Some of the frequently asked questions asked by both buyers and sellers. Please click on the question that interests you:

Buyers:

What is the difference between a real estate agent and a real estate broker?
Why should I use a real estate salesperson?
What is a REALTOR?
What are an agent's obligations to me?
What do I need to decide when I've decided to buy a home?
How will a real estate salesperson/broker help me find my dream home?
How do I decide my price range when buying a home?
Once I find a house I like, what would be the next step?
What will I need to bring with my offer?
If I buy a condominium unit, does the condo building allow pets?

Sellers:

What is a listing agreement?
What is the main idea with this agreement?
Why should I list with a realtor?
How much should I ask for when selling a property?
What is a public open house?
What do I need to do to prepare my house for an open house?
What if my house isn't selling?
If I get an offer, should I accept it?
Once the offer is signed, if I change my mind, can I get out of it?
What if I'm asked to give the buyer a current survey? Do I need to?
Do I need a lawyer? If I do, what is their role?
How do I figure out how much money I've made on the sale of my home?

Glossary of Terms

BUYING

What is the difference between a real estate agent and a real estate broker?
The person you normally deal with is a real estate agent or salesperson.  The salesperson is licensed but must work for a broker.  All listings are placed in the broker's name, not the salesperson's.

A broker can deal directly with home buyers and sellers, or can have a staff of salespersons or agents working for him or her. 

Why should I use a real estate salesperson?
A real estate salesperson is more than just a "salesperson."  They act on your behalf as your agent, providing you with advice and guidance and doing a job - helping you buy or sell a home.  While it is true they get paid for what they do, so do other professions that provide advice, guidance, and have a service to sell --such as accountants and lawyers.

The Internet has opened up a world of information that wasn't previously available to homebuyers and sellers. Salespersons have access thru the Multiple Listing Service (MLS) to the most up to date property information, such as properties for sale and sold properties. As a buyer or seller, obtaining the most current information is vital. Currently, the only way to obtain this information is thru an agent. There are times when you need the most current information about what has sold or is for sale, and the only way to get that is with an agent.

If you're selling a home, you gain access to the most buyers by being listed in the Multiple Listing Service.  Only a licensed real estate agent who is a member of your local MLS can get you listed there - which then gets you automatically listed on some of the major real estate websites.  If you're buying or selling a home, the MLS is your agent's best tool.

However, the role of an agent has changed in the last couple of years.  In the past, agents were the only way home buyers and sellers could access information.  Now agents are evolving.  Because today's home buyers and sellers are so much better informed than in the past, expertise and ability are becoming more important.

What is a REALTOR®?

Not all agents or brokers are REALTORS® - there is a difference.

As a prerequisite for selling real estate, real estate professionals must be licensed by the province in which they work, either as an agent/salesperson or as a broker. Before a license is issued, minimum standards for education, examinations and experience, which are determined on a province-by-province basis, must be met. After receiving a real estate license, most agents join their local board or association of REALTORS® (such as Toronto Board of Real Estate or TREB) and Canadian Real Estate Association (CREA). Upon joining, they can then call themselves REALTORS®; this is among CREA's licensed trademarks. There is no requirement to join a local board.

The term "REALTOR®" is a registered collective membership mark that identifies a real estate professional who is a member of CREA and who adheres to its strict Code of Ethics (which in many cases goes beyond provincial law). In most areas, it is the REALTOR® who shares information on the homes they are marketing, through a Multiple Listing Service (MLS). Working with a REALTOR® who belongs to an MLS will give you access to the greatest number of homes.

What are an agent's obligations to me?

A real estate agent is bound by certain legal obligations. Traditionally, these common-law obligations are to

• put the client's interests above anyone else's (including the agent's!)
• keep the client's information confidential
• obey the client's lawful instructions
• report to the client anything that would be useful
• account to the client for any money involved

As your agent, I owe you the duties of utmost care, integrity, confidentiality and loyalty. Make sure you discuss agency with your realtor. 

Related to the above mentioned, an essential responsibility of the realtor, is that he/she must disclose to you in writing, who exactly they represent in any real estate deal. A realtor may represent you as a buyer or a seller; he or she may also represent both buyer and seller in the same transaction provided you (the client) are informed. Although all realtors are guided by a Code of Ethics and Standards of Business Practice, my practice is to avoid representing both buyers and sellers in the same transaction. In other words, if I'm representing you as my buyer client, I will never represent a seller client in the same transaction & vice versa. 

What do I need to decide when I’ve decided to buy a home?
If you've decided to buy a home, start by determining what type of community, or specific neighbourhood, you're interested in. List your space needs, including:

    * living space requirements (i.e. how many bedrooms);
     * what you're bringing with you from your old house;
    * how close to schools, shopping and other services;
    * the size of down payment you can afford; and,
    * price range.

How will a real estate salesperson/broker help me find my dream home?
Once you've identified the features you want in a home, the search begins. A REALTOR will use various tools to try and find properties that meet your specifications. One of the important search tools will be the local MLS® system. By sitting down at a computer the REALTOR can key in your needs, choice of neighbourhood s and price range and immediately come up with a list of suitable properties available through the MLS® system. Also common are MLS® catalogues, which provide additional information about each property, along with its photograph. Both computer systems and catalogues are updated r egularly.

How do I decide my price range when buying a home?
It's important to be realistic when you're thinking about a down payment and setting a price range. You don't want to be saddled with something you can't afford. At this stage, it's a good idea to talk things over with a real estate sales professional. For first time homebuyers, it's strongly advised that you get pre-qualified by your lender (either directly or thru a mortgage broker).

Once I find a house I like, what would be the next step?
Once you find the house you want to make your home, you can work with a REALTOR to develop an offer . In the offer, you should specify how much you're willing to pay. State when the offer expires, and suggest a closing date for the transaction. You can also propose some conditions on the offer. Some common types of conditions are:

    * obtaining a suitable mortgage (if you cannot obtain financing, you can't purchase the property);
     * selling your current home (the seller may continue to look for a buyer, but will give you the right of first refusal);
    * the seller providing a current survey, or a "real property report," showing the location of the house on the property owned by the seller and that there are no encroachments;
    * the seller having title to the property (your lawyer will check this out when he or she conducts a title search to see if there are any liens on the property, easements, rights of way or height restrictions);
    * for rural properties, if there is a septic system, the seller should have a health inspection certificate, stating the system meets local standards;
    * if you still have any doubts about the home's safety and construction, you may wish to make the purchase conditional o n an inspection by a qualified engineer;
    * any inclusions - basically, what stays and what goes.

What will I need to bring with my offer?
You will need to present a deposit along with your offer. An appropriate deposit will show your good faith to the seller. The seller's agent is bound by law to bring all offers to the seller's attention.

After your offer is accepted and all the conditions are met, the offer becomes binding on both sides. If you walk away from the deal at that point, you may lose your deposit. You may also be sued for damages. Therefore make sure you understand and agree with all of the terms of the offer before signing. A deposit can be forfeited if the buyer doesn't attempt to satisfy any conditions stated in the Agreement.

If I buy a condominium unit, does the condo building allow pets?
It depends. When you buy a condo, you’ll receive a laundry list of rules that must be complied with! These ‘rules’ will include any pet restrictions. i.e. whether or not pets are allowed, number of pets , weight restrictions, etc. Each condo has its own restrictions and when you find a condo that interests you, a knowledgeable real estate agent will ensure that the condo building accommodates your pet(s). After all, there’s no point falling in love with a unit only to find out at the last minute that the building has a no-pet policy. Here’s some other useful information to consider:

• Condo unit owners are obliged to comply with the condominium’s declaration, by-laws, rules and agreements; however, the condo corporation has a duty to accommodate pet owners based on their special needs.
  • For example, if a pet owner has a disability and medically requires the pet, this will likely result in an accommodation. Of course, this is a fact specific determination. 
  • Courts are generally less sympathetic in cases where pet owners are seeking to keep their pets in a no-pet condominium due to their preference, but not as a result of a real necessity. While it is acknowledged that pets provide comfort to the owner, the test is whether the pet owner can live without pets based on evidence of whether the pet owner is dependent on their pets physically, emotionally or for any other medical reasons.
• Condo unit owners should know that not only can the condominium corporation sue them to obtain an order to enforce the rules of the condo and recover legal costs for doing so, but they can also register a lien against their unit. If a corporation obtains an award of damages or costs in a legal proceeding against an owner or occupier of a unit, the damages or costs will be added to the common expenses for the unit. Don’t underestimate the importance of complying with the condominium corporation’s no-pet rules. 
  • If these amounts are unpaid, the condominium corporation has a right to register a lien against the unit. Subject to the condominium board, a condo owner may or may not be able to have pets, and if pets are allowed, the condo board will likely stipulate what is allowed for the pets.
• Assuming you find a condominium that allows pets, as a pet owner you have an obligation to control your pet and not cause a nuisance to your neighbours. Your condominium corporation will likely have detailed rules concerning the control of pets especially in common areas. If you do not comply with such rules, as an owner of the offending pet, you may be subject to lawsuit(s) from the condominium corporation and/or the neighbour(s) and/or face other costly consequences. 

SELLING

What is a listing agreement?
The process of selling a home with a REALTOR starts with the Listing Agreement. It's a contract between you and the brokerage company that the agent represents. It is a framework for subsequent forms and negotiations. It's important the agreement accurately reflects your property details and clearly spells out the rights and obligations of all parties. Both you and the listing agent sign the listing agreement and each receive a copy. The agreement binds both parties to its terms and conditions.

What is the main idea with this agreement?
Generally, in the agreement you appoint the brokerage company as your agent and give its representatives the authority to find a purchaser. The duration of the agreement is indicated, and the compensation is specified. The agreement also sets out the listing price, and accurately describes the property you are selling. That will include the lot size, building size, building style and materials, floor areas, heating/cooling systems, room sizes and descriptions.
 
This is when you must also decide what you are taking with you and what you are leaving with the house. Generally, unless stated otherwise, fixtures remain with the property, while chattels -- things which are movable -- aren't included in the sale. If necessary, what stays and what goes are listed under "inclusions" or "exclusions." Be clear on what items you will not include in the purchase price & specifically which ones you want removed.

Finally, the Listing Agreement also details the financial conditions of the property, including the mortgage balance, mortgage monthly payments and the mortgage due date. It should also provide information about annual property taxes; and references for any easements, rights of way, liens or charges against the property.

Why should I list with a realtor?
One advantage of listing with a REALTOR is that only a REALTOR is able to place your listing on the MLS® or Multiple Listing Service.

When your listing is placed on the Multiple Listing Service®, the information about your property is shared with all other REALTORS accessing MLS®, and all REALTORS have the opportunity to sell your property. This type of cooperative effort will result in the listing agent offering compensation to the selling agent. Your property gains more exposure, because it reaches the majority of the real estate professionals in your community.

How much should I ask for when selling a property?
One major issue for anyone selling a property is how much to ask for. Although you may have an idea of how much your house is worth, it's important to have your home valued by a professional on its own merits. Be careful not to price yourself too high or too low. If it's too high, there's no sale & the property lingers; too low and the appraised value may be impacted.

A REALTOR has the research and expertise to provide a market assessment of what similar properties in your area have sold for. They can also provide information on market history, such as the number of properties sold in your community the previous month or year.

What different tools does a realtor have to help me sell my home?
Your REALTOR may also recommend an Open House as a marketing strategy. There are two types: first is an agent's open house, where sales representatives from the listing company will be invited to view your house. If you have signed an MLS® agreement, other REALTORS may also be invited. Remember, each of these REALTORS may have a prospective buyer.

What is a public open house?
The second type of open house is a public open house, where members of the public are invited to walk through your home and have a look. It's an efficient way to show your home to many potential buyers at once. The listing agent will act as host, answering any questions.

You and your listing agent will pick the time and date for an open house. In order to give the agent access to your home, you may wish to keep a key at his or her office, or in a lockbox. It's also a good idea to ensure that any valuables are put away in a safe location. If you do stay, be sure to keep out of the way, and turn off any TVs or radios to let the agent and the buyer talk in peace.

What do I need to do to prepare my house for an open house?

• Staging is something to consider & should be discussed with your agent. Studies conclude that staging typically increases the final sales price. Remember, people make emotional decisions!
• Less is more when it comes to the interior. Cluttered countertops, huge furniture pieces, busy wall decorations can detract from the features of the home itself. Personal photos, eye-catching artwork or tacky knick-knacks will draw the buyer’s eyes to those items, not the room size or the hardwood floors.
• Well-lit rooms are key, especially on dark winter evenings, so ensure enough lights are on and all light bulbs are working. During the day, open your curtains wide and let the natural light in.
• Kitchens and baths are huge selling points to many buyers, so take extra time to make these areas shine. Cabinets, countertops, sinks and other surfaces should be spotless and free of clutter. Double check your plumbing for any loose components or leaks. Remove as many magnets and pictures from the fridge as possible. In the bathroom, make sure you have a clean shower curtain and matching rug, and check the caulking around the tub and sink and repair as necessary. A plant with style coordinated vase can have a real positive impact to your kitchen or bath.
• Ask a friend or neighbour with a good nose to walk through and check for any unusual smells. We often don’t notice the smells in our own home, so a second opinion is wise. Musty basements can be fixed with some fresh air and a dehumidifier. Simple air fresheners throughout are good too, but don’t be overpowering as it may be overwhelming to some buyers.
• Cracks in your basement floor are quite common but can still make some buyers uneasy. A small patch job and proper flooring paint will greatly enhance the presentation of unfinished areas in the basement.
• Dirty furnace filters look terrible and raise questions about the added stress on the furnace and the overall maintenance of the house. Make sure yours is clean before you go on the market. If you have an HRV unit, make sure those filters are clean as well.
• Make sure the lawn is cut and raked. If there are some dead patches of grass, overseed or sod. Trim bushes and trees, even add a few brightly coloured flowers. 
• Touch up any peeling paint around exterior windows and doors, stain the fence or deck, clean up your garage or shed and ensure that your home looks just as enticing at night by making sure it’s well lit. If you are listing during the winter, keep your driveway, all walkways and access points clear of snow and de-iced for convenience and safety.
• Help the buyers imagine themselves in your home by setting the dining table or putting out some fresh flowers. Light a scented candle. Leave some refreshments out. And for your own security, make sure you store all your valuables.

What if my house isn’t selling?
Sometimes a home doesn't sell right away. Avoid the urge to pull your home off the market... be persistent! Generally, there are three reasons why a home may not sell as fast as others. First is location; second is condition; third is the asking price.

Naturally, you can't change your home's location, but you can fix the condition of your home and you can, of course, adjust your price. Throughout the listing process, you need to be constantly comparing your asking price against those of similar properties in your area. It may be time to adjust the price of your home.

Review your selling strategy regularly with your listing agent: Is your house being shown regularly? Are you receiving feedback from prospective buyers? Are you in touch with the marketplace? Is your property competing well? If not, what else can you do?

If I get an offer, should I accept it?
Once a buyer is found, you'll be receiving an offer that will detail how much, specify any conditions that may apply or be attached by the buyer, say when the buyer would like to take possession, and when the offer expires. As an act of good faith, the buyer may make a deposit with the offer.

You don't have to accept the offer as is. You may wish to make a counter offer that comes part-way to meeting the offer's conditions. The counter offer is one more step along the way to negotiating the final terms and co nditions of the sale.

Once the offer is signed, if I change my mind, can I get out of it?
The offer, once signed by everyone, is a binding contract. Make sure you understand and agree to all of the terms in the document. You may want to have it reviewed by your lawyer before signing.

What if I’m asked to give the buyer a current survey? Do I need to?
Not unless it's stated in the Agreement. Generally, sellers only need to provide a survey in their possession. If the seller doesn't have one or can't find it, no problem. A current survey, or a "real property report," is a visual representation of your property & ensures there are no encroachments. 

The buyer may also make the purchase conditional on an inspection by a qualified engineer or inspector.

Do I need a lawyer? If I do, what is their role?
On or before closing day, lawyers representing you and the buyer will set up a trust account for the money coming from the sale and will pay off any mortgages you owe on the property. After these are paid, you will receive any money you have coming from the sale. You must deliver the property deed or transfer documents, mortgage details and keys to your lawyer. Your lawyer will register the mortgage discharge and transfer the deed at closing,

Your lawyer should also ensure that you receive compensation for prepaid expenses such as, property taxes, electrical or gas bills, or if applicable, any heating oil left in your tank. Some lenders will make it possible for your mortgage to be portable, so you can take your mortgage with you when you move to your new home.  

How do I figure out how much money I’ve made on the sale of my home?
To many of you, the answer may appear obvious or straightforward; after all, you know your purchase price, selling price and how long you’ve held onto your home; what else is there to know, right? As a former ‘bean counter’ (accountant), I can tell you the calculation isn’t obvious or straightforward. As you’re all aware, home ownership is costly. Just consider the regular costs you routinely make for property taxes, utilities, home insurance, mortgage interest, maintenance fees (for those with condos). Than, there are those one time costs back when you originally bought your home; you may have incurred land transfer taxes, home appraisal fees, refinancing fees/penalties, home inspection fees, title insurance fees, legal fees & disbursements. On the sale of your home, you likely incurred legal fees & commissions (inclusive of HST) along with moving costs. Of course, if this isn’t enough, throughout your holding period, you may have had to pay for repairs, maintenance, landscaping, snow removal, security or you may have redecorated or renovated. These costs can be significant. If this is sobering, keep in mind that for most, home ownership isn’t solely an investment! Some of these costs mentioned above don’t need to be considered when you’re trying to figure out how much you’ve made on the sale of your home but as you can see, many of these costs do need to be considered.

Here’s the key takeaway – Those of you interested in figuring out your average annual rate of return since you’ve purchased your home can call or email me and together we can come up with a reasonable estimate.

Buying/Selling Homes: Glossary of Terms

Amortization: Paying off a debt, such as a mortgage, by installments. The conventional amortization period for a mortgage is anywhere between 15 and 25 years. The shorter the amortization period, the less interest you have to pay.

Appraisal : An estimate of a property's value.

Asking (list) price: The price placed on the property for sale by the seller.

Blended payments: Payments consisting of principal and interest components, paid during the amortization period of a mortgage.

Broker: A person licensed by the provincial government to trade in real estate. Real estate brokers may form companies or offices, which appoint sales representatives to provide services to the seller or buyer, or they may provide the same services themselves. In some areas, brokers are referred to as agents.

Buyer's Agent (also known as "Buyer's Broker" or "Purchaser's Agent"): A person or firm representing the buyer. A Buyer's Agent's primary allegiance is to the buyer. The buyer is the Buyer Agent's client.

Buyer Brokerage Agreement: A written agreement between the buyer and the buyer's agent, outlining the agency relationship between the two parties and the manner in which the buyer's agent will be compe nsated. In some states or provinces, a buyer agency relationship arises automatically, without a written agreement establishing the relationship.

Client: The person being represented by an agent. The agent owes the client the duties of utmost care, integrity, confidentiality and loyalty. There is also a 'Customer' relationship; see definition below.

Closing: The day the legal title to the property changes hands.

Commission : An amount agreed to by the seller and the real estate broker/agent and stated in the listing agreement. It is payable to the brokerage(s) on closing and shared, if applicable, among those salespeople involved in the sale.

Customer: A person who receives valuable information and assistance from a real estate broker or salesperson, but is not 'represented' by that individual. Unlike a Client, a Customer is not owed to a duty of loyalty.

Debt-Service Ratio: The measurement of debt payments to gross household income which may include, in addition to the main wage earner's salary, salaries of other wage earners, commissions, bonuses, overtime, etc.

Dual Agent: A real estate broker or salesperson who acts as agent for both the seller and the buyer in the same transaction. Both buyer and seller are the agent's clients. Both clients are 'represented' by the same agent; also referred to as 'multiple representation'.

Equity: The difference between the value of the property and the amount owing (if any) on the mortgage.

Financial Institutions: Banks, credit unions, insurance or trust companies.

Gross Debt Service: The amount of money needed to pay principal, interest, taxes and sometimes, energy costs. If the dwelling unit is a condominium, generally only 50% of the common fees are included in the "Gross Debt Service" calculation.

Gross Debt Service Ratio: Gross debt service divided by household income. A rule of thumb is that GDS should not exceed 35% but it varies by lender depending on other criteria. It is also referred to as PIT (Principal, Interest and Taxes) over income. Sometimes energy costs are added to the formula, producing PITE.

Listing Agreement: The legal agreement between the listing broker and the seller, setting out the services to be rendered, describing the property for sale and stating the terms of payment. A commission is generally payable to the broker upon closing.

Mortgage: A contract providing security for the repayment of a loan, registered against the property, with stated rights and remedies in the event of default. Lenders consider both the property (security) and the financial worth of the borrower (covenant) in deciding on a mortgage loan.

Mortgage Broker: A person or company having contacts with financial institutions or individuals wishing to invest in mortgages. The mortgagor pays the broker a fee for arranging the mortgage. Appraisal and legal services may or may not be included in the fee.

Mortgagee: The person or financial institution lending the money, secured by a mortgage.

Mortgagor: The property owner borrowing the money, secured by a mortgage.

Offer of Purchase and Sale: The document through which the prospective buyer sets out the price and conditions under which he or she will buy the property.

Real Estate Board: A non-profit organization representing local real estate brokers/agents, salespeople, which provides services to its members and maintains and operates a MLS® system in the community.

Term: The actual life of a mortgage contract-- from six months to ten years -- at the end of which the mortgage becomes due and payable unless the lender renews the mortgage for another term (See Amortization).

Seller's Agent: The Seller's Agent 'represents' the seller as a Listing Agent under the listing agreement typically through the MLS® system. In dealing with prospective buyers the Seller's Agent can provide a variety of information and services to assist the buyer in his/her decision-making. However, the Seller's Agent does not 'represent' the buyer.

Variable-rate Mortgage: A mortgage in which payments are fixed, but the interest rate moves in response to trends. If interest rates go up, a larger portion of your payment goes to the interest; if rates go down, more goes to cover the principal.