WHAT HOME PURCHASERS SHOULD INSIST ON FROM REAL ESTATE AGENTS

Until recently, there was a Real estate boom, with prices of homes reaching astronomical heights. Rentals were down, but sales were way up. Real estate agents and brokers were extremely busy and may have omitted to take certain precautions on behalf of their clients who were looking to purchase a home.

There are certain safeguards real estate brokers or agents should perform on behalf of their clients who are looking to purchase a home. Clients should not have to ask for their realtor to take these steps and should always insist that their agent will be protecting their interests before signing a Buyer Representation Agreement with any real estate broker.

These precautions are the responsibility of real estate agents and brokers and the omission of any of them may constitute a breach of their fiduciary duty to buyers.

The first is a comparative market analysis. This is a study of the real estate market and similar properties in the area of interest and is used to help determine the range of market values. This would enable the purchaser to find out the fair market value of the property they are interested in.

In addition, there are certain conditions that should be contained within an agreement of purchase and sale. For example: closing should be conditional upon mortgage financing (if applicable), the satisfactory results of a home inspection and the sale of the purchaser’s existing home (if applicable).

If you are counting on financing to enable the purchase of a home, ensure that your purchase is conditional upon financing. You do not want to be stuck in a purchase and sale agreement only to find out (too late) that the financing you were depending on has not been approved. If you omit this very important condition, you could end up losing your deposit and you may be liable for the full amount of the seller’s losses, thereby costing you thousands of dollars.

Buyers should also insist that the purchase be conditional upon the home passing an inspection to make sure that they are not purchasing a house with any defects or deficiencies that could potentially result in additional money to rectify.

Also, if buyers are trying to sell their existing home and cannot afford the expense of two homes, or if they are counting on the proceeds of the sale of their existing home to finance the purchase of their new home, they should ensure that the purchase of the new home is conditional upon the sale of their existing home.

One other item to be very cautious about is entering into a Buyer Representation Agreement (also known as a “BRA”). This is an arrangement with a realtor or broker whereby home buyers contract with a particular broker or agent to have the realtor represent them for the purchase of a home. The BRA also requires that the Buyer client will be responsible to pay a commission to the realtor if the buyer client purchases a home within the time period specified in the BRA. Even if the purchaser finds a home on their own and the broker or agent had absolutely no involvement with that whatsoever, buyers could still end up owing the agent or broker a commission due to the BRA.

It is not easy to get out of a BRA, both parties have to agree to it and both parties have to sign a Cancellation of Buyer Representation Agreement. It must be signed by both the buyer and brokerage.

Please note these materials have been prepared for general information purposes only and do not constitute legal advice. Readers are encouraged to seek legal advice by contacting Frank Feldman* regarding any specific legal issues.

Please note these materials have been prepared for general information purposes only and do not constitute legal advice. Readers are advised to seek legal advice by contacting Frank Feldman* regarding any specific legal issues.

Call the Real Estate Law Experts at Frank Feldman Law Today!

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