Before buying real estate in London Ontario, be aware of what you are signing!
Why is That?
Most Realtors may want you to sign a Buyer Agency Agreement because without a written agreement; there are no guarantees the Realtor who finds you your new home will get paid.
Most agency agreements say, in effect, that the Realtor will help you find a place, and you agree not to work with any other real estate agents during your search. That’s like someone asking you to get married, and you haven’t even had your first date yet!
Now, after reading this, hopefully, you will know enough to maybe go out with this Realtor on at least one date (viewing a few homes). Still, you may feel uncomfortable signing a contract that obligates you to this Realtor until you buy or die.
How can you handle it?
In Ontario, licensing laws require that you acknowledge receipt of a copy of The Buyer Agency Agreement which explains thoroughly what you are signing. Who represents whom in the transaction?
I think it is essential that you understand what it is that you sign, and keep in mind, this form is written by RECO (Real Estate Council of Ontario), and there is a lot of language in there to ensure that when you buy a home, that Realtor will get paid, either by you or by the seller.
Also, keep in mind that you are free to negotiate changes any of the boilerplate languages if there are terms or conditions you can’t live with
Here are some of the major issues it will include:
- How much does the broker charge and how is that paid? In Ontario, the sellers usually pay the brokerage fees, and I’ve even heard Realtor’s telling people that their services to buyers are “free.” Not quite. If the listing company has negotiated payment from the seller (called a “co-op” commission) to your Realtor of less than the amount of the fee he or she charges, the agreement may say that you must make up the difference. In other words, if your contract calls for a 3% payment, and the co-op commission is only 2.5%, you may have to write a cheque for the difference at settlement.
- Does the buyer broker charge an up-front contingency fee? If so, how much is it? Is it refundable under any circumstances? Is it credited back to you at closing toward your down payment and closing costs? This is one way that a Realtor can help weed out real buyers from tire kickers, and it’s becoming more customary.
- How long is the term of the agreement? If you are not sure you want to enter into something long-term, and if the Realtor insists that you have to sign something, make it a week or so. You can extend your contract at the end of that time – assuming the Realtor is doing a good job and you both want to continue the relationship.
- What geographical area does it cover?
- What type of property?
- Is it possible for you to break up once you’ve signed on the dotted line? If it turns out that you’ve made a mistake and don’t want to work with that Realtor after all, how do you get out of it? Most brokerages will let you out, but they don’t have to make it easy for you unless you have included language that lets you terminate.
When a good Realtor enters into a buyer-brokerage agreement with a new client, they know that they have to earn the trust and loyalty that the agency agreement represents. But the agreement has got to be more than a piece of paper. And there will be essential elements of the relationship that can’t be written into a boiler-plate contract.