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ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

July 20, 2016 | Realtor 101

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

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Are realtors redundant? Obsolete? With no redeeming economic value? (Other than buying Audis, of course.)

No doubt we’re moving in that direction, with more than 90% of buyers saying they conduct almost all of their property research online before ever dialing the dude from Re/Max with a juicy listing. Not far off is the publishing of Zillow-type info all over Canada (only in NS now) that gives buyers even more of the good stuff – past sales figures, price adjustments, days on market, property tax history etc. That’s a certainty since the Toronto Real Estate Board was reamed by the federal competition cop.

Already, FSBOs can throw a few bucks to a discount real estate outfit and end up on MLS, thus negating one of the big advantages realtors used to enjoy. It’s also common to apply for a mortgage online – even the big banks offer that service. So, what does anybody need a “real estate professional†for, besides giving you a promotional pen and telling you to initial inside all the little circles?

Well, there are reasons, even if they’re dwindling. Smart buyers will always have an agent representing them – who can pull up neighbourhood ‘sold’ comparables you don’t have access to, who see new listings two or three days before they make it onto realtor.ca, who specialize in a certain hood and can alert you to issues (“…the guy who bought number 112 is a neo-Nazi with a Hummer…â€) and who can assist during the offer-writing and negotiating phase, especially if there are multiple offers or you’re trying to buy from a dork.

For sellers, an experienced agent sure helps in setting the right price, which is where most FSBOs fail (almost all are greedy, which is why they DIY). They can ‘shop’ an offer when one arrives to try and drum up competitive bids, stage agent open houses for maximum exposure, show your property day or night, vet potential buyers and ensure they don’t steal underwear during visits. Be a good client, and you also might get a Royal LePage calendar.

Having said this, there are 109,000 real estate agents in Canada with more continuously joining the ranks after a grueling few weeks of quasi-training. Many are duds. Choose wisely. And be very careful about what documentation you sign.

For buyers, that means no BRA, or at least one which is severely restricted. The Buyer Representation Agreement may seem harmless, and the buyer-agent you engage may insist upon it, but beware. There are several instances in which you could end up being liable for paying commission on a purchase, or even having to fork over big bucks for a deal the agent was never involved in.

Either refuse to sign a BRA, or do it only in connection with an offer. Then make the location on the front page very specific. The agent might just write in “Toronto†or “Edmontonâ€, but instead replace that with the address of the house you’re going after – and for a specific, short period of time. Like two days, during which sign-backs may occur. Without that protection you could end up with a nasty surprise if you happen to buy another house even miles and months distant, without the help of that agent.

For sellers, resist any realtor’s attempt to fill out and sign a property disclosure form. In Ontario it’s called the SPIS, in Nova Scotia the PCDS, in Alberta and BC the PDS. These are toxic, which you can easily tell because lawyers love ‘em.

The idea is that a homeowner discloses every wart and defect giving potential purchasers full disclosure. In actual fact, this protects the realtor’s butt, since it’s actually his job (not yours) to ensure the property is fairly and completely presented to any potential buyer. The disclosure form can cause big problems, and has resulted in hundreds of lawsuits, because it’s vague, open-ended, complicated and imprecise. If, for example, you declare you’re not aware of water problems in the basement or defects in the roof, then a big storm floods the place, you have a legal problem. This would be despite any due diligence the buyer did on his own, including a home inspection.

You don’t need to fill out a disclosure form. Nobody can force you to do so. It won’t affect the marketing of your property, the price or in any way deter a buyer. The last thing you should do as a seller is declare your place is perfect, when in fact you have no idea what’s about to fall off, who’s buried under the basement or what’s ready to go bust in the night. Why court the hassle?

In short, realtors are just like bad dogs. Lovable when leashed.

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July 20th, 2016

Posted In: The Greater Fool

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