Choosing a Buyer's Agent
In selecting Nancy as your buyer’s agent, not only are you enlisting Nancy’s 30 years of experience and professional services, you will gain the support of the invaluable contacts Nancy has developed with realtors throughout the city, her large client base, as well as the numerous contacts in Ottawa’s building industry.
Her talented administrative staff and Nancy’s dedication to customer service offers you, the buyer (client), maximum exposure to a wide variety of properties throughout the Ottawa-Carleton region.
CHOOSING BUYER REPRESENTATION
Buyer Representation (Buyer Client)
A real estate brokerage representing a buyer must do what is best for the buyer.
A written contract, called a Buyer Representation Agreement, creates an agency relationship between the buyer and the brokerage, and establishes buyer representation. It also explains services the brokerage will provide, establishes a fee arrangement for the realtor’s services and specifies what obligations a buyer may have.
Typically, buyers will be obligated to work exclusively with that brokerage for a period of time. Confidences a buyer shares with the buyer’s agent must be kept confidential. Although confidential information about the buyer cannot be disclosed, a seller working with a buyer’s agent can expect to be treated fairly and honestly.
A real estate brokerage may provide services to buyers and sellers without creating buyer or seller representation. This is called “customer service.” Under this arrangement, the brokerage can provide many valuable services in a fair and honest manner. This relationship can be set out in a buyer or seller customer service agreement.
Real estate negotiations are often complex and a brokerage may be providing representation and/or customer service to more than one seller or buyer. The brokerage will disclose these relationships to each buyer and seller.
Occasionally a real estate brokerage will represent both the buyer and the seller. The buyer and seller must consent to this arrangement in writing. Under this multiple representation arrangement, the brokerage must do what is best for both the buyer and the seller.
Since the brokerage’s loyalty is divided between the buyer and the seller who have conflicting interests, it is absolutely essential that a multiple representation relationship be properly documented. Representation agreements specifically describe the rights and duties of everyone involved and any limitations to those rights and duties.
Buyer Representation Agreement
Realtors are governed by the legal concept of “Agency.” Agents are legally obligated to look after the interests of their clients. A Real Estate Company or Representative may be your agent if you have clearly established an agency relationship with that realtor. Unfortunately, many clients mistakenly assume such an obligation exists when it does not. It is important to understand what comprises a Buyer Agency Relationship, and how entering such an agreement with Nancy will help you find the best possible home. Agency: A written contract, called a “Buyer Representation Agreement”, establishes Buyer agency. According to the Real Estate and Brokers Act of 2002, “if a brokerage enters into a buyer representation agreement with a buyer and the agreement is not in writing, the brokerage shall, before the buyer makes an offer, reduce the agreement to writing, have it signed on behalf of the brokerage and submit it to the buyer for signature.” O. Reg. 580/05, s. It also explains services the company will provide, establishes a fee arrangement for the realtor’s services, and specifies what obligations a buyer may have. A realtor or Real Estate Company acting as a buyer’s agent owes the buyer complete competence, diligence, full disclosure, obedience, loyalty, confidentiality, and complete accounting. The buyer’s agent must always do what is best for the buyer. In the absence of a Buyer Agency Agreement, the realtor is only required to treat the buyer fairly and truthfully. Typically, buyers will be obliged to work exclusively with that company for a period of time.
Although confidential information about the buyer cannot be disclosed, a seller working with a buyer’s agent can expect to be treated fairly and honestly. It is important that you understand who the realtor is working for. If the seller and the buyer have the same agent, this is “Dual Agency”; the realtor must act in the best interests of the buyer and seller, to the best of his or her ability, throughout the transaction.
As a prospective buyer, it is crucial that you understand every aspect of the agency relationship between you and your agent. That’s why agency disclosure is included in a self-imposed Code of Ethics which is administered by the Real Estate Council of Ontario. The code requires realtors to disclose in writing the nature of the services they are providing, and encourages realtors to obtain written acknowledgement of that disclosure. The code also requires realtors to enter into a written agency agreement with any sellers or buyers they are representing.
By entering into a “Buyer Representation Agreement” with Nancy, your search for a home becomes clearer, more professional, and better organized. Taking the time and effort to make the right choice regarding your Buyer Agency relationship is one of the smartest things you can do to improve your home-buying process.
Individual Client Information Record (FINTRAC)
For every transaction (purchase or sale) or attempted transaction (presentation of an offer), each client must complete an “Individual Client Information Record.” If there is more than one person signing during the transaction (for example, both a wife and husband are purchasing the property, or seven siblings are responsible for an estate), EACH client must complete one form. Each client must provide a valid piece of identification issued by the government. A photocopied or scanned version is not sufficient – an agent must see the original documentation.
Agreement of Purchase and Sale
This document, commonly referred to as an “offer”, is used to state the buyer’s desire to purchase the property, and to negotiate the terms of sale. This document also allows the buyer a chance to outline in detail all of the conditions they wish to be placed in the offer to buy the seller’s property. After the offer is prepared and signed by the buyer, it is presented to the seller for acceptance. The seller, in turn, may want to make changes to the offer for the buyer’s consideration.
Receipt of Funds Record
This form is to be completed if an agent representing a buyer receives a deposit with respect to an offer or an Agreement of Purchase and Sale. A form must be completed for EACH deposit given to the agent.
THE BUYER INTERVIEW
Here is some of the information that Nancy will go over in her buyer interview:
Real Estate Representatives
Real Estate professionals must have a provincial license and are required to pass a number of exams to obtain a license. They have legal obligations and agree to ethical standards. A realtor is a real estate sales person, agent or broker who is a member of the Canadian Real Estate Association (CREA). Nancy, a licensed realtor, will guide you through the listings, take you to see properties and help you make the best choice.
Tell Nancy exactly what you want and need, including preferred locations, number of bedrooms, bathrooms, and how close you want to be to schools, shopping, or other facilities.
The sales person does not charge you for this help. Real Estate Agents charge a fee – called “a commission” – to the seller (the person selling the home). The sales person also helps you make an offer to purchase and with the back and forth negotiating of the final purchase.
You may want to consult with your lawyer before making an offer to purchase. Nancy can easily fax or email a copy of the offer to a lawyer of your choice in advance of signing if you wish. Once you make an offer to purchase, it is legally binding if it is accepted by the seller.
Where you decide to live may depend on where you work and your family’s lifestyle. Do you want to live near recreation and fitness facilities? Do you wish to walk to amenities – coffee shops, eclectic shops and food specialty shops? Or do you need to be close to schools or public transportation?
Consider the property values and planned future developments in the neighborhoods you are interested in, as they may reflect current trends and your future investment potential. Nancy can help you with this process by giving you insight into the demographics of neighborhoods and the amenities located in these areas.
Builders & Contractors
If you decide to buy a newly built home it is important to find out about the builder’s reputation. Nancy can provide you with references and provide information on previous developments and contact information for the New Home Warranty Program and Ottawa-Carleton Home Builders’ Association.
In order to make an offer to purchase, you will have to find an institution to lend you the money. There are several possibilities, including banks, credit unions and trust companies. It is important to discuss the size of mortgage you might qualify for with the lender before looking for your new home or investment property. New homebuilders sometimes offer lower interest rates to attract buyers through the institution that may be financing the building of the development.
Definition:A company that receives payment from a lender for matching the lender with borrowers who meet the lender’s criteria. The mortgage broker performs some or most of the loan processing functions, such as taking loan applications, ordering credit reports, appraisals and tile reports. Typically, the mortgage broker does not underwrite the loan and generally does not use its own funds for closing.
Unlike a mortgage banker, a mortgage broker does not negotiate the terms of the loan, issue a loan commitment, prepare the loan documents or service the loan. A broker who represents numerous lenders helps consumers find affordable mortgages. The broker charges a fee only if the consumer finds a loan.
The mortgage broker performs some or most of the loan processing functions such as taking loan applications, ordering credit reports, appraisals and tile reports. Typically, the mortgage broker does not underwrite the loan and generally does not use its own funds for closing.
Unlike a mortgage banker, a mortgage broker does not negotiate the terms of the loan, issue a loan commitment, prepare the loan documents or service the loan.
A broker who represents numerous lenders helps consumers find affordable mortgages; the broker charges a fee only if the consumer finds a loan.
It is a good idea to have a home inspected. Inspectors can give you a detailed written report outlining the condition of the house and whether it needs repairs. Ask about the inspector’s credentials and references, and make sure they are covered by errors and omissions insurance. Nancy can provide you with a list of experienced Registered Home Inspectors. Inspection fees start around $450 +/- plus HST depending on size, age and value of the house, and generally take 2-4 hours to complete. A qualified inspector will give you a full written report to refer to for future maintenance of your property.
Insurance brokers can provide you with many forms of insurance and lenders insist that you carry fire insurance which not only covers the replacement cost of your home, but also provides security for your mortgage. Nancy is very familiar with the types of insurance that you will require, and can easily give you qualified references.
Your lawyer will protect your interests during a real estate transaction. Lawyers are responsible for title searches, reviewing the Offer to Purchase, closing arrangements, the transfer of funds and registration, such as of ownership. To find a lawyer, you may wish to ask friends/family for recommendations. Nancy can also provide you with a list of qualified professionals.
Before looking for a home, learn more about the housing market. You should know the price trends in the areas that interest you. Supply and demand determines the housing market.
Keep interest rates in mind. Interest is what a financial institution charges for lending you money through a mortgage. Interest rates can move up and down from year to year. The basic rate is set nationally. The state of Canada’s economy and the world economy determines the interest rate. Different financial institutions and types of mortgages have differing rates.
What Type of Home do you Want?
Once you have decided on a location, you have to decide what type of home you can afford. A single family detached house is usually the most expensive choice. Semi-detached, duplex, townhouse and apartment condominiums are usually less expensive. You may also have a choice between new homes and resale homes. There are advantages and disadvantages to both.
Maintenance costs are low for new homes for the first few years and they are backed by a new home warranty – the TARION Warranty. A new home will need work as things wear out and break down. With new as well as older homes, there is always maintenance to be done. New homes usually have the latest design and building materials and are often more energy efficient. An older home is usually in an established neighborhood with landscaping and plentiful public green space.
Look…Look and Look Again
If you are buying an older home, it is in your best interest to have a home inspection. Inspectors costs start at approximately $450 +/- +HST, and you should receive a written report from your inspector on the condition of the home you are buying.
You may have to do some renovations. If you do, get a cost estimate and add it to your budget. Remember, renovating increases your equity and investment.
Putting in an Offer – A Legal Offer to Purchase
You will need to include a cheque as a deposit. This indicates a serious buyer and ensures the home is held for you to buy if your offer is accepted. Once the offer is legally binding and if you decide to back out of the deal, your deposit may snot be refundable. An offer to purchase can be made conditionally (the sale will be final once conditions, for example financing and inspection, are met). Once you have made an offer to purchase, it is binding if accepted by the seller.
What’s Included in an Offer to Purchase
- The registered legal description so you know exactly what you have purchased
- The price you are offering
- Chattels, the legal items in the home included in the purchase price
- Financial details, including deposit, details and terms of your proposed mortgage and whether the offer is conditional on financing or an inspection of the subject property
- The time frame you the buyer are leaving your offer valid to the seller. This is referred to as the “irrevocable time.”
- The closing and possession date (the day you will legally own the property)
With Nancy’s expertise, she will now present the offer to the seller directly or to the seller’s agent. The seller can accept your offer, reject it, or make a counter-offer. A counter-offer may suggest a different price or other changes in the details of the offer. Nancy will then suggest a negotiating strategy to enable you, the client, to obtain the property at a satisfactory price and on terms acceptable to you.