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September 14, 2018 | The Trap

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.

Dom and his squeeze are regular readers, recently out looking for digs to rent. “We found a place on our own via MLS,” he reports. “We called the number and a property management company sent a real estate agent to let us into the vacant house.”

So far, so good. Now check out what happened:

One more visit with the agent a couple days later and we processed the lease online with the property management company. Beyond opening the door for us, the agent wasn’t involved in the final documentation.

After approval of the lease, the real estate agent sends us 3 documents to sign and demands 1/2 the 1st month rent as a fee, $1200. At no time did the real estate agent mention about fees during the 2 house visits. We believed that since the property manager sent her, the property management would cover any agent costs.

The 3 documents are:

*         Working With A Realtor (Form 810) 1pg
*         Buyer Representation Agreement (Form 300) 3 pgs
*         Confirmation of Co-operation and Representation (Form 320) 2 pgs

From your blog I understand I don’t need to sign the BRA.

Given that we never agreed to her being our agent up front or discussed fees, do I need to sign any of the documents or pay her?

Tsk, tsk. Is this realtor greed. Or a landlord trying to wriggle out of the arranged commission on a successful rental?

No matter, Dom. You need not sign any documentation with the realtor nor, of course, pay a commission to the guy who’s acting on behalf of the landlord taking your rent money. However, if you do sign the BRA, all bets are off. Then you’ve agreed to pay a portion of the commission outstanding, or worse. The landlord could refuse any compensation to the agent, leaving you to pick up the whole tab. And still have to pay the rent.

This is a fine example of why nobody, ever, anywhere, under any circumstances (unless you have a law degree and specialize in real estate transactions) should sign a Buyer Representation Agreement. It’s a trap. The document is wholly one-sided, designed to protect and reward the realtor, heaping obligations upon the buyer while conferring no benefit.

Shame on this woman for trying to ensnare you, Dom. Print out this blog post, hand it to the person, then suggest where she might file it.

$     $     $

As you know, politicians have done more to make housing unaffordable and screwed-up than any other group.

Cheap interest rates inflated prices dramatically and led to historic levels of family debt. So they’re now swelling. Loose lending regs that encouraged borrowing have been turned on their head because people did exactly what they were encouraged to do. Real estate’s been milked relentlessly by local governments through things like Toronto’s double land transfer tax and Vancouver’s insane ‘empty-houses’ levy. One government encourages real estate with the RRSP homebuyer’s plan and a capital gain exemption, then another squeezes homeowners with a speculation tax, a luxury tax and a non-resident’s tax. Ontario and BC are trying to manipulate the market while municipalities wildly inflate new housing costs by insisting developers pay for public services.

It’s a mess. Soon to get worse.

The current election campaign in YVR is a case in point. It’s all about housing – just as every other BC vote has been lately. The poor locals are obsessed with this. One mayoralty candidate (Kennedy Stewart) vows to create a renters’ advocacy office to battle landlords, create 25,000 affordable housing units and triple the empty-houses tax. Oh yeah, and he wants the city to expropriate the private property of people who the state believes are ‘negligent’ landlords.

Meanwhile his opponents are howling against a 4.5% rent increase the province is allowing for 2019 (hardly a stretch when inflation is 3% and owners’ mortgage costs are rising). One (Ken Sim) would immediately allow homeowners to create two suites in every detached dwelling, tripling the density of residential zones, helping to erode property values and hammer down rents.

The drift left in local politics is unmistakable, and the consequences predictable. Politics as usual is bad enough. The politics of envy, even worse. Resist it.

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September 14th, 2018

Posted In: The Greater Fool

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