Читать книгу The Real Estate Process: Pros Discuss Buying & Selling Your Home - Vi Brown - Страница 11
ОглавлениеThe Beginning
You have decided to buy a home. Renting is no longer an option. You want to build some equity for the future. What can you afford? Small house? Condo? Where do you begin?
You have been living here for 25 years. You brought up your children in this home but now they are gone and have their own lives. This house is far too big for the two of you and it requires too much care.
You are thinking of selling and buying a condo. Which should you do first - sell or buy? Where do you begin?
Your family is increasing. You need more space. What is your home worth? Can you afford a larger home? Where do you begin?
You are being transferred and have to find a home in a new city. Your company is allowing you several days for ‘house shopping’. You will have to locate a REALTOR® to assist you. Will the REALTOR® accommodate you with the time you require? Where do you begin?
With the exception of a transfer, most consumers are able to look for a home on a more leisurely basis. As the thought of buying materializes, many consumers start browsing through real estate papers and other real estate publications. They may access the various internet sites including the MLS® System - www.realtor.ca - to see what properties are available in their neighbourhood of interest. Some may drive around favourite neighbourhoods to check out homes with for sale signs.
There are many ways to proceed but the most effective way is to find a REALTOR® that you are comfortable with and in whom you have confidence to represent you.
Consumer Concerns
Some consumers avoid contacting a REALTOR® because they are uncertain of what this entails.
Seeing All Listed Properties
I have had clients who asked me up front if I would show them other properties besides my own listings or the company’s listings. The misconception is that REALTORS® don’t wish to show other properties or that they don’t have information on other companies’ listings. The fact is that all REALTORS® have access to the information of properties listed on the MLS® System. REALTORS® often promote their properties to each other in the hope that one of them may have a suitable buyer for the property. REALTORS® are a cooperative group.
Availability of Information
Similarly, others only contact listing REALTORS® because they feel that REALTORS® from other companies may not have all the information and, specifically, may not have some helpful inside information that would assist the buyer. Personal information about the seller cannot be disclosed by the listing REALTOR® to a potential buyer or to any other REALTOR®. But, all property information must be shared.
Obtaining Addresses
Other consumers like to use the real estate paper and do their own drive-bys before they contact a REALTOR®. Often the address is not in the paper so they call the real estate office with the listing and ask for the address. If the MLS® number is in the ad, they can search it on www.realtor.ca and generally find the address. Because there are several days of lead time required to publish a paper, in a fast market some of these properties might already have pending offers. This is a very time consuming way to search for properties.
REALTOR® Fees
Another drawback for some consumers deals with their uncertainty of how a REALTOR® gets paid. This is easily clarified. In most instances, when I represent a buyer, my fee comes from the proceeds of the transaction. The listing REALTOR’S® Brokerage has a listing contract with the seller which specifies the dollar amount or the percentage of the selling price that the Brokerage will be paid upon the completion of the transaction. Out of that, it stipulates the dollar amount or percentage of the selling price that will be shared with the cooperating Brokerage - if different from the listing Brokerage.
The respective REALTORS® also have agreements with their Brokerages as to what percentages they will receive for their services. These agreements vary within a real estate company and among real estate companies. By the time the property is on the market, these contractual fees are already established, and, in most instances, are outside the buyer’s sphere of influence.
‘Pushy’ REALTOR®
Consumer concerns wouldn’t be complete without addressing ‘pushy’ REALTORS®. For the most part, this perception is generally due to the buyer and the REALTOR® working at different speeds. Some consumers only take a few moments to go through a home and decide whether it is on their potential list or not. Others scrutinize a property much more carefully before coming to such a decision. Some buyers spend a great deal of time evaluating their choices before making an offer. For others, it is a straight forward decision.
REALTORS® have to adjust to the pace of their clients and, generally, do. A little communication usually clears up the problem. REALTORS® are there to facilitate the process by ensuring that you, as buyers, have all the information necessary to make informed decisions -- at your pace.
The ‘Door Opener’
There are times that I receive a call from a consumer who wishes to see a property. I don’t normally respond to such a request but ask the potential buyers to first come to my office to discuss their requirements. Often they do and occasionally they don’t.
In the past, I responded to such requests but soon learned from them. The following is an example of what transpired on one occasion.
The caller wanted to see a property later that same day. I agreed to this instead of suggesting that we should first meet. It was my listing, close to my office and it was vacant. I asked the caller some important questions: “Are you working with a REALTOR®?” The answer was “No” and so I felt I was not infringing on another REALTOR® or wasting my time.
There are occasions when a consumer calls on several REALTORS® to view properties. If that is the case, it is only the REALTOR® who eventually writes the offer who is not wasting his time. All those who show homes that are not of interest are simply ‘Door Openers’. They are wasting their time and really have no recourse because they know nothing about the buyer’s wants or needs.
Another question: “Have you been pre-qualified for a mortgage?” “Yes, up to $500,000.” A good answer since it attests to the seriousness of the buyer. So, I agreed to meet Joyce, this potential buyer, at the vacant house at 4:30 p.m.
I arrived a few minutes ahead of time to open the house and put on the lights. Shortly, a gentleman came by but I wasn’t sure why he was there. I was expecting a female. I soon found out, that this was apparently a relative of the potential buyer who might co-sign for the mortgage and was, therefore, previewing the home.
At this point, I was somewhat uneasy as I knew nothing about this person or the person who actually made the call. Nor did I notify anyone in my office that I was showing a property. As he viewed this house, I allowed the gentlemen to browse through this vacant home on his own as I stayed close to the open front door with my cell phone in hand with the emergency number on speed dial. When he was finished, he simply thanked me and returned to his car. He had no questions nor was I prepared to address anything either. I was simply glad that he left.
I didn’t know how serious these buyers were or what their timing might have been. They obviously didn’t want a REALTOR®. They wanted a ‘Door Opener’! In not having buyers first come to my office where I could have obtained information about them and their housing needs, I not only wasted my time but could also have unnecessarily exposed myself to danger.
Meeting with the REALTOR®
Now when I get a phone call from you, the consumer, indicating that you plan on making a real estate purchase, I ask you to come to my office. This is a serious purchase and it requires setting up some important ground work.
From your point of view, you should know all the aspects that make up the buying process. This also includes gathering all available information so that you can make the best decisions.
From my point of view, as your REALTOR®, I would like to know details about your real estate needs and wants, your timing and whether you have been pre-approved for a mortgage.
I generally begin by obtaining your legal names (essential for contracts), address, home phone number, work numbers, cell numbers, fax numbers and email addresses.
Usually, I provide you with some highlights about my real estate company and my professional background. I then want to know about you so may ask you some general questions about yourself-- perhaps your work or other places you have lived. At this point, this is not a fact gathering session but an opportunity to build some rapport. I find that a little personal information enhances a work relationship.
I then proceed to the kind of home you are looking for -- house, condo, townhouse or mobile --what size, how many bedrooms, bathrooms, garage, yard requirements and location. I have an outline of my questions and make notes as we go along. I enquire as to whether or not you have been pre-qualified for a mortgage and whether or not you have a down payment. I also ask you about timing -- when you wish to be in your new home.
In discussing all these elements, we develop a sense of how we would work together. I actually address that point and make sure that you are comfortable with me and feel that I have a good grasp of what you are looking for in a home. I then proceed.
Agency Relationship - ‘Working with a REALTOR®’ Brochure
After establishing the kind of home you are looking for, I begin with some of the paperwork. I explain the agency relationship to you at this point and have you sign the form. This has been described at the outset of the book so I will not elaborate further here.
Exclusive Buyer Agency Contract
Next is the Exclusive Buyer Agency Contract. I highlight the key clauses of this contract. Essentially, it is a commitment between the Brokerage, represented by me, the REALTOR®, and you, the buyer- similar in intent to the Listing Contract signed by sellers.
Since we will be investing time in each other, this contract commits us to each other for a specific period of time. Such loyalty creates a positive and productive relationship.
I will be making you aware of all listed properties in your areas of interest and acting as your agent working on your behalf. If a property is for sale but not listed on the board’s MLS® System, I, representing my Brokerage, can enter into a fee agreement with the seller without acting as an agent for the seller but still working on your behalf.
You as the buyer, agree to use my REALTOR® services exclusively for the agreed upon time period and provide me with sufficient information so that I can act in an informed manner on your behalf.
This contract also provides the buyer’s Brokerage with a guaranteed fee which is then stipulated in the contract. Fees vary from REALTOR® to REALTOR® and from Brokerage to Brokerage. It is against the Competition Act to have fixed fees. So I would set the fee that my Brokerage would receive through this contract.
When you, the buyer, select a home that you wish to purchase, I will advise you what fee is offered, if any. If it is less than stipulated in the contract, you will pay my Brokerage the shortfall plus applicable taxes or, I can, with your permission, see if I can obtain my stipulated fee through the other Brokerage or via a fee agreement. You also have the option of by-passing that home and selecting another.
To put this in perspective, when such a situation arises, my fee has generally been met by the listing Brokerages or I have been able to negotiate my fee through a fee agreement.
Once you understand and agree with the terms of the Exclusive Buyer Agency Contract, and we have signed the contract, you are no longer simply a consumer or customer but become my client. As such, this gives me the authority to represent you and legally obligates me to look after your interests. It does NOT give me the authority to sign on your behalf - such authority would have to be provided in writing.
It should be noted, that a buyer agency relationship can also be implied by the conduct of the parties and does not necessarily require a signed document.
I then move on to the next piece of paperwork.
Individual Identification Information Record
This identification form is also referred to as FINTRAC - The Financial Transactions and Report Analysis Centre of Canada. I explain it to you and have you complete the form. This too has been described in the earlier part of this book.
Mortgage Pre-Approval
Now that I have established the kind of home you would like and we have dispensed with the initial paperwork, my focus is on price range. To establish the price range, you need to be pre-approved for a mortgage.
If you have been truly pre-approved, that means that you have provided your financial institution or a mortgage broker with your employment history, pay stubs, tax assessments, any credit card debt and other financial obligations. In turn, the lender has assessed all this information, did a credit check and you have received a letter, from your financial institution or mortgage broker, stipulating the amount of mortgage for which you qualify. The net result of being pre-approved is that the only missing ingredient in this process is the actual home. Once you have selected the home, the mortgage process can proceed.
However, if you have gone to a financial institution or mortgage broker, and you have not provided any of your personal financial data but simply talked about it, then you probably do not have anything in writing. Any verbal price range that has been given to you is at best tentative and cannot be relied upon. There is always a chance that some financial element has been overlooked or not all debts have been incorporated. There also may be other factors such as job stability, past bankruptcy or credit history that has not been addressed and could have mortgage implications. To avoid disappointment, I would suggest that you go back to your financial institution or mortgage broker and obtain proper mortgage pre-approval.
I have included a chapter entitled ‘Financing Options’ that will provide you with some factors you will need to consider when ‘shopping’ for a mortgage.
Internet Search
Now that we have examined some of the financial factors you may encounter, we are finally ready to check the MLS® System for appropriate properties.
Many real estate boards have specific programmes for REALTORS® that enables them to do detailed searches and also enables the REALTOR® to actually email such results to their clients. Some programmes are quite elaborate whereby the client, having received listings fitting his criteria, can mark his ‘favourites’, or ‘possibilities’ or place them in a ‘discard’ category if they are not of interest. Then, on a daily basis, if properties come on to the market place meeting his criteria, they are emailed to him. In this way the client continues to stay up to date with new entries.
I now know the kind of home you are seeking so I input some specific criteria, including an approximate price range, and do a search. A fair number of properties come up but I don’t wish to fine tune the criteria any further because, at this point, it is in your best interest to see a broader spectrum of properties from which to choose the ones you wish to view.
I do two things with this search. First, I email it to you so that when at home, you can browse through and categorize them and or delete the ones that are not of interest. I also print out the search.
Concluding First REALTOR® Meeting
At this point, you have been with me for about an hour and probably are in information overload! There is still more information to share but this is a good place to stop for now.
I have a ‘Buyer’s Information Package’ for you. It covers some aspects of what we discussed and also has new material. The package contains a copy of the ‘Contract of Purchase and Sale’ and Addendums that you will encounter when you have found the right home. It is a good idea to become familiar with these documents.
I also provide you with copies of all the documents you have signed.
If you have not been pre-approved for a mortgage, it is best to schedule an appointment so that we can verify the price range and avoid any disappointments at a later time.
You also have a broad selection of properties that you can review.
You may wish to do some drive-bys and/or select some you wish to see. Once you have made your choices, let me know and I will set up the appointments so that we can start the selection process.
Making Appointments for Showings
Once you have selected the properties you wish to see and call me, I then arrange for the appointments. Depending on local customs and/or arrangements the listing REALTOR® may have made with his seller, I either call the listing REALTOR® or the seller to arrange an appointment to show the property. There is usually a window of approximately two hours to attend the property during which time the seller is gone. Potential buyers are much more comfortable viewing homes when the owners are absent.
I have worked in cities where the use of lock boxes was not the norm so this meant picking up keys from real estate offices -- a much longer process. But in many areas, lock boxes are used and this makes the showing process far more convenient.
In order to be able to work within the required time frames, I have to plan my route in a logical fashion and also anticipate how long my clients will take to look through a home.
If the properties are within adjacent municipalities, I may be able to show between 6-8 homes if they are on lock boxes. I usually verify to see if my client is comfortable with that range. When I have an out of town buyer who has time constraints, I have often shown double this number of homes. This requires an early start and late finish with lunch on the run!
If my clients consist of 1 or 2 people, I prefer to take them in my car so that I can get some feedback on what they have seen -- what they like and dislike. This helps me to better understand the kind of home that might be suitable. Otherwise, they simply follow me in their own vehicle since meaningful discussions become difficult in a group setting.
‘Shopping’
On the appointed day, you meet me at my office and I hand you a clip board and pen as well as a ‘tour’ sheet of properties where you can record key elements of the properties you see to help you remember them later. I have already programmed my GPS with all the addresses for the quickest routes from one property to the next and we are ready to ‘go shopping’!
When you first start to view homes, you have a vision of the new home in mind. In fact, you have described it to me at our first meeting. Most of the time, one single home does not have all these desirable elements. As you view one home after another, your vision begins to change and the focus becomes more realistic. By the end of one day’s viewing, you have gathered some good insight into what is important for you to have in a home.
I generally suggest that you do ‘plus and minus’ list for each home you have seen. This helps you sort out which home you may wish to see again and helps you to select other homes to view. I also check to see if any other properties have come onto the market place in the past couple of days that we need to put on our ‘shopping list’.
If during the first day’s viewings, a home doesn’t rise to the top of your list, I suggest that you select others you would like to see and give me a call so I can set up further appointments.
It takes perhaps 2 or 3 outings before a client is ready to select one on which to make an offer. Frequently the home that is selected was viewed on the first day. But viewing others simply confirms that the first choice is the best choice. As a REALTOR®, I have to respect my client’s decision making process and timing. In most instances, this is all within the framework of reasonableness. Extreme unreasonableness is rare but has to be addressed and resolved.
It is worth noting that in a fast market where many buyers are competing for the available properties, sometimes you don’t have the luxury of time. In those instances, I have warned my clients that if they have found a home they really like, they should seriously consider placing an offer immediately. That really sounds like a ‘pushy’ REALTOR®!
Nevertheless, it had to be said. Some wanted the extra time to discuss the property over the course of the evening and then decided to make an offer the next morning. Unfortunately, the property had sold the previous evening. The search then continued and the mind set adjusted to the circumstances.
The Offer
After all the viewings and evaluations, you have made your selection and are now prepared to make an offer. You have already looked over the blank Contract of Purchase and Sale and the Addendums that I included in your Buyer’s Package. I will now go over the major parts -- primarily the parts that have to be completed.
Price
To help you decide the price you will offer, I provide you with all the information available to that point. I obtain the Property Assessment for this property, the listing history as well as current and more recently sold similar properties in the area. This will enable you to evaluate the asking price of this home and determine if the price is within a normal range of similar properties in the area you are purchasing.
I am happy to participate in the discussion and lend my experience to the situation but ultimately, the price offered is your decision.
Property Assessment
I answer any questions you may have as you deliberate. One of the questions is generally about the dollar value of the property on the assessment. An assessment is not the same as an appraisal. Assessments are used as a base for property taxes.
In BC, property assessments reflect prices as of July 1 of the previous year. In addition, year-to-year adjustments are based on a formula and not by inspections. For these reasons, assessments do not reflect market value today.
Not all regions utilize the previous year’s information. Ontario, for instance, uses the same base year for four consecutive years. This certainly increases the distance between assessed value and market value.
Property Appraisal
A property appraisal can be done any time by inspecting the property. For residential properties, the direct comparison approach of similar properties is utilized. The appraised value reflects market value on that day. An appraisal loses accuracy and validity over time because of market changes.
Deposit
I recommend that a respectable deposit be included to demonstrate the seriousness of your offer. The deposit forms part of the selling price and is generally returned to the buyer if a satisfactory agreement cannot be reached. The usual process for releasing the deposit and the contract is through the signing of a release by both seller and buyer.
The deposit is usually held by the real estate company as a stakeholder and not for the benefit of either the buyer or seller. In many jurisdictions deposits are required by certified cheque or bank draft.
In some areas, the custom is not to take a deposit until all conditions have been removed. This is not my preference. It has been my experience that sellers look much more favourably at an offer with a deposit, and even more favourably when it is a generous deposit. When I am representing my client, I want to ensure that his offer is seen in the best possible light. A good deposit accomplishes this.
Contract Dates
I then cover all the dates that appear in the contract.
Of course, there is the date you write the offer. Then we discuss the date you would like to have the keys to actually move into your new home - the possession date. Once we establish that, we can establish the day that money and title change hands or completion date. This day is usually a day or two before possession date. Some jurisdictions also have an adjustment date which can be the same as completion date. This refers to any financial adjustments the lawyer or notary may have to make with respect to property taxes, prepaid fees, rents and the like.
The offer has a limited life span. This means that it is only open for acceptance for a specified period of time. This can be as little as a couple of hours or a couple of days or even more depending on the market conditions and situation. In some jurisdictions, this date is referred to as the irrevocable date.
The last date in this grouping is the acceptance date. This is the date on which both buyer and seller agree to the terms of this contract. This may be the same as the offer date or several days later if counteroffers have gone back and forth. Besides the acceptance date itself, often the time of acceptance is also noted.
Agency Relationship
The Contract of Purchase and Sale also addresses this relationship. It requires that we stipulate who represents the buyer; who represents the seller; is it dual agency; or is one of the parties not represented.
We discussed all of these scenarios when you signed the `Working with a REALTOR®` brochure at our first meeting. The contract requires that the relationships be spelled out here.
Terms Agreeable to both Buyer and Seller
Clients often ask me what kind of subject to’s or conditions should be placed in a contract. There are major conditions that have to be inserted to protect you but aside from that, there are few restrictions. The important aspect is that both buyer and seller have to agree to the terms.
Perhaps this example will illustrate my point.
I had clients who had been renting for years and had been thinking of purchasing a small home. Prices were too high for a single family home but a mobile home might be possible. They drove through some mobile home parks and found one that they just loved - on a hill with ocean view and a sun room! They called me and I suggested that they get pre-approved. A few days later, they told me that they couldn’t get financing for a mobile. I then recommended that they see someone else and I arranged the appointment. In another few days, they called and said that they could get pre-approved, if they had an additional $3,000 for their down payment. Also the pre-approval dollar amount was a bit less than the asking price for the mobile. They indicated that they had a relatively new scooter that they have been trying to sell and if they could sell it they would have enough money for the down payment.
To disclose any of my client’s personal information, I needed to obtain their permission. Having obtained it, I verified their situation with the mortgage broker and then called the listing REALTOR®. I chose to discuss part of the circumstances with the REALTOR® instead of proceeding with an offer because this was a unique situation and I didn’t wish to waste any one’s time. I explained that I had a client who was very interested in her mobile home listing but was a little short on a down payment and could not meet the full price. However, with a little creativity and flexibility we might be able to work it out.
The REALTOR® approached her client and briefed him on the circumstances and, although not excited at the prospect, he was anxious to see an offer. So, after my clients viewed this mobile home, I drew up the offer.
The price was the maximum they could be approved for and, among other conditions, the contract was subject to the seller taking on the scooter by completion day in exchange for $3,000. The seller accepted the contract as written. Apparently, the seller was anxious to relocate and purchasing the scooter was a means by which he was able to move on with his life. Needless to say, I had very happy clients who delighted in their new home!
It has been my experience that a little creativity and working ‘outside the box’ can turn into a win-win situation for buyer and seller. Those times make my job so delightful!
Inclusions in the Purchase
As a rule, all fixtures are included in a purchase. These generally pertain to items which are ‘attached’-- light fixtures, doors, curtain rods, tracks and valances, fixed carpeting and so on. Not everyone views ‘fixtures’ in the same way so it is best to specify some of these inclusions. For example, a built in vacuum cleaner is attached and should, therefore, be included. However, the attachments may not be included!
Items like washer and dryer and stove and fridge are not automatically included unless they are built in. Items such as drapes and curtains are not automatically included but the rods are. When in doubt - clarify!
Subject to Clauses or Conditions
All subjects/conditions must be clearly written, have a time frame for satisfying the condition and indicate if they benefit the buyer or seller or both.
Financing
We now decide what conditions are required to protect you in this contract. As your REALTOR®, I certainly have recommendations in this area. The major one is the financing. If I don’t include this condition, and for some reason your mortgage does not materialize, you are still committed to this contract. Even if you have been pre-approved, I still include this clause because the property forms part of the mortgage qualification.
