Understand the role of the Realtor

We asked Nancy Bain to explain the role of realtors for housing buyers. Nancy Bain, M.B.A. is a licensed real estate agent. She has worked as an educator, author and researcher in the real estate industry for over 20 years. She also provides expert opinion for Supreme Court cases relating to standards of practice of real estate agents. Her most recent research project "Re-Sale of Leaky Condo's: Did the Buyer Know?" has been published and is available on this site.

What you can expect from your real estate agent:

If you are buying a home of any kind in BC there are certain things you can expect from the real estate agent that you are working with:

1.       You can expect the agent will explain the concept of agency representation to you. This is a legal concept that determines the agent's legal obligation to each party in the transaction. In most cases, they will be working for you as your buyer agent. In some cases, they may also be representing the seller, in which case they are known as a limited dual agent. Once in awhile, they may represent the seller only, and you will not have 'agency representation.' This latter scenario is most likely to happen with new condominiums that are being sold by the developer.

The BC Real Estate Association has produced a brochure called "Working with a Real Estate Agent" that describes the agent's obligations to you. The agent should provide you with a copy and disclose if their agency loyalties are to you or to the seller. This should happen when you first begin working with them. READ THIS PAMPHLET!

The following information applies in the cases where you are working with a buyer agent or limited dual agent. It does not apply if you do not have agency representation:

2.      Within BC, many cities, municipalities and rural areas have unique characteristics. It is important that you work with an agent that knows the area and anomalies. You can expect that any agent you work with have particular areas where they do most of their business. Ask the agent what areas they know well. If you are working with an agent in Vancouver, do not expect that they will be knowledgeable about communities 100 km away.

3.      Your agent should assist you in preparations to buy:

If you need a mortgage to finance your purchase, you can expect your agent to assist you in getting pre-approved for a mortgage. There is no charge for this process and you are not obligated to use the lender that pre-approves you if you find a better deal from another mortgage company. The benefits of pre-approval are that it ensures that you are shopping within your affordable price range and if interest rates are rising, a pre-approval locks in currents rates for a period of time while you shop.

You can expect that your agent will be able to give you a ball park figure of expected costs of completing the transaction so that you don't run out of money. There is a list of costs for a buyer on an "Information Sheet" that is part of the Contract of Purchase and Sale.

In BC, deposits are held by a 'stakeholder' (usually your real estate agent's company) and the funds are not given to the seller until the completion of the sale. You can expect your agent will explain how deposits are handled in real estate transactions in BC to ensure your money is safeguarded pending the completion of the transaction.

Evaluating the property:

4.      You can expect that an agent will find suitable properties and show them to you. In no case should an agent prepare an offer to purchase for you on a property that the agent has not personally viewed.

5.      Your agent should assist you with making inquiries about the property. Depending on the property, it may require investigation at the city or municipal hall or provincial ministries. Prior to preparing the offer, the agent should obtain the Title Search and Seller's Property Disclosure Statement for you to review. If it is a new home, it is important to determine if there is a warranty, and exactly what it covers.

6.       Your agent should help you establish an appropriate price for the property though you may have viewed sufficient similar homes to have a good idea of price. In addition, your agent can prepare a Comparative Market Analysis to show you what similar homes have recently sold for.

7.      The Contract of Purchase and Sale should have 'conditions' that prevent you from being bound to the contract unless certain events happen, such as:

• Your mortgage is confirmed;
• The property inspection is satisfactory to you; and,
• In the case of a strata title property, minutes of meetings and other important documents are obtained for you to read carefully to assist you in determining the physical and administrative state of the strata.

In addition, any representations that have affected your decision to buy should be in writing. For example, if the seller has promised to repair something, it should be in writing.

8.      You can expect that your agent will explain to you that real estate agents are not expert in house construction and you should have a professional property inspection as a condition of purchase. It is wise to identify who will be your property inspector before you actually find the home you want. What will they charge and what does their inspection include? What is not included? If you are buying a strata title property, does their inspection include the exterior of the building or just the interior of the unit you are buying? If there is more than one building in the complex, will the inspector review the exterior of the other buildings? At what additional cost? When condo owners are faced with large repair bills, the problem inevitably arises from the outside of the building.

Does the inspector have Errors and Omissions insurance and if so, what does it cover? Are they accredited with a property inspector's organization and what type of experience and training do they have? It is important to ask these questions before you hire a property inspector.

Agent advise - disclosure:

9.      You can expect your agent to advise you if there are any other issues that you need to verify before being bound to the contract. There are some issues that are so complex that you should have expert advice before being bound to an offer. Your agent has been trained to recognize these situations and advise you to seek help from appropriate experts.

10.  You can expect that your agent will explain the buying process in plain language. It is a complex process and there are a number of booklets available from  organizations such as the Real Estate Council of BC, the Canada Mortgage and Housing, and the Homeowner Protection Office to assist you in understanding the relevant issues.

11.   You can expect that your agent will disclose if they are receiving any fees, bonuses or incentives for services that you require during the transaction. For example, in a slow market, some sellers offer the buyer's agent a larger commission. In this case, the buyer's agent is required to disclose this fact to you.

In general, you can expect your real estate agent to put your interests first in the home buying process and ensure that you have adequate information to make an informed buying decision. If there is any situation where the agent's loyalties are compromised, you can expect that they will disclose this to you. You are free to change agents at any point if you choose. In most cases in BC, buyers do not sign an agency contract with the buyer's agent and there is no financial penalty for changing agents. However, if you have signed a buyer agency agreement, read it carefully so that you understand any penalties you may incur.

If you are troubled about the agency representation that you have received, you can call the Real Estate Council of BC (the licensing and regulatory body for real estate agents) and talk to them about your concerns. (604 683-9664)

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