With the busy season slowly winding down, I've seen many deals come through my office. Some straightforward, and others not so much. But many of them have something in common: The inexperience of the purchaser can play a factor in the closing process.

When I speak of inexperience, I don't mean whether they have bought or sold property before. I recently dealt with a transaction for a client that had owned property previously, but had trouble understanding what needed to be done for the purchase of her new home. She required financing through non-traditional means, but felt that she was entitled to the bank's preferential rates without satisfying the bank's conditions and believed that she should not be required to put any money down into a deal. I guess she wanted to get a free lunch.

Several of my clients who purchased condominiums did not follow my advice and make arrangements with the management office to set up automatic payments of common expense. I often had to explain to them that the notices they were receiving were not for the vendor's arrears, but for their own non-payment. In the most extreme case, one client still could not comprehend the situation and did not listen to our advice nor his agent's advice, and subsequently, had a condominium lien registered against his property.

In writing this entry, the purpose of this post is not to rant about my clients not being sophisticated enough. Instead, it reinforces a conversation I had with a real estate agent last year where I said that through new financing vehicles, people who normally would not be able to afford homes are now able, and we have a much broader base of clients that we need to serve. With that has come the belief that home ownership is a natural right that everybody is expected to achieve at one time or another.

This belief may be attributed to the media. Numerous advertisements have said that potential purchasers can have the home they want while living the life they want by essentially putting no money down. The branches then flash low rates to entice borrowers into using them. What many people don't realize is that those rates are only given to people with good credit, high incomes and lower loan-to-value ratios. In effect, many purchasers are shut out of the big banks and forced to find non-traditional financing with higher interest rates, which they may not be able to afford in the long run.

As a result, many people have felt obligated to get in on home ownership by any means necessary. That often means longer amortization periods, higher interest rates, and sky-high lender fees so that they can put less money down or qualify for a home that is beyond their means. I've seen clients making minimum wage try to buy a $400,000 house and I've seen other clients effectively getting paid for completing a purchase. We've all seen a prime example of what happens when lenders basically give money to everybody.

I guess misery (being the US) loves company (which will soon be Canada).