Prior to 1995 the rules were different as they pertain to who is representing whom in the real estate transaction. At that time, both the listing agent, and the agent showing homes to buyers (called a sub-agent), were both working for the seller.
There was no confidentiality whatsoever. For example if the seller asked the sub-agent ‘Will your buyer pay more?’ that agent was supposed to reveal anything that the buyer had told them. For many of us however that didn’t happen.
Even though agency law supported the seller, we as agents showing houses and condos developed a bond with our buyers and we didn’t subscribe to the concept of both agents representing the seller.
Finally, in 1995, the agency laws in Ontario changed so that the buyer could choose to have their own representation. Thus the concept of buyer agency was born.
Now, once a real estate purchaser signs a buyer agency contract with their agent, that Realtor is committed to representing the best interests of the buyer throughout the real estate transaction.
When you are being shown homes by an agent who does not have a buyer contract, it means that you’re only entitled by law to a few things. You will be basically shown the property, and be told the truth about the property, but you’re not entitled to any representation whatsoever and you’re not entitled to be counseled in any way.
For example, you may not have home defects pointed out to you.
In fact, if the agent who’s showing you homes is not your buyer agent, they are automatically working for the seller and must disclose to the seller everything you say about your financial situation or the homes you’re looking at.
The advantage of having a Buyer Agent working for you is that he or she MUST represent your best interests in that showing and during the entire buying transaction.
So when you go in to look at any property, you’re going to have the defects AND faults pointed out to you as well as the good features.
Your buyer agent will do a market analysis to determine the fair market value for the house or condo you’re considering purchasing. He or she is dedicated to getting the best price and terms for the you and anything that you tell the agent throughout the buying process and the negotiations must remain confidential.
The law states that this Buyer Representation Agreement must be signed at the earliest possible moment in the home buying process. Why? Because if the Realtor is not representing the buyer, then they are, by default, representing the seller and it’s certainly not in the buyer’s best interest to have that happen.
A typical contract length is between 6 months to 12 months and we do offer an ‘Easy Exit Buyer Contract Cancellation Guarantee’ whereby, if you’re not happy with our service, we’ll cancel the contract without question.
Remember, if you don’t sign a contract with a buyer agent, that agent is automatically working for the seller which is obviously not in your best interests.
Of course you can choose to go through the process on your own but it’s not recommended. There are many parts of the real estate transaction which an experienced buyer representative can help you with.
AND… the great thing is that it doesn’t cost you anything... it’s free! Your Buyer Agent is paid by the listing agent, so you don’t pay a penny yet you get terrific representation.
By the way, don’t consider using the Listing Agent to represent you during the transaction. The listing agent by law must represent the best interests of the seller. Therefore they are supposed to be getting the seller the highest price possible. So as you can see, it is by far very beneficial to have a Buyer Agent represent you.
Are you asking yourself “What’s the motivation of my Buyer Agent to get me the best price if they’re paid on commission”? That’s a very good question and here’s the answer.
First, our entire Team works under what we call a ‘By Referral Only’ philosophy. That means that we want to ‘WOW’ you during the home buying process so you will refer your friends and family to us in the future..
In any year between 40-60% of our Team business is from referrals... past clients coming back to do business with us or them referring their friends, etc. So this is a very important part of our business.
Secondly, when you get down to the dollars and cents of it, it really doesn’t make a lot of difference to us.
For example, we’re paid typically 2.5% of the sale price. For every $1,000 of the sale price, that’s $25 dollars. After Revenue Canada and RE/MAX take their share, that is reduced to about $15 dollars per $1,000.
So... if we can save you $5,000 during the negotiations.... that’s a big number to you isn’t it? You know how long it takes you to save $5,000.
However, we’re losing about 5 x $15 = $75 bucks... not a big deal to us!
So we’d rather ‘WOW’ you and get your referrals and have you become a Client For Life. Makes sense doesn’t it?
Here is a link to the ‘plain English’ version of the Buyer Representation Agreement so you can peruse the content.
One of the things we do at a Buyer Planning Session or Consultation is review the Buyer Rep Agreement and then let you take it home to read over carefully. Then you can decide if we’re the right fit to work with you and help you buy your new home.
What areas of the real estate buying process would you be most interested in learning about?
Text or email me to set up a few minutes to chat over a coffee or the phone.