August 03, 2014
Once when the buyer has selected the house he would like to purchase, the next step is to negotiate the selling price of the house. To do that, the buyer's agent will require the buyer to sign a series of documents. Some documents are good for the buyer to sign. Some documents are not! One of them are waivers!
Waivers is a simple form that the home buyer signs to waive the conditions in the contract to purchase to house. The conditions in the contract, which is usually conditional upon financing, home inspection and appraisal value, protect the buyer from having to buy the house, if the buyer conditions cannot be satisfied. The contract usually indicates the conditions must be met within a week where the buyer uses that time to find a lender and home inspector to see if the house satisfies the conditions. If and only if the conditions are met, should the buyer then sign the waivers.
Now, imagine this:
You are new home buyer. Your trustworthy Real Estate Agent hands you a bunch of documents to sign. How often do you actually read through each document? There are so many documents and they can be so confusing. What is the likely hood of you simply giving up reading the documents and just signing everything the Agent tells you to sign?
Now Imagine if your Agent sneaks in the waivers and you being in a state of total confusion, what is the likely hood of you actually signing these waivers?
1. The moment the home buyer selects a house to buy, the agent will then have to proceed with several contracts to sign.
2. These documents are presented in a complex manner that confuses the buyer. The first couple of contracts, the buyer must really sign.
3. At this point of confusion, the buyer would eventually lose concept of understanding and pretty much, will sign anything because it just appears everything needs to be signed, any ways.
This the moment when the Agent quickly sneaks in the waivers and the buyer without even knowing it, signs it because the buyer becomes unaware of what the document is really about!
Now at this point, the scam is not yet finished because the waiver still has to be sent to the seller.
So how does the Agent trick the buyer into agreeing to send the waivers to the sellers?
1. The contract will expire in week. So the Buyer's Agent only has a week to send the waivers to the sellers.
The first thing the Agent does is calls the lenders and other parties involved early to see how the process to checking the contract conditions is going. By calling early, the lenders and other parties will not be able to claim the property to be purchased is no good. In fact, more often than not, the lenders will actually tell the agent there will always be a way to get the money for financing. The lenders say that really just to comfort the Agent they he is in good hands.
2. Using this confirmation, the agent quickly tells the home buyer, the lenders are ok and the house is good. The agent then ask if the buyer is would agree to waive the conditions now because the agent would be too busy later on claiming he is on an educational course.
3. The homebuyer trust the agent and sees that the conditions will most likely go through. So to help the Real Estate Agent, the home buyer agrees.
Now, it is done deal. The Buyer's Agent now has the right to send the waivers to the seller's agent and the contract is no longer nullable. The buyer must now buy the house. The home buyer may not even know the house was overpriced.
This happens. It happens in Ontario. I am releasing this information because Canadians must know. Quite frankly, orea.ca may not even be aware of it or is not doing anything about it.
August 03, 2014
Rushing your decision
There are many ways the Real Estate agent can rush their client without their client even knowing it. Time is money. Rushing also prevents you from changing your mind and selecting another agent.
One tactic is complimenting all the houses the Real Estate Agent shows you.
There are good houses and bad houses on the market. The agent should tell you which one is good and which one is bad. The agent should have some sort of an opinion. However, if he tells you how spectacular all the houses are and how rare this opportunity, it will encourage you to buy. Fact is, opportunities are a dime a dozen. Generally, sellers do not sell houses to lose money. Your likelihood of finding that bargain house is rare. Do not be so gullible to believe your mighty agent has found that for you.
Another tactic is to claim the house could be taken buy someone else.
It is possible that there are multiple people wanting the same house. In this case, my suggestion to you is jsut back out of the deal. The seller will raise the price and give it to the highest offer. You will have no negotiating power. Further, once you make an offer to the seller and the seller has responded with a counter offer, then only you have exclusive right to purchase the property. That is, no one else can buy the property while you are negotiating with the seller. Therefore, there is absolutely no need to rush once the negotiation process has taken place.
A third tactic is leaving you out of the negotiation process.
The Buyer's Real Estate Agent may attempt to find the highest price you are willing to pay. You do not need to reveal that. By knowing the highest price you are willing to pay, your Real Estate Agent can secretly discuss with the seller's side to convince you the best price to pay and get the deal working. During the negotiation process, your Buyer's Agent may attempt to plan out the whole thing for you and leave you blinded. Do not ever allow this to happen. As the client, you are in charge. Always tell the Real Estate Agent what the next step is, which is dependent on how the seller responded. Never reveal to your Agent the highest price you would pay for the house.
There are many, many tactics the Real Estate Agent can use. The bottom line is that if you end up finding yourself buying a house in week of meeting your agent, then there is a high chance you have been rushed and you may not have even know it. Purchasing a house should be a long and time consuming process. There will always be plenty of houses for sale. There will always be plenty of opportunities. You only have one chance to make the right decision. Make sure you spend all the time you need and want to make that decisions.
August 03, 2014
Encouraging you to put a high security deposit when writing up a contract to purchase your desired home.
A security deposit informs the seller you are interested in purchasing the property and the amount lets the seller know how serious you are. The higher the amount, the more serious you are.
The moment the contract is agreed upon by both parties and signed, you must provide the security deposit within the set time specified in the contract. This security deposit is suppose to be returned to you if the contract becomes null and void, if the conditions (usually financing and inspection) specified in the contract fails.
Now, this procedure seems to be fair. Here is where the problem lies:
If the contract becomes null and void and you want your money back, all parties must sign a form called a Mutual Release. This signature must include the buyer, buyer's agent, seller and seller's agent. If any one party does not sign, you will not get your money even if the contract has been null and void. If anyone party refuses to sign, you have to go through court, most likely small claims court, to settle your dispute and if you know anything about the court system in Canada, you know your court date could be as long as two years away!
You should never be serious in buying house. It is poor negotiating tactics. If your Real Estate Agent encourages you to put a high security deposit, it is because your Real Estate Agent wants you to be serious about purchasing the property even though it is poor negotiating tactics.
The reality is your security deposit can be very difficult to get back. Sadly, this is the general process in most home buying transactions and it is a very poor process.
And did you know...
IT IS NOT NECESSARY TO PUT A SECURITY DEPOSIT AT ALL!
There are no limitations to a contract. It is only a matter of agreement. You can write anything you want on the contract as long as both party agrees. My suggestion is to encourage your Real Estate Agent to only provide the deposit after the contract passes the conditions. This is possible, but only if your Real Estate Agent is willing.
For the buyer, the purpose of the contract is to make the contract such that the buyer can get out of purchasing the house. For the seller, the purpose of the contract is to make the contract such that the buyer will purchase the house.
Once again, I cannot stress this enough, to find a Real Estate Agent do not search through the Internet and pick the first one you see. Good salesmen do not make good Real Estate Agents.
August 03, 2014
This is a very common practice and it would seem to make sense. You would need to look at the houses before buying it, correct? Well, there is reason behind the Real Estate Agent wanting you to travel and spend your valuable time staring at these houses. By spending so much time on one house, it becomes too much of an effort to find your perfect house. You end up settling for your less than desired house.
What should be happening is that before looking at the house, you should request a comparable analysis. Your Real Estate Agent has statistical information about the houses you are looking at and houses similar to what you are looking at. This statistical information reveals the market value of the home and whether the home is worth you TIME. By not showing you the comparable analysis, the time, effort and pain it takes for you to search for a home causes you to make a decision faster. If the Real Estate Agent shows you the comparable analysis first, it reduces the pain and you would wait longer to decide. Also, the Real Estate agent has to spend time to create the comparable analysis report where most likely, they would not want to do.
Rule of thumb: Find a Real Estate Agent that will give you the comparable analysis first.
Now, this isn't to say you should never look for the house first.
There is one exception.
When you first meet your new Real Estate Agent, there is some level of concern on the agent's side. The agent is spending valuable free time on you, gambling that you would buy a house through him. So if you start off by requesting comparable analysis, he will not do it. Any honest Real Estate Agent would not do it. A comparable analysis is valuable information that the Real Estate Agent gets for being a Real Estate Agent. They need to pay a fee to be a Real Estate Agent.
What the Real Estate Agent needs to know, is that you need to provide some "level of comfort" that you will certainly buy the house through him in order to get the comparable analysis. To me, this is fair because if the Real Estate Agent is going to spend the time on you to help you find a home, then it would only be fair that you buy through him and let him get the commission.
The legal way to show this "level of comfort" is to sign the 90-day commitment contract that indicates you would only work with him and no other agent for 90 days. This legal way is by no means the only way nor is this a bad way, either. It is only a matter of preference and your relationship with your Real Estate Agent that determines the best approach.
August 03, 2014
Showing you overpriced houses in terrible conditions before showing you the target house.
Once when you have a Real Estate Agent you are willing to work with. The next step or close to the next step is to visit the properties you are interested in purchasing.
A trick your Real Estate Agent may attempt to pull is to first show you a series of houses in terrible condition and is overpriced. Then, after you see your terrible selection and you believe these houses are what you have to work with. Once that belief is set in, then your Real Estate Agent will show you a nice house.
By the Law of Contrast, a valuable house looks even more valuable when it comes after a worthless house.
If you find yourself viewing houses that are just rip offs, be careful when you see a decent house. It is actually less valuable than you believe. Further, your Real Estate Agent will even try to complement those worthless houses so that when decent house shows up, you believe it's your perfect home!
A Real Estate Agent is a marketing name for a salesperson. By complementing these houses and telling how spectacular these houses on sale are and what a great deal you are getting, it encourages you to buy. By buying, the agent gets paid!
August 03, 2014
Information is vital for you to make important decisions. It is really up to you to decide what to do with the information your Real Estate Agent can provide. Do NOT ask your agent what to do with the information. It is you who make the decisions. You should already have a good idea as as why you are buying the property and how to intend to use property. Your agent cannot tell you that.
Bad Real Estate Agents will hide information in order to get you to make the decision to buy the house. To make sure the agent is being absolutely honest with you and providing you all the information you need to know, always have another reliable source to verify the information.
Often times, Bad Agents will tell you that because of their experience, they naturally know and so, you should trust them. That is NOT a relaiable source of to verify the information. They must have documents to back up what they are saying.
One good way to find honest Real Estate Agents is through referrals. If you friends have experience good results from the agent, then at least you found someone honest and you know the results.
Do NOT go through the Internet and pick the first agent you see or the agent that has the most advertisements. They are just spending marketing money, which they intend to recover from you. I especially find the ones that are top ranked search engines to be the most conniving, especially the Mississauga location!!!
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