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July 20, 2011

4

Mastermind #10 July 20 2011

by mark mclean

If its Wednesday it must mean there is a Mastermind meeting. And a good one it turned out to be for all in attendance. This morning we had a number of good topics so if you didn’t make it, here is what you missed.

1. When doing an Agreement of Purchase and Sale, agents often leave key information blank only to fill in the details, such as price, at a later date. It is important to make sure that the clients initial the hand written inserts. Also remember that listings on MLS often include standard office clauses in the form of a schedule. Remember the top portion of these schedules are often left blank and agents are required to add the names of both the buyers and sellers as well as the address. It is important that these handwritten additions are initialed too.

2. Too Often, agents are working with clients that are a little on the frustrating side. Sometimes it is tough to get both buyers together at the same time, they don’t want to offer on properties with bidding wars. It seems that they are not really committed to buying a property. We  talked about overcoming some of these obstacles. First, deal with the decision maker exclusively, but keep the other buyer in the loop. Second, make sure that they have the means to jump on a property quickly; for example, they need to have the funds available for deposits as often we hear “oh yeah, I have the money, it just might take me a few days to move it around”. Third, show them a list of all the properties that they have seen. Point out how quickly the have sold and stress the importance that they need to start offering on properties. There are countless examples of good properties that sell below asking but they will never buy a house if they don’t offer on any. Finally, an agent pointed out that she had success showing clients two types of houses; those that have offer dates and those that have been on the market for a couple of weeks. The ones that have languished on the market are usually overpriced  and need a ton of work.

3. The Classic. Seller Jones lists his house for $499K under advice from the agent. Their hope is to generate enough interest to spark multiple offers. On offer night there is only one offer. The buyer agent brings in a full price offer (because he recognizes the house to have that value), with no conditions and the exact closing date the seller has asked for. What happens? the Seller signs it back for $530K because that was their expectation. The reality is that the seller and the seller’s agent are guilty of false advertising. If they want $530k they must do a price change on the property. Believe it or not, more than a few agents in attendance today had experienced this scenario. This is a great topic that might be better saved for future blogs so stay tuned.

4.Finally, we had a lengthy conversation about what to say to people who have their property listed with another agent, but want your advise. Sometimes they call you out of the blue because they know you specialize in the area or maybe they are friends looking for some words of wisdom from a trusted source. The reality is that  helping people is in our DNA. Just remember, the person you are talking to is under contract with another agent so you cannot interfere under any circumstances. It’s okay to answer questions about the market or speak generally about properties or buildings but if someone asks you why their house isn’t selling you must decline to answer. Here is a good rule of thumb; always be thinking… what if this conversation was being taped. How much trouble could I get into? Exercise extreme caution. Simply answer that you cannot interfere with another agent’s contract and direct them to get answers from their agent.

Have a great week and don’t forget to check in next week.

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4 Comments Post a comment
  1. Kim
    Aug 5 2011

    Great article. Thanks. When signing a buyers agreement, if new additions to the agreement is not initialized by the buyers (the whole page is initialized, however, not the new additions in the middle of the page), Is that new addition valid?

    Thanks

    Reply
    • Aug 5 2011

      Great question. I think you are referring to the middle section that talks about type of property and geographic area. Typically, agents would be signing a buyer to a specific type of house and location, for instance, a single family home in downtown Toronto, but it has happened on many occasions that the contract is invalidated because the buyer decides to buy a condo in Markham instead. I recently had a case where the agent’s client bought a house privately and didnt have to pay commision because it was completely different from what was specified in the buyer rep agreement.
      My sense is that if a buyer changes his mind mid contract, and the agent adds on new locations or property types, those changes should be initialed in order to be valid. The BRA is legal document and must follow the same procedures as any other contract. Changes should be initialed. There is one caveat to this however, and I will give you an example. You sign a BRA with an agent to buy a condo downtown. You look at a lot of property but nothing really captures your interest. Your agent, on a whim, shows you a triplex and after running the numbers you decide that a triplex is really the way to go. You continue to work with that agent for a number of weeks and the agent shows you a bunch of triplexes and four plexes. Then one day, on your way home, you spot a private sale of a beautiful triplex. You call the owner and check it out. It is the perfect house and you end up buying it privately. The question remains, you had a signed BRA for a condo, BUT, you also established a track record with the agent, who may also have an email trail to document your change in direction. Hope this helps. Mark

      Reply
  2. Kim
    Aug 8 2011

    Thanks for the answer.

    The reason for asking the question is, i was interested in buying a home and signed a contract. My realtor gave me bunch of papers, and she didn’t discuss any of those except the dual agency agreement (I agreed to that as I thought she was nice, and it’s better if she get both commissions, as that property was listed by her). We trusted her so much, we signed all the documents without reading (yes, never again).

    There was an radon issue with the home at inspection, and we didn’t buy it. However, when we looked at other homes after that, she always gives negative comments on those homes while saying how we could live on the home she listed with windows and doors open to eliminate radon. We were not happy of this, and wanted to find a home our own, and at that time realized that we have signed a 1 year agreement with her ; she didn’t discuss this at the time of the agreement, and for some reason we don’t have our copy of it either, however have all the other things in the file : (

    She emailed us a copy, and yes, we have signed all the pages on the bottom. In one page where it describes the type of properties, she has written new constructions, however, we didn’t initialed it. We didn’t discuss on new constructions with her either as we wanted to buy a home ASAP.

    We are really unhappy with this realtor, as she breached out trust by sneaking in to get us signed for a one year term, and to that fact that customer is her 2nd priority, and earning a commision in any way is her #1 priority.

    My question is, if we go for a new construction, do we have to pay a comission as we didn;t initialize the new addition?

    Thank you.

    Reply
    • Aug 8 2011

      Hi Kim, thanks for. The follow up comments. It is difficult to guide you here as it would be seen as me interfering in your current contract, so all I can really do is talk in general terms. Certainly the BRA is a great legal document which, when used properly, can save everyone a lot of heartache and confusion. It is also a complicated document filled with lots of legal terms which can seem daunting at times.
      If I could give you any advice, I would suggest a frank and honest conversation with your agent to see if your problems cannot be solved amicably. Sometimes a simple discussion is all you need to get back on track. A renewed, clear focus on what you are looking for and a timeline for finding and purchasing your home seems like an appropriate discussion to have. If you don’t think there is hope in restoring a good working relationship than, like any contract, your relationship can be severed as long as it is mutually agreed to do so. I would not enter into an agreement with someone else. You could become liable. Honesty is the best policy and could save you a lot of headaches down the road. Good luck!

      Reply

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