A Realtor is a member of the Canadian Real Estate Association (CREA), and is required to adhere to a strict Code of Ethics and Standards of Business Practice. When working with a Realtor, you will have access to the Multiple Listing Service, as it is exclusive to members only. Access to this database, and communicating with a Realtor allows you to determine comparable sale prices, neighbourhood trends, housing market conditions, and other data that may be difficult to obtain on your own.
The Realtor has duties that arise out of the terms of the agency contract itself, and those which arise at common law by virtue of the agent-principal relationship. The contractual duties of an agent dealing in real estate include:
1) The duty to act in person
The agent is required to act in person, unless the performance of the agency by someone else has been authorized by the principal, either expressly or by implication.
2) The duty to obey the principal’s instructions
If the agent fails to perform the agency contract in accordance with its terms, then the agent will not be entitled to commission. Any specific instructions given by the principal must be followed.
3) The duty to exercise skill and care
The Canadian courts hold novice agents to the same high standard as their experienced colleagues, namely, that of a reasonably skilled and proficient real estate agent. This duty requires the agent to provide competent professional advice on the estimated value of the property, however there is no better statement of value than that determined by a qualified appraiser. If the agent fails to live up to the standard, he or she will be in breach of the agency agreement and will be liable in damages to the principal for any resulting loss.
What About Commission?
Provided the agent is duly licensed, lives up to the terms of the agency agreement, and is not in breach of his or her duties as an agent, the agent will be entitled to collect a commission from the principal. The rate of commission is normally a percentage of the sale price or a negotiated fixed rate. The typical Realtor commission is 7% on the first $100,000 and 2%-3% on the remainder, on top of the required legal fees.
A mortgage broker will provide you with expert advice and works on your behalf to secure you the best mortgage terms and conditions. All mortgage brokers in British Columbia are required to meet the requirements of the Mortgage Brokers Act, and have educational standards set out in the Policy Statement.
There are a handful of financial institutions, each with different rates and products. A mortgage broker simplifies the lending process by connecting you with the right lender according to your exact needs. Your mortgage professional can better source out lenders that you wouldn’t be able to find otherwise such as private lenders, or trust/insurance companies.
Many benefits are found when contracting an independent mortgage broker such as:
• Full AMP (Accredited Mortgage Professional) certification which bank lenders do not possess, giving you services that adhere to a strict professional code of conduct;
• A high level of expertise related to mortgage options and terminology that will give you the upper hand in negotiating the best rates;
• No charge for conventional mortgage services, as the broker is paid by the lender;
• Personalized ways to save you money and pay off your mortgage faster.
A lawyer is an absolute necessity when you consider the magnitude of purchasing a home. You must protect yourself from real estate fraud which can come in the form of false identity or bad intentioned investors (such as the infamous Ponzi scheme). Unusual circumstances can also arise that weren’t covered in the purchase agreement, and a lawyer is trained to deal with these issues.
Tax implications must be considered when buying or selling property, and a lawyer will be able to educate you on how to take advantage of tax provisions should they apply to you.
There are a number of issues that must be resolved at the outset with the purchase agreement such as:
• Are there any rights of way or easements that constrict lot ownership?
• Have there been any alterations to the land or building, and were lawful permits granted?
• What happens if there is a discovery of hazardous substances upon inspection (asbestos, waste, radon, etc.)?
• How the conditions set out in the contract will affect the monies exchanged, and will the funds be held in escrow?
The legalities of buying your home is where your understanding of real property becomes an asset, as it is the unseen elements that require the most attention when purchasing a home. When you are properly represented by a competent lawyer, there should be no conflict of interest, as the lawyer has a duty to be loyal to every client.
A home inspector performs a non-destructive visual examination of the condition of a property. The choice to hire a home inspector rests with the home buyer, but it is advised that an inspection be performed to ensure you don’t have any unwelcome surprises down the road. All home inspectors in British Columbia are required to be licensed by the Business Practices and Consumer Protection Authority. A home inspection is not a guarantee that the property is sound, as inspectors only check foundations, roofs, walls, and chimneys, and are not required to check for water penetration, condensation, or mould.
Things to consider when selecting a home inspector:
• Perform a background check on at least three home inspectors and their organizations;
• Find out how much of the property the inspector will be examining, and recognize the limitations of the inspection;
• If there are any deficiencies, get quotes as to how much it will be to repair them;
• Include a subject in the contract that the completion is pending a home inspection
An appraiser is elemental in finding the true value of a property. All appraisers in British Columbia are required to uphold duties and responsibilities under the Appraisal Institute of Canada and are fully insured. A certified appraiser is the go to expert when it comes to property value. The following is the role of the appraiser:
• Provide a formal opinion of value prepared as a result of a retainer, intended for reliance by identified parties, and for which the appraiser assumes responsibility;
• Perform selective research into appropriate market areas, assemble pertinent data, and use appropriate analytical techniques;
• Apply knowledge, experience, and professional judgement to develop an appropriate solution to an appraisal problem;
• Provide the client with an opinion of real property value that reflects all pertinent market evidence;
• Find three or more properties that are highly comparable to the subject property that are the most recently sold and adjust for differing characteristics to derive an appropriate statement of value.