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