Accessing Sales History Data Really Gives You the Goods!

Real estate sales professionals: your underwriters either serve your branches or your agents/brokers. They submit applications to you and they want their deals turned around quickly. The borrower may have great credit and income and ‘as a borrower’ perhaps qualifies for the financing, or the borrower could be self-employed or not have great credit history – in either case, the next step is to assess the security (the property). 

This can be particularly challenging in neighbourhoods in urban centres like Toronto where the real estate market has continued to climb even through turbulence in the economy, or other major city centres in provinces like Alberta where property values have been up and down.

It can be hard to know what a property is actually worth; in some areas, what a person paid for a home 5 years ago could be fairly similar to its current value. In other areas, the value could have increased by up to 30-40%.

Before even getting to this stage or generating an automated property valuation, submitting the deal to the insurer or ordering an appraisal, there are measures lenders can take to get a sense of the current market value of the properties they are considering financing.

One measure is reviewing sales history information.

·        Reviewing sales history information on the subject property enables you to validate when the property was purchased and the purchase price. If the property was purchased recently this can highlight how wide the gap is between what the homeowner paid for the house and what they think it is worth now.

·        Reviewing sales history information on other comparable properties in the neighbourhood will reveal what comparable properties in the area are selling for.

Now, if it happened that when looking at the sales history information a property was purchased within the past 5 years and there is a substantial gap between the purchase price and what the stated value is now, comparable sales in the area may explain this as the property could be located in an area with a hot real estate market.

If both the sales history information and comparable sales history information draw the same conclusion and it seems that the property is worth much less, there may no longer be a deal and the lender can save the time generating an automated property valuation, submitting the deal to the insurer, ordering an appraisal, etc. In addition, if the application was referred by a broker/partner they can let them know that the value is not there and give them the option to order an appraisal. This strengthens these relationships.

Ensuring that your underwriting team has access to accurate sales history data makes it easier for them to make more effective underwriting decisions and be more efficient.

For more information about how to access sales history data on a particular property or properties in a particular area please visit www.purview.ca/lender or call 1-855-787-8439.