Real estate professionals, appraisers, adjusters, lenders, mortgage brokers… sometimes it can seem that they are working at different purposes. But they can, and should, work together to achieve what everyone wants – a done deal.
And there is no better an example of professional cooperation than within the real estate sector, says Andrew Libby, owner of Modern Realty NB Inc. in Moncton, NB.
“I think the real estate industry is one of the best cooperating professional industries that I’ve seen. You work with different companies, you are technically competitors, but you treat each other with respect,” says Libby. “Even though a deal may not be going your way, and you may not like the real estate professional on the other side of that transaction, you gotta move on – because next month they may be representing a buyer to purchase one of your listings.”
Compare that to the mortgage business, “everyone is each other’s competitor,” he says. “And they have to compete with other brokers; and the banks – they’ll undercut.”
That climate of competition was fuelled by the rule changes imposed on the mortgage industry, tracing back in 2008.
“Business is harder for bankers and brokers to get. There aren’t as many qualified buyers out there,” he says. “It has really changed the way that they try to grab a hold of a client and keep that client. That is not a good climate.”
There has always been alternative lending, but the industry really gained a foothold following the collapse of Wall Street and the U.S. housing market crash.
Then the CMHC (Canada Mortgage and Housing Corporation) started changing their lending rules, requiring a higher down payment – which really hit homebuyers hard.
“The thing that affected most Canadians was the restriction on how much they could refinance their homes for,” says Libby. “We’ve had alternative lenders re-emerge, but they definitely aren’t as aggressive as they were 10 years ago.”
While there are examples of strong relationships forged on a one-to-one level, Libby remains skeptical that partnerships on an association level will come to pass.
“A real estate professional may know a lot about the mortgage business, but for specific questions or pre-approvals, they can pass that along to their broker or bank,” says Libby. “That will always remain – the one-off relationships with between brokers and real estate agents. However, I don’t see the real estate industry partnering with CAAMP (Canadian Association of Accredited Mortgage Professionals) professionals at a high level to refer clients back and forth.”
When you make regulatory changes to the mortgage industry, you affect the real estate industry.
“To be honest, if CREA (Canadian Real Estate Association) and CAAMP went to the Minister of Finance and say, ‘The changes you’ve implemented over the past seven years don’t make sense, and have actually caused the situation that we have today in the real estate business;’ people are turning over their keys, because they can’t refinance that last 10 or 15% of their homes, and are just walking away. I don’t know if that would make a difference.”