Facts, fiction and the real estate market
It’s the bubble that just won’t burst. The hot ticket that keeps getting hotter. The party that never ends. The metaphor that… alright, you get the idea.
We’re talking about the Canadian real estate market. The industry has been booming for well over a decade. Bidding wars are now commonplace and fixer-uppers in major cities are hitting seven figures. So how do you keep your head amid the frenzy? How can you wade through all the clutter and the chatter to suss out the info you need to make wise decisions?
Well dearie, you always have us in your back pocket. And we’ve got the Real Estate Council of Ontario (RECO) on our side, especially since they’ve found that 41 percent of Ontario homeowners and 45 percent of first-time homebuyers wish they had done something different when buying or selling their home. We turned to RECO to help us fact check some of the myths we have heard out there in the wild world of buying and selling a home…
8 myths debunked when it comes to buying or selling a home
- Fiction #1: Real estate contracts are standardized so just sign the paperwork and work out the details later.
Fact: Not on your life, sister. Each real estate contract is as unique as the pink and black onyx tiled bathroom being sold. You really do need to read the fine print and understand exactly what is being included in each agreement of purchase and sale. Never make assumptions about the appliances, the fixtures or even the possession date. This actually works in your favour, since every little point offers the possibility for discussion.
Same goes for the contract you sign with your real estate rep – they’re not all the same and terms, like how long you’re committed to each other, are up for discussion. Don’t sign until you understand everything and are happy with the terms.
- Fiction #2: When you sign on with a salesperson, they are personally committed to being on-call for you.
Fact: Representation agreements are between you and the brokerage firm where your salesperson works. Sometimes the salesperson you thought you had retained will get reassigned and someone else on his or her team will be assigned to work with you. If there is a certain someone you really want working for you on a daily basis, you can ask to put in writing who your primary contact will be during the transaction process. Speak up and be clear about everyone’s level of involvement before you get started.
- Fiction #3: A brokerage can represent both the buyer and the seller, no questions asked.
Fact: Fifty-eight percent of Ontario homeowners could not identify the conditions under which a real estate professional could represent both a buyer and a seller in a transaction, so here’s the skinny: A brokerage may represent both the buyer and seller only if both parties have agreed to it in writing. This is called “multiple representation”. If you want to buy a home already listed by the brokerage representing you, find out how your service may be affected.
- Fiction #4: When a bidding war breaks out, the seller must accept the highest offer.
Fact: The seller can choose to accept or reject any offer he or she wishes, regardless of the price. It often surprises buyers to know that price is not always the deciding factor for a seller. For example, a seller may accept a lower value offer if it comes with an earlier closing date or has no conditions, which could potentially delay the transaction. A bird in the hand, as they say…
- Fiction #5: Open houses are perfectly safe and you don’t need to worry about a thing.
Fact: Stuff happens. Open houses can be an awesome way to show off your home, but showing off all your cool stuff can also lead to the possibility of theft or damage. Remove your valuables, financial information and personal items, and store them in a secure place. Insist on a sign-in sheet and ask your salesperson to escort visitors through the home rather than waving them through to explore on their own. It is still your home, so you get to set the rules about visitors.
- Fiction #6: Home inspections are overkill and a waste of money.
Fact: Your heart may tell you “this is the one”, but your head needs a few more facts to determine what you should be shelling out of your wallet. An experienced home inspector examines what is actually going on behind those walls, including the condition of the electrical, roofing, plumbing, heating, air quality, foundation and septic systems. If there is repair work or upgrading needed, this should be reflected in the home’s price. Skip the inspection and you run the risk of your dream home turning into a very expensive nightmare.
- Fiction #7: You will automatically get your deposit back if your offer doesn’t pan out.
Fact: When you make an offer subject to certain conditions and it is accepted, you pay a deposit, which is held in a brokerage trust account. If the conditions are not met or not waived by you, the deal falls through. But don’t assume you automatically get your money back. At this point, both the buyer and seller must agree to a release of the deposit money. If the seller does not agree, you will have to obtain a court order to recoup your funds.
- Fiction #8: Anyone can buy or sell a home and there is no advantage to getting the help of a registered real estate professional.
Fact: Real estate professionals must abide by industry regulations and a Code of Ethics. In Ontario, they are registered with RECO, which has the authority of the provincial government to protect home buyers and sellers. When you work with a regulated real estate professional who knows your neighbourhood, you get the advantage of experience when it comes to prices and buyer behaviour, plus access to an insurance program that protects consumer deposits. As you enter into one of the biggest financial transactions of your life, having an experienced and trustworthy professional to guide you through the steps (and steer you away from the pitfalls!) can be a huge comfort.
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These are just a few of the myths that you might encounter in your quest to buy or sell your home. As Galileo (who knew a thing or two about lovely abodes in 16th century Italy) said, “All truths are easy to understand once they are discovered; the point is to discover them.” To help you discover more truths about real estate matters, take RECO’s “Fact or Fiction” quiz.
Best of luck to you for a great transaction!