Buyer's contracts in ON

[jc94]

First time posting on this board.

I got my PR a couple weeks ago and am keen to buy after almost 2.5 years renting an overpriced apartment (all apartments in Toronto are overpriced imho).

My question is about the fact that realtors seem to want to force people to sign a exclusive contract meaning they have to work with them, and only them for the length of the contract. And guaranteeing the buyer a % of the commission from the seller, which seems open to cause issues.

I know they tried to do this sort of stuff in the US and no-one went for it, the UK system is completely different again, and while there is a huge amount of information online a lot of it seems old and very much "well it's good and bad" and "you don't have to do it", but in Toronto at least... it seems like you DO have to do it. Unless you literally go door to door dealing with sellers or try one of the online sites.

Anyone got any experience of views on this?

Thanks!

P.S. Apparently this requirement is legal (ie: they have to do it, it's always legally biding one you sign something) in AB.

 

[steaky]

But buying a home in Greater Toronto area is overpriced too.

 

[jc94]

Yes, everything in TO is overpriced but I'd rather shop around without a very dubious contract having to be signed

 

[scylla]

Yes, everything in TO is overpriced but I'd rather shop around without a very dubious contract having to be signed

I would interview a few agents - find one you like - and sign with them. This is what the vast majority of people do. The market moves very quickly these days and you want to have a representative working with you as soon as you see something you like. You can't see what stuff actually sold for or historical prices for a condo/apartment (if that's what you're looking for) - so that will make it difficult for you to structure a deal on your own. An agent can also tell you things about a building or area that you may not know - or identified properties you've overlooked.

Unless you're buying from someone who is selling without an agent, you're going to be at a disadvantage going into this without representation. Just my two cents (and no - I'm not an agent myself).

 

[jc94]

Thanks, yeah my issue isn't so much do I want a realtor as wanting one that doesn't mean signing a contract that could leave me legally open to being screwed by a realtor if it falls apart. Being given verbal assurance by them, that it won't happen isn't that comforting.

The "guaranteeing the buyer a % of the commission from the seller" aspect. Basically as soon as a contact is signed they get 2.5%, nothing about what happens if the seller pulls out.

 

[torontosm]

Thanks, yeah my issue isn't so much do I want a realtor as wanting one that doesn't mean signing a contract that could leave me legally open to being screwed by a realtor if it falls apart. Being given verbal assurance by them, that it won't happen isn't that comforting.

The "guaranteeing the buyer a % of the commission from the seller" aspect. Basically as soon as a contact is signed they get 2.5%, nothing about what happens if the seller pulls out.

Buying a home in Canada is an extremely inefficient process. The realtors have a monopoly on data, and they have been fighting hard to ensure that this data is not made available to the public (like it is in the US and other countries), as this is pretty much the only value they add through the process. Don't expect them to help you on the negotiation or documentation side at all, as most are inexperienced and are just trying to get their commission at any cost (which represents a conflict of interest).

That said, there are a few things you can do to protect yourself:
1) Delete any clause in the realtor agreement that you aren't comfortable with. There is some standard language that they insert saying that if the seller doesn't pay them the commission, then you have to pay it. I have always deleted this and no agent has ever objected.
2) Find an agent who is willing to give you at least half of their commission back. There are way too many agents running around these days, and most are desperate for business. As they will all be pulling listings from the exact same system with the same data, choosing one over the other isn't going to make a huge difference. So, if you can get a 1% discount on the house by taking half of your agent's commission, why not?

 

[jc94]

Thanks for this. It definitely seems they have access to data that should be available publicly.

The whole we are on your side does seem like a joke given the more they get you to pay up the more $ they get, conflict on interest much.

I'll definitely look into that, I didn't think they'd budge on that!

 

[rolandatremax]

Speaking as a Realtor for Re/Max I have to confirm; the signing of a buyers representation agreement is required in order to submit an offer on a home. It does mean that you are represented by the agent for the duration of the contract.

As an alternative; if you really do not wish to sign on with an agent and want to go it alone in the buying process (best to have a really trusted lawyer and other advisers though to read and review all documentation) you can alternately sign a buyers customer service agreement with the agent of the seller. This really only benefits the seller in that they sometimes receive an adjusted commission amount (say half or 1 percent less than paying separate buyer & seller agents) from the seller's brokerage. Under this arrangement they are still there for the best interests of the seller but provide you the basic level of information in order for you to make an offer on their property.

If you have any other questions please feel free to contact me.