple had opted for a “simultaneous settlement” – selling their current home and purchasing a new one to move in to at the same time.
The 60-day contract had been exchanged and everything was on track for a smooth transition until two weeks before the settlement date when their buyers separated and pulled out of the purchase.
This left Andrew and Cathy without the funds needed to settle on the new house, putting their own $86,000 deposit at risk.
Matt says the situation was compounded by a clause found in some real estate contracts that “seriously depletes” the compensation sellers expect to receive when a deal falls through.
“Even though the buyers walked away from the 5 per cent deposit they had paid on the home at the exchange of contracts, Andrew and Cathy didn’t end up being able to retain much of that deposit as their selling real estate agent had included a clause in the listing agreement stating that they were entitled to their commission, even if the property didn’t settle,” he says.
“Not all agents have these terms, and in many cases, sellers can negotiate out of this clause with the logical reasoning being that the agent is contracted to actually sell the property, i.e. ensuring that the settlement proceeds.”
Clarity Home Loans mortgage broker Matthew Rastar. Photo: Clarity Home Loans.
There was no time to panic, however.
In the ACT, a seven-day grace period protects sellers and purchasers from penalties when things go awry, and buyers have a 14-day notice to complete before forfeiting their 10 per cent deposit.
In other words, they needed to devise a solution within two weeks, when a typical loan application from submission to settlement takes four to six.
“The next few days were going to be intense, and the pressure on our clients was immense, but I knew Andrew and Cathy’s income and asset base were strong and that meant they had options to explore,” Matt says.
“As brokers, we don’t deal with one lender – we have multiple, and we know how to mobilise in these situations.”
The Clarity team got to work, assessing all the possible workarounds to settle on the best solution.
A bridging loan would allow Andrew and Cathy to settle on time for their purchase, but it was harder for upgraders to meet the eligibility criteria set by the bank for this kind of arrangement.
Regardless, working feverishly in the background and updating the client regularly, Matt was able to find that lender, structure the deal, prepare a whole new loan submission, and have it approved and documented and ready to settle within that timeframe.
After weighing up interest rates and turnaround times, Bank Australia emerged as the most accommodating, and the crisis was averted.
“In a situation like that, every minute counts because you’re talking about the single greatest investment of most people’s lives,” Matt says.
“I have only seen one other client in a situation like this – it’s pretty rare. Still, we knew how to tackle it.”
Andrew says once he had cottoned on to the urgency of the situation, it was a week of tenterhooks.
“I don’t want to lie, it was the most stressful week of our lives. Not because we didn’t have a solution – Matt and his team were brilliant and took care of all of that. It was more around the bureaucratic timeframes that caused delays,” he says.
“Anyone finding themselves in a similar situation, all I can say is buckle up – it’s out of your control.
“The only thing you can really do is make sure you’ve got a good broker who can quickly get options on the table, explain them in frank and honest terms and remain patient as you go through the motions.”
For more information, contact Clarity Home Loans.
Original Article published by Dione David on Riotact.
