The Rate Game---Lower rates don't always mean better results

I recently got involved with representing an elderly Seller with property in the fashionable Beacon Hill section of Boston. At the urging of her grown-up children, she decided to sell the Condominium Unit which she used as a pied-de-terre on her  frequent visits to Boston.

The properly showed nicely, and we received several Offers. We accepted the deal which offered the lowest loan to value mortgage contingency. That was where the problems began. The Buyer, a medical professional who fancied himself quite a real estate expert, started to shop for mortgages. This property was not going to be his principal residence, at least not from the start.

Investment properties, even with substantial down payments, are not viewed the same way by Lenders as principal residences. In the end, the Buyer walked away from the deal, and my Seller, because he could not get a fixed rate loan at a rate that I didn't think was possible in the first place. When he notified me. as attorney for the Seller, that he was unable to obtain the financing set forth in the mortgage contingency, I spoke to my Seller, and we agreed to underwrite three years of a quarter of a per cent a year, by lowering the purchase price. That was not acceptable. We offered to give him Seller financing for five years, fixed rate, thirty year amortization, with a balloon at the end of five years. This did not work for him either. We have today terminated the deal.

What a colossal waste of everyone's time, really occasioned by the fact that interest rates are low, and everyone thinks that he or she will get the lowest rate on every deal. I remeber when I worked for a mortgage company, and friends would call me up to say they would refinance if rates every got to single digits. What a difference twenty years makes, no?

In any event, it is my belief that we are in a "tail wagging the dog" mode with interest rates, and that can be a royal deal killer. If any of you have some suggestions as to how to get around the kind of behavior I saw with my cratered deal, I am all ears.