WORKING WITH A REAL ESTATE AGENT

Buyers and sellers are presented with this brochure at the earliest contact with a real estate agent. Industry regulations have now made it mandatory for agents to explain at the beginning of the client relationship the options of agency representation you have, and to disclose the capacity in which the agent will be working with you: i.e. as a buyer’s agent, a seller’s agent, as a sub-agent to the seller, or as a dual agent. The agent will then ask you to sign a statement acknowledging that this disclosure of agency representation has taken place. He or she will then tear off and keep the signed statement and give you the brochure for future reference.

Signing the disclosure statement in the Working with a Real Estate Agent brochure does not bind you to any obligation to that real estate agent. It merely confirms that you have discussed your agency representation options with the agent. You will have a contractual arrangement with your agent when you sign the listing agreement (as a seller) or the exclusive buyers’ agency agreement (as a buyer).

MLS® LISTING CONTRACT

The Multiple Listing Service® Listing Contract outlines the terms of the listing contract, including the length of time for the listing, the price, the commission to be paid, all the parties to the listing, the address and the legal description of the property to be sold, how the seller is to be paid, the preferred possession date, the financial obligations, and other information regarding the property.

The listing agreement is the seller’s agreement with the listing agency, not the salesperson individually. If the salesperson leaves that company, it is up to the seller and the listing company to decide whether or not the listing will go with the salesperson, or whether it will stay with the original company and be assigned to another salesperson.

The standard MLS® Listing Contract explains that the seller is liable to pay a commission if the listing agent or a cooperating agent brings an offer which meets all of the stated terms and conditions of the seller.

As with other services, there is GST (but not yet PST) payable on commission, so when you are calculating your proceeds, take that into consideration.

DATA INPUT FORM

The Data Input Form is the sheet the REALTOR® fills out with all of the information about the property, such as number and size of rooms, lot size, construction type, house style and more. The data is entered into the MLS® database, where other REALTORS® are able to search for specific criteria. As well, this form includes any descriptive comments that will be included for the public websites or private comments, only for other REALTORS®.

EXCLUSIVE LISTING CONTRACT

The Exclusive Listing Contract is used when a property is not going to be on the Multiple Listing Service®. The listing is publicized by advertising and the sign alone, without the benefit of the catalogue/computer. At times, the seller will prefer an exclusive listing in the belief that there will be fewer “lookers,” rather than buyers. Actually that is not the case. An exclusive listing is often overlooked by REALTORS® working with buyers, because the first place they look is in the MLS® catalogue/computer. The more people who know about a property, the greater the chance of a larger number of serious buyers viewing the property and making offers until the acceptable price and terms are reached.

LISTING AMENDMENT

A Listing Amendment form is used whenever a change is made to the original MLS® or Exclusive Listing Contract. This may involve extending the date, changing the price, altering wording on the print-out, correcting measurements or tax or financial information, etc. It must be signed by all owners, as on the original listing contract, as well as by the manager of the listing agency.

LISTING CANCELLATION

From time to time a listing is cancelled for various reasons. The Listing Cancellation form used in most areas has a preprinted clause which states that if the property sells within 60 days of cancellation, or before the natural expiry of the listing (whichever comes first), the seller is liable for commission. The reason behind this clause is that, at times a seller may be told by a buyer to cancel the listing so that the seller will not be liable for the commission and the buyer will pay less. This dishonest approach tries to cheat the REALTOR® out of a commission, even though the REALTOR® may have spent hundreds of dollars on advertising and hours at open house and other showings trying to sell the house.

If the seller is very dissatisfied with the service of a REALTOR®, the seller should speak to the manager of the listing agency and outline his/her concerns. The listing agency will make every effort to achieve satisfactory results.

HOLD ACTION FORM

At times, it is necessary to stop the marketing of a property for awhile because of illness or other personal circumstances of the seller. By definition, when your home is listed on MLS®, all REALTORS® have an opportunity to find a buyer for your property. The Hold Action Form communicates your wishes to all REALTORS® who have access to MLS® that you wish to delay the sale of your home.

PROPERTY DISCLOSURE STATEMENT (PDS)

Every residential listing placed on the MLS® must be accompanied by this form which is filled out by the seller and signed, as acknowledgement, by the buyer. If the signed PDS is not submitted to the real estate board with the listing contract, the listing will not be placed on the MLS®. The seller indicates his knowledge of various aspects of the property, defects of which he is aware, and any upcoming expenses, (as in special assessments in strata-titled properties).

The REALTOR® is not permitted to fill out the form. The REALTOR® will keep a copy, and may file a copy with the MLS® listing at the real estate board, but it goes no further. The buyer receives a copy after signing and dating it. The form does not cover every aspect of the property. A buyer is still advised to consult an independent inspector if there are questions or concerns that are not adequately answered.

LIMITED DUAL AGENCY AGREEMENT

This form is used when the agent represents both the buyer and the seller in a single transaction. It is used when the situation involves either one salesperson who represents both the buyer and the seller, or when two salespersons from the same company are involved.

This agreement modifies the prior Listing Contract and the Buyer’s Agency Contract (or verbal buyer’s agency agreement) and gives the agent the authorization to represent both parties in a limited capacity. It authorizes the agent to maintain both parties’ confidences regarding motivation, negotiating positions and personal information (unless either party gives the agent written permission to disclose such information).

CONTRACT OF PURCHASE AND SALE

The Contract of Purchase and Sale standard form is the basic contract signed by the parties (the sellers and the buyers). It outlines every aspect of the transaction, including the price, the terms and conditions, the dates, the inclusions and exclusions, the handling of existing tenancies, the deposit and increase (where applicable) and other legal matters as described in the preprinted contract and added as clauses.

ADDENDUM (WITH PRINTED CLAUSES)

The basic contract will be accompanied by a special addendum form with preprinted clauses where there is either financing to be cleared from the title before the seller can provide clear title, or where there is financing to be put into place after the title is registered in the buyer’s name.

ADDENDUM (WITHOUT PRINTED CLAUSES)

The basic blank addendum for is used to write additional clauses on the contract when there is not adequate space to do so on the contract itself. When that has been done, the buyer signs this form indicating that this clause is being removed.

AMENDMENT TO CONTRACT OF PURCHASE AND SALE

This form is used to remove conditions (subject removal) when they have been satisfied, as in the situation where a buyer has to find financing by a certain date.

OTHER DOCUMENTS

Leases

Usually leases are used more in commercial transactions than in residential ones, but you may be a landlord or a tenant who prefers to use a lease for a specified time period for any number of reasons, including stability of tenure. A commercial lease is very involved and should be drawn up by a specialist in the commercial field and reviewed by a lawyer for each party. A residential lease is less complex and normally involves little more than a standard rental agreement with an outline of the rules and regulations of the building or complex, or expectations of the owner and tenant above and beyond what the Residential Tenancy Act sets out. If you have any doubts about how to draw a lease or how to interpret specific clauses, consult a lawyer or a REALTOR®.

Mortgages

Mortgages come in a wide variety of formats, depending on the lending institution. Now, many institutions use a simplified form and make reference to the larger form where any deviations from clauses in their standard form may occur. The buyer should check that the document matches the commitment letter they have signed outlining the terms, including the interest rate, the term, the amortization period, the prepayment privilege (”penalty”), the options (if any) for increasing the number of payments or making lump sum payments, the assumability of the mortgage if the property is sold, and the portability of the mortgage if the seller wishes to use it on another property.

If you are a seller who is carrying financing for a buyer of your property, make sure that your lawyer reviews the documents before you sign them. If you are a buyer who is asking a seller to carry financing, make sure your own lawyer reviews the documents as well. Many serious issues may arise where the parties are unfamiliar with the law concerning mortgage financing.

Realtor Code of Ethics

CREA’s Code of Ethics and Standards of Business Practice has been the measure of professionalism in organized real estate for over 40 years. The first code was approved in 1913 at the convention of the National Association of Real Estate Boards held in Winnipeg. The first Code of Ethics specifically prepared for members of The Canadian Real Estate Association was approved by members in 1959.

The Code establishes a standard of conduct, which in many respects exceeds basic legal requirements. This standard ensures that that the rights and interests of consumers of real estate services are protected. As a condition of membership, all REALTORS® agree to abide by the Code.

Some of the requirements of the Code include:

1. REALTORS® must disclose in writing whom they are representing as an agent in the transaction. Parties to a transaction must be told what their agency relationship is to the REALTOR®.
2. Definitions, terminology and presumed agency relationships vary from province to province. Most jurisdictions have their own forms for complying with disclosure requirements, which have been drafted to accommodate agency relationships as they exist in your province or territory.
3. All financial arrangements between REALTORS® and others (e.g. referral fees, compensation from more than one party, rebates or profits on expenditures) must be fully disclosed to clients;
4. REALTORS® cannot acquire an interest in property (either directly or indirectly) without disclosing the fact that they are real estate professionals;
5. REALTORS® cannot use the terms of an agreement of purchase and sale to negotiate commission.

While the Code of Ethics establishes obligations that may be higher than those mandated by law, in any instance where the Code of Ethics and the law conflict, the obligations of the law must take precedence.

A REALTOR®’s ethical obligations are based on moral integrity, competent service to clients and customers, and dedication to the interest and welfare of the public. The Code has been amended many times to reflect changes in the real estate marketplace, the needs of property owners and the perceptions and values of society. For more than forty years, through a variety of updates, the CREA Code of Ethics is unchanged in demanding high standards of professional conduct to protect the interests of clients and customers and safeguard the rights of consumers of real estate services.

6 Ways to Kill Your Credit Score

Lenders will charge you more or flat-out reject you if you show up with a low Beacon score. Here’s how you may be doing yourself harm.

1. Be a big spender at the wrong time: The bigger your total balance as a percent of your total credit limit across all your credit cards, the lower your score will be. Beacon scores range from 300 to 850 - the higher the better, with anything above 760 being the most desirable. Experts estimate you lose 1 point for every percent of your credit limit that you use. So if you have a total credit limit of $10,000 and have an outstanding balance of $4,000 (40%), your score would be 40 points lower than if you had a $0 balance. Ideally, credit experts say, you never want your balance to exceed 30 percent of your credit limit. It’s always good to pay off your balances every month. To boost your score: Don’t charge anything for at least 60 days before applying for a loan. If you can’t pay off your total balance in full, at least keep it under 30 percent of your total credit limit.

2. Be a payment-slacker: Sending in your loan or credit card payments late can really hurt. Experts estimate when you’re 30 days past due and your balance is still unpaid, your score could take a 60-point hit. Late payments from your past that you have since paid off will have less and less of a negative effect on your score as time goes on. To boost your score: Pay your bill in full and mail it as soon as it arrives or at the very least the minimum due. If you are late one month, be sure to pay off what you owe as soon as possible.

3. Be too thin: When it comes to your credit record, fat is good, emaciated bad. Even if you’re the most responsible, on-time, in-full bill payer on the planet, your credit score won’t be as high as it could be if you have just one credit account. The reason: Your credit profile is too thin and lenders ideally like to see a potential borrower responsibly managing a mix of revolving debt (such as credit cards, where you can reuse the credit after paying it back) and installment debt (such as a car loan or most mortgages, where you pay the same amount every month for a certain period). To boost your score: Consider opening another credit-card account or taking out a car loan or small bank loan.

4. Be too young and eager: Old credit accounts count more than young ones in your credit score. Lenders prefer borrowers who have responsibly managed the same accounts for years. That’s a more reliable indicator of creditworthiness than a few months of exemplary behavior on a new account. Lenders also don’t like to see a borrower who’s gone on a credit binge, applying for a lot of new accounts or loans in a short period. Every time you apply for new credit, your score may be dinged by 5 points. To boost your score: Avoid applying on your own for a lot of loans and credit cards, particularly in a short period.

5. Be too tidy: The bigger your balance relative to your credit limit, the lower your score. But while it may be tempting to close out a credit card account when you transfer the balance to a lower-rate card, you may inadvertently hurt your score. That’s because your total balance stays the same but your credit limit goes down when you close an account. Say you have three credit cards with a combined credit limit of $24,000 ($8,000 each) and you owe $6,000 total. Your balance represents 25% of your credit limit. If you then close out one of your accounts, your credit limit goes down to $16,000 but your debt is still $6,000, which now represents 37.5% of your credit limit. To boost your score: Don’t close unused accounts when you transfer debt.

6. Be too nonchalant: You may be a great credit risk, but your score won’t reflect that if there are errors in your credit report. The last thing you need is to have someone else’s delinquencies wrongly assigned to you. To boost your score: Order a credit report once a year from www.Equifax.ca and check it carefully!

The following article is from the Frazer Valley Real Estate Board, after reading it I think you will sleep easier at night if you were concerned about fraud!

Title Fraud Rare in BC, Thanks to Land Title System.

Nothing garners more sympathy than hearing about hardworking, regular citizens who have their house stolen; and worse, have no insurance.

For that reason, title fraud, a specific type of mortgage fraud, and promotion of title fraud insurance have received a lot of national media attention this past year with sad stories of homeowners, mainly in Ontario, becoming victim to fraudsters who stole their identities and then their properties.

In these cases, thieves used stolen identities or forged documents to transfer the registered owner’s title to himself or herself without the registered owner’s knowledge. The fraudster then obtains a mortgage on the property and once the funds are advanced on the mortgage, disappears.

These stories received a lot of play in BC as well, but it’s important for people here to know that title fraud is extremely rare in BC because of stringent requirements for land registration here and protection through an Assurance Fund.

Every time a property is sold, mortgaged, leased or statutory rights of way are created in British Columbia, the BC Land Title and Survey Authority (LTSA) is legally obligated to confirm ownership. Also, the people most often conducting title transactions in BC are professionals, such as notaries and lawyers. Even documents that are submitted electronically to Land Title Offices require certification by a recognized professional.

As mentioned, in addition to certainty of title, protection is provided through an Assurance Fund managed by the LTSA. Godfrey Archbold, LTSA’s chief executive officer, confirms that in the last 17 years, the Assurance Fund has had only two claims related to property ownership for a total payout of $375,000. During the same period of time, the land title system processed 13.5 million transactions.

So, REALTORS® and homeowners in BC can remain sympathetic to those outside the province facing title fraud, but can take comfort in this statement outlined in a release on www.ltsa.ca, “While it is always important to be vigilant in matters related to property ownership and transfer, British Columbians do not need to be unduly concerned about title fraud because of the protections provided by the province’s system of registered ownership and the high standards and practices of professionals involved with property transactions.”