Recently I seen that a Calgary mortgage broker or a Lender had designed and released a program called the 'buyer protection plan'. From what I can tell the plan is a gimmick designed by either a company or individual who has lots of skills in selling but possibly not much experience in real estate and dealing with real estate customers. Of course I have not seen all of the program, but can only imagine how it will turn out.
The general idea behind this new gimmick appears the concept that a home seller will place a portion of their sales proceeds into a trust account to be held for 1 year. Then after a 1 year period of time, should the market have dropped and the home be worth less than it was upon the sales transaction, the home buyer would be entitled to the funds placed in trust. If the home had not dropped in value, the seller of the home would have their money refunded to them. Make sense?
Seriously, that is the basic idea of this buyer protection plan. Can you see some of the inevitable problems that a program like this presents? Do you think the buyer is protected? What about the seller? Since I am not involved in this program I can only speculate or speak in general about similar programs that I have seen and the 17 plus years I have been in the real estate industry dealing with hundreds upon hundreds of home buyers and sellers.
1. What home seller would want to not prefer to have all of his sales proceeds at the time of sale?
2. What home seller would want to gamble on whether the market is going up or down?
3. What home seller would want to take a risk of some of his money should the market decline, but be entitled to no reward should the market increase?
4. Who will be the ultimate authority on the present and future value of the home? What if this number is in dispute?
Those are simply the first of the potential probems that spring to mind when I read about things like this new buyer protection program. I am sure there are a few starving mortgage brokers and starving real estate people who will jump all over this BPP program, probably the same group of people who will be phoning you and inviting you to join their next multilevel marketing or pyramid scheme. This is not the first program like this I have seen in my many years in the real estate industry, and like all of the others I have seen I would not be shocked to see this one will end in several law suits, several ripped off clients, and several mortgage brokers who have made themselves look foolish.
This probably will not be the only innovative or creative attempt to survive the downturn in the real estate industry. The bottomline is that all the schemes and scams and programs that the desperate and creative real estate industry members can come up with does not change the basic fundamentals of the real estate market. They cannot change the number of buyer and sellers that exist. They cannot change the amount of inventory on the market. They cannot change the cost of construction which dictates the value of a new home.
Successful real estate people and successful mortgage brokers know that silly gimmicks eventually detract from their credibility and would not want anything to do with them. Successful real estate and mortgage industry members know that clients want the best rates and best service that they can get without all this kind of crap and fluff that just serves to confuse or complicate their transaction. As a consumer, please do not fall for gimmicks. Do your homework and trust your real estate and mortgage transaction to people who operate in a legitimate business manner.
Robert May is a Realtor, as well as the broker and owner of Rainbow Realty of Lethbridge Alberta . He is also a licensed Lethbridge mortgage broker and financing expert with Canada First Mortgage of Calgary Alberta. He has been in the Lethbridge real estate industry since 1993 and offers full Lethbridge real estate services to Lethbridge and surrounding area, as well as Lethbridge mortgage financing, mortgage refinancing , preapprovals, and Lethbridge loans financing to Lethbridge and Southern Alberta. He can be found online at this link: mortgage broker Lethbridge
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