How to Write a Real Estate Offer the Right Way!
As a buyer, when writing an offer on a property, you want to be able to pay the least possible amount for your
home. Sometimes buyers will offer 5-10% off of an asking price for no reason other than they were told to by a "friend" This is so silly! You may want to offer more, you may want to offer less. The only way to make a reasonable offer is to do your homework.
REAL ESTATE TIP #1 - What the seller paid for their home is irrelevant.
REAL ESTATE TIP #2 - What the seller is asking for their home is also irrelevant.
Knowing why a seller is selling is always helpful when you make an offer, but this information is protected by the sellers real estate unless it is allowed in writing to be disclosed. However knowing the reason for selling is still irrelevant on the true market value of the home, as is the asking price. There are several things to take into consideration, prior to making an offer on any home.
Is it a buyers market or a seller's market? Knowing what type of real estate market you are in will help you choose an initial offer price. Completing a community Absorption Rate is the easiest way to know.
Edmonton Real Estate Agents have access to this information and as a rule of thumb, the quicker, the possession date, the more motivated the seller is. Most homeowners in Edmonton have a 30-day negotiable possession date. If a longer possession date or a set date is asked for, this is an indication which the seller needs a specific date and can be more important than price. Keep in mind, if the property is tenant occupied, tenants do have a 90-day tenant-right. Normally, homeowners with tenant occupied properties or vacant property are more motivated.
Your REALTOR® will know the history of this home. How long the sellers have owned the property, how long they have been trying to sell it and if there have been any price adjustments. Your real estate agent is also required to pull the title of the property which will indicate any recent financial debts including the current mortgage to ensure there will be enough funds to close on the possession date.
Condition and Size:
Size is a factor of price more in places like China than Edmonton. The value of a home is in the condition. You may want to go back into the home to take a better look at the overall condition. Is the flooring laminate or hardwood? Are the faucets Walmart or Moen? Has the yard been meticulously maintained properly or neglected? Will you be replacing any fixtures, chattels, windows, shingles in the near future? Look at the property through the eyes of your experienced real estate agent. They will notice things you don't.
Complete a Buyers CMA:
Examine all recent comparable sales. Only use recent properties that are similar in configuration, age, and location to the home you want to buy. Your REALTOR® can complete a buyer's comparative market analysis (CMA) for you.
REAL ESTATE TIP #3 -If the property has been staged, don't be fooled by how pretty it looks. Staging a home does not increase property values.
Should you fire your Realtors® (part 3)
Every Realtor and Real Estate Companies in Edmonton market homes differently. Some companies and agents will put your home on the public MLS, charge an upfront fee and expect you to do everything else, hoping either you find a buyer yourself or another agent from another real estate company brings you a buyer for your home. A full-service company will do all of the work for you and more. Below are three more reasons to fire your Realtor.
4. Your Realtor is not looking after your best Interest
A Realtor's obligations are set out in your agreement in plain sight. During the listing agreement, your Realtor must be impartial in dealings with you and other buyers being represented by the same agents with an interest in your property.
- If your agent has found a buyer for your home and is representing both you and the buyer, an acknowledgement form must be signed but all parties prior to the offer presentation. If you are not comfortable with your Realtor representing both you and the buyer with the sale of your home, both have the option of being represented by another Realtor or real estate brokerage prior to the offer presentation.
5. Your Realtor is not marketing your home
Under section 4.2 subsections (a) and (b) of the Exclusive Seller Representation Agreement, it states:
- In addition to the responsibilities described in the Consumer Relationship Guide, the designated agent (your Realtor) must also:
- (a) market the property, until the property is sold under this agreement, or this agreement ends.
- (b) keep you informed of their marketing activities and any resulting transaction.
A good realtor will continuously keep marketing your home through various types of marketing exposure to find the right buyer and keep you informed. Don't expect to find that perfect buyer if the only thing exposing your home for sale is the address and a few photos on the Multiple Listing Service (Realtor.ca).
6. Confidential Information Exposed!
Whether you list with a common-law real estate company or a designated real estate company, the Consumer Relationship Guide forms part of both a buyers agreement and a sellers agreement. In this document. it clearly states the agent's fiduciary duties which include:
- Undivided loyalty: The agent must act only in your best interest and put them above their own and those of people. The agent must avoid conflicts of interest and must protect your negotiation position at all times. In lamens terms - your reasons for selling cannot be disclosed unless it has been put in writing.
- Confidentiality: The agent must keep the information confidential, even after your relationship ends. Confidential information includes your personal information, information about the property and information about the transaction (except information the law says must be disclosed or information you agree to disclose).
For more information on the Alberta Consumer Relationship Guide, contact the Alberta Real Estate Council.
Have a question? Feel free to reach out.
Should you fire your Realtors® (part 2)
It is always best to try to resolve any issues or concerns you have prior to firing your agent. However, if you have made a mistake and chosen the wrong Realtor to represent you on the purchase or sale of your home, the best thing to do what is best for you and move on. Below are the top 3 reasons home sellers and buyers fire their Realt Estate Agents.
Reason 1: Lack of communication
You have signed a listing agreement with a Realtor and now have no idea what is happening with the sale of your home because your agent is not responding to your texts, emails or phone calls. A lack of communication is the biggest complaint Realtors receive from the public and is unacceptable. Even if there has not been any activity on your property, your Realtor should still be communicating with you to let you know there is no interest. A good Realtor will have systems in place to ensure you receive updates on the sale of your home on a regular basis. These updates should include:
- Feedback from all and every showing one you home
- The most recent real estate community activity including which homes have recently sold had price adjustments, and the homes which have been removed from the market.
- Updates on your neighbourhood house prices - Should you really drop your price?
- Feedback from Open houses
- How many people are looking at your home online
- The number of people who have viewed the videos
- All internet and yard sign inquires
- Any mortgage changes will affect the sale of your home.
Reason 2: Your Photos Suck!
Let's face it! If your photos on the MLS are distorted, blurry or upside down, it shows the effort your Realtor is putting into the sale of your home. It also shows the quality of the Realtor you hired.
If you are a hoarder, have extremely messy tenants or your property needs some major repairs, there is still no reason why your MLS photos should not be clear. When a buyer views your home in person, they will see the condition of your home, so why hide it.
When putting photographs on the MLS, it is to attract buyers looking online. It only takes a few minutes for your home to show it's best. This is easily done and only takes a few minutes to remove anything in the photos which would discourage a buying from wanting to see your home. This is not rocket science.
- Remove any signs of pets including their toys and food dishes.
- Make your beds and open your blinds and curtains
- Clean off your kitchen counters and hide dirty dishes
- Don't over stage your home - This just clutters the photos
- Put the toilet seats down
- Cut your grass and shovel your walkways.
Reason 3: Showing you the wrong houses
When you sign a Buyer Brokerage Agreement with a Realtor to help you with the purchase of a home and you are discouraged with every property you have seen, this may be a sign you have chosen the wrong agent. As a buyers agent, your Realtor should be taking the time to search listings WITH YOU to determine which properties will work best for you and eliminate those which will not. Its fun to look at houses online, but great Realtors use a few techniques to make a property look better than it actually is. It's our job! When you are viewing homes online with your Realtor, you will be able to see the "private" comments including any contingencies which would discourage you from purchasing that home.
By eliminating "undesirable" properties will save both you and your Realtor time and frustration. It will also help those home sellers. Every time a sellers home in Edmonton is shown, the seller tries to make their property show its best by cleaning up, removing the kids and the pets and accommodating your showing time.
If you still have questions or concerns, please contact the Edmonton Real Estate Association at 780-451-6666.
Have a question? Feel free to reach out.
How to Fire Your Realtors®
There are a few reasons to fire your Realtor. If you feel you made a mistake by signing a selling agreement with the wrong Realtor, the best thing to do is to correct it and move on. If your Lawyer or Doctor was not working in your best interest, would you fire them too?
Your listing agreement is usually for a period of three to six months (sometimes longer) and you are entitled to cancel at any time. This can be done with a standard Alberta real estate form. A Realtor (depending on the agency designation) also has the option of terminating your agreement at any time without your consent, but this rarely happens.
If you have hired the wrong real estate company or agent to represent you, fire them. Do it professionally and do it in writing. There are a few things to consider prior to firing your Edmonton Realtor. All of these contingencies will be set out in your original listing agreement.
Who owns the listing?
A: The listing is owned by the brokerage, not the Realtor. If you have a problem with the agent, call the broker. If you have a problem with the broker, call consumer affairs and the Edmonton Real Estate Association.
Is there a fee to cancel your listing agreement?
A: There may be a cancellation fee in the standard agreement. This fee is usually the cost to cover expenses already paid by your Realtor prior to your cancellation. The service fee amount will be set out in the agreement you signed. However, if you paid a fee upfront, there usually is no cancellation fee.
Will I still have to pay a commission after I fire my agent?
A: If a buyer was introduced to your home during the term of your listing agreement and you sell it privately (during a specified time in the agreement) to that same buyer, commissions will be payable.
Can I hire another agent immediately?
A: Yes. Once your home is off of the market, you are free to list your home with any licenced real estate agent.
When you are ready to fire your Realtor, simply inform your agent that you would like to cancel the listing and ask him to provide you with the cancellation listing form. There will be two choices on this form. Make sure you have a property termination end date, the broker (not the Realtor) has signed and you have received a copy.
- 1. Unconditional termination
- Which allows no further obligations for either the seller or Realtor
- 2. Conditional Termination
- Your agreement will end on the termination date but your obligations will continue under the terms of Section 10 of the Exclusive Seller Representation Agreement. There may also be an additional term.
If your Realtor fails to provide this form within a timely matter, contact the brokerage and tell them about your grievances with the agent.
Can you fire a Buyers Agency or Buyer Realtor?
Yes. It is a different form, but you are free to fire your Realtor when buying. There may or may not be a small fee to get out of the agreement. This fee would have been set out in the original buyers' agreement which states: If you change your mind about looking for a property, you must tell us in writing. You must reimburse us for our reasonable expenses up to the time you tell us. Reasonable expenses will include: (If this section is blank - no penalty will be payable). However, this does not allow you to approach a seller that has been introduced to you while working with your realtor. If you do this, you will have to pay a full commission as set out in the original buyer brokerage agreement.
If you have any questions, both RECA (the Real Estate Council of Alberta) and EREB (the Edmonton Real Estate Board) have plenty of great information to help you make the best decision for you!
Have a Question? Feel free to reach out.
Understanding Buyers Brokerage Agreements in Alberta
Buyer Brokerage Agreements have been around for several years, and only recently has been mandated for real estate agents to have buyers under the agreement when working in a "client status". This legal change created security for both consumers and real estates in Edmonton and throughout Alberta. This form states the responsibilities of both the buyer and their real estate agent including:
- The mandated Fiduciary Duties, to protect the interests of the buyer
- The buyer cannot hire more than one broker or real estate agent to represent them
- The term of the agreement. Depending on the real estate market and how long the real estate agent chooses to work with a buyer, this agreement is normally 30 Days to 1 year and allows enough time for the buyer to purchase a home. If the buyer has not purchased a home during the time frame, they may extend the agreement or sign with another agent.
- The retainer fee (normally $1000 - $2500) is held in trust by the real estate agent/broker and forms part of the buyers down payment.
- Remuneration is stated in the agreement and can not be changed without written consent from all parties. This protects the agents' commissions and allows the buyer to know how much the REALTOR receives for their services. (usually paid for by the sellers real estate agent)
- While under the agreement, If the buyer elects to purchase a property without the help of their real estate agent, they will owe the agency the commission set out as per their Buyers Brokerage Agreement.
- This agreement also lays out the obligations and duties of the real estate agent ensuring the agency is working in the buyers best interest. Some of these obligations may include
- Showing you all properties you may be interested in as soon as possible
- The duration of the agreement
- Advertising for properties that meet your search criteria
- Pulling land titles to ensure closing capacity
- Setting you up on Auto-prospecting.
- Fiduciary Duties of the real estate agent
- Explaining and helping to prepare the offers to purchase
- Negotiate favourable terms for the buyer
- Provide a Buyers CMA to ensure you are not overpaying
- Inform you of all aspects of your offers including any counters
- Assist you with a chose of mortgage brokers, inspectors, lawyers, etc
- Any other relevant services you may require
For more information on working under a Buyers Brokerage Agreement, feel free to contact us.
What Happens if your Real Property Report does not Comply?
If you are selling a home and have been told that there is no compliance or you have a non-conforming property, don't panic if you have not yet accepted an offer to purchase. Your Edmonton real estate agent can walk you through how to write or amend the purchase agreement to ensure you will not be penalized. However, if you have sold your home and are just finding out, you have no compliance or non-confirmation, talk to your lawyer.
Residential AREA real estate purchase agreements contain a clause that clearly outlines the factors of the real property report.
"The current use of the Land and Buildings complies with the existing municipal land use... buildings and other improvements on the Land are not placed partly or wholly on any easement ... do not encroach on neighbouring lands ... directly on the real property report ...location of Buildings and other improvements on the land complies with all relevant municipal bylaws, regulations or relaxations ... prior to the Completion Day, or the Buildings and other improvements on the Land are non-conforming buildings as that term is defined in the Municipal Government Act (Alberta) ...current use of the Land and Buildings and the location of the Buildings and other improvements on the Land comply with any restrictive covenant..."
Drawbacks of Non-Compliance or Non-Confirmation:
Knowing in advance that there may be an issue with compliance or non-confirmation on your real property report will save time, money and stress, by dealing with the issues in advance. Depending on the nature of the deficiency. A request to the municipality for a certificate may lead to a requirement for substantial alterations, relocation or destruction of certain structures.
The buyer may choose not to go ahead with the purchase until deficiencies are resolved. Under the AREA contract, the warranties provided by the seller only relate to development issues and not building code issues; and while there is some debate among lawyers on this issue, most take the view that any building code deficiencies including the lack of building code permits are the responsibility of the buyer.
Knowing in advanced provides certainty for both buyer and seller at the time of closing regarding compliance with development issues and provides the opportunity for a buyer to have the seller remedy any deficiencies in this regard prior to or in conjunction with the closing.
It can be used to address the validity of permits that may or may not have been pulled to add, replace or alter a deck, garden shed, gazebo or greenhouse. Any concerns or questions regarding issues with your real property report, please contact your real estate lawyer. Note* The town of Morinville no longer requires compliance.
Edmonton Realtor Fiduciary Duties
Real Estate Agents in Edmonton and the province of Alberta who is in an agency capacity for buyer or seller clients have duties mandated by the legal system called fiduciary duties. The position of the REALTOR® is a fiduciary capacity, acting in the best interests of the client.
- Obedience: Your real estate agent must obey your instructions as long as it is legal and in accordance with your brokerage agreement.
- Loyalty: Your real estate agent must be loyal and keep your best interests ahead of those of any other party, including themselves.
- Disclosure: In the province of Alberta, the law requires real estate agents, whether in an "agency" capacity or not, to disclose material facts to their client. Material facts are those that, if known by the buyer or seller, might have caused them to change their purchase or sale actions. In a signed agency agreement, your real estate agent must disclose more than the material facts. They must disclose all known or suspected information regarding the purchase of the property.
- Confidentiality: A real estate agents fiduciary duty of confidentiality means that nothing learned about you can be disclosed including your business, financial, personal affairs or motivations. This confidentiality fiduciary duty must be maintained for eternity.
- Accounting: Your real estate agent is accountable for all documents and funds in the transaction. Accurate reporting of the whereabouts of all monies pertaining to the transaction and the ultimate disposition. All documents are to be kept for at least six years.
- Reasonable Care: The words "reasonable care" are only finally fully defined in many cases by a judge or jury when it's too late to change your actions. Most Edmonton Real Estate Agents, as a rule of thumb, go by the ethics code "What we know, you know" when acting in an agency relationship.
Whether you work with a real estate agent in Edmonton under a "customer status" or a "client status", before signing any other paperwork, in Edmonton and the surrounding areas have a regulatory requirement to present and discuss our Consumer Relationship Guide with you which includes the real estate agency relationship you have chosen to work under. A copy of this form can be found at the Real Estate Council of Alberta.
Have a question about Edmonton Realtor fiduciary duties? Contact us.
Why You Should Always Pull a Land (Property) Title Search
Basic information on a property title will include:
- The current owners' name: In the event of an estate sale, probate may or may not have been completed and your real estate agent will ensure the person selling the property does have power of attorney. In the event, there is only one person on the title in a marriage, a dower consent will also be needed to complete the sale.
- The Legal description: The municipal or mailing address is different from the legal description and includes a block, lot and Plan number.
- The amount of the last mortgage, any second or third mortgages or the original purchase amount at the time of purchase or there may be a nominal fee.
Other things which can be revealed on a property title search may include:
- Outstanding or owing property taxes, special assessments, delinquent condominium fees which have not been paid by the seller.
- Outstanding creditors including other financial institutions and businesses for things like unpaid vehicle loans, furniture stores, construction loans, personal loans, etc
- A lis pendens, which is normally added by a lawyer during divorce procedures and "freezes" the transfer of a property until all parties are satisfied.
- Easements and Liens from a third party, such as the municipality, utility company or Environmental liens, who may have rights to use part of your property.
- Covenants are restrictions on the land that can limit what can be built on it, where it can be built and from what materials it may be built. Breaching a covenant can have serious consequences so it is necessary to be aware of any covenants on your property.
What is a Real Property Report?
A Real Property Report (also known as the RPR) is a legal document that clearly illustrates the location of significant visible improvements relative to property boundaries. It is a plan or illustration of the various physical features of the property, including a written statement detailing the surveyor’s opinions or concerns.
Who needs a Real Property Report?
Part of the standard real estate contracts in Alberta will have a term in the document states the seller will provide a current real property report with the compliance report to the purchaser upon closing. Prior to putting your home on the MLS System and/or Realtor.ca, Sellers should order a new RPR to protect themselves from potential future legal liabilities resulting from problems related to property boundaries and improvements. Your REALTOR® can assist you with this process to ensure your property complies with municipal requirements.
Do I need a Real Property Report for a Condominium?
Bareland Condominiums require Real Property Reports. Conventional Condominiums do not require an RPR.
How does a Real Property Report protect you?
Purchasing a property may be the largest financial investment you ever make. With a Real Property Report, owners are aware of any boundary problems. They know whether their new home is too close to the property line, or part of their garage is on their neighbour’s land or vice versa. Since legal complications may occur if a sold property fails to meet requirements, a Real Property Report protects the seller.
What is on a Real Property Report?
The legal location description of the property and municipal address, dimensions and directions of all property boundaries, any improvements on the property, right-of-way or easements, any visible encroachments, a duly signed certification and opinion by an Alberta Land Surveyor and a permit Stamp where applicable.
How much does a Real Property Report cost?
The amount of work to prepare a Real Property Report varies between properties. Lot size and shape, number of buildings, natural features, age and availability of the property boundary information all affect the cost. However, if you are planning on selling your home in the near future, the sooner you order your Real Property Report, the more economical it will be plus any problems can be identified and resolved before a sale is finalized.