Large franchise or local real estate firm?

Q - Should I list my home with a large real estate franchise or a smaller local real estate firm?

A - This is a frequent question.  Large franchises do a great deal of advertising promoting themselves.  The consumer often sees this in a positive light and presumes that such a firm will provide a substantial marketing program for their clients. That may or may not be so.  

Real estate agents are independent contractors and are considered self-employed.  It is the real estate agent, not the real estate firm, who plans and pays for all the advertising and marketing of your property.  So discuss the marketing of your property with agents of your choice regardless of the size of the firm.

Franchises often indicate that, because of their size and their many locations, they are more likely to have referrals for new buyers from their offices across the country.  This can also be said of smaller companies because they network with other companies across the country.

Speak to 2 or 3 real estate agents from different companies and find out first hand what kind of marketing they will do for you.  Make a list of question beforehand to be sure you cover all your questions.  This will help you make the right decision.

Best Selection of Properties for Sale

Q - I want to purchase a home.  What is the best real estate website to view residential properties for sale?  There are so many.  Help!

A - You are so right!  There are numerous websites which list residential properties for sale.  All real estate companies seem to have their own websites, such as Royal LePage, Remax, Century 21 and many many others.  Most real estate agents also have their own websites.  You have to remember that a real estate company and their real estate agents only display their own listed properties.  On the Royal Lepage     website, for instance, you only see properties which the company's real estate agents have listed.  Similarly, Remax displays their listings as does Century 21 and others.

If you only go to one company's site, you are limiting your choices.  To go to websites of numerous real estate companies is somewhat overwhelming.  Your best answer is to go to a Multiple Listing site to search for properties.  Realtor.ca will provide you with all properties listed in Canada while Realtor.com will display the US properties.

Not to short change the real estate companies, many of them actually provide a link to Realtor.ca or Realtor.com on their websites  -- i.e. the MLS (Multiple Listing System).

The above refers to properties listed by real estate agents.  There are sellers who choose to sell their properties themselves as opposed to listing with a real estate company.  To view such properties you would have to check out sites such as FSBO.ca and other such sites where sellers can post their properties. However, not all For Sale by Owners list their properties on a website.  Many simply have a For Sale Sign on their lawn.

To make the best possible purchasing decision, you should select a property among all those available not just among those listed by a particular franchise.

Appraisal vs Assessment

Q - Does my property assessment reflect the value of my home?

A - Your property assessment is utilized to calculate your property taxes.  It should not be used as an indicator of property values.

Depending on the province, assessments reflect various time periods.  In British Columbia, property assessments reflect prices as of July 1st of the previous year.  Also, year-to-year adjustments are based on a formula and not by property inspections.  In Ontario, for instance, they use the same base year to calculate taxes for four consecutive years.  

The market is dynamic and moves at various speeds depending on economic conditions.  A property assessment is static and used for different lengths of time and, therefore, is not a good measure of property value.

A property appraisal, on the other hand, is done by actually inspecting the property.  The appraiser examines the property in the context of the market and places a value on that specific property.   The appraised value is only valid for that point in time.   The older the appraisal, the less accurate it becomes because the market is dynamic in nature.  A year-old appraisal no longer reflects the true value of a property.  In a very fast moving market, a two-month appraisal may also be inaccurate.

For residential properties, real estate agents are able to do a Comparative Market Analysis to arrive at a selling price that would be competitive in the market place.  For a more in depth analysis of your property,  a professional appraisal can be enlisted.

Agent's Pay Day

Q - Before we wrote the offer for our home, we had to sign a document about how much money the agent  was going to receive.  We didn't get a copy of it but could you tell us more about it?

A - What you are referring to is called a "Disclosure of Remuneration".  This document was introduced a few years ago so that the buyer would be aware if the brokerage or the agent has any vested interest in the transaction.   All money and gifts/rewards which may be received are to be disclosed on this document.

For example, the document spells out in percentage or actual dollars the compensation the brokerage will earn on completion of the transaction.  This document also requires the disclosure of any rewards or gifts which the brokerage/agent may receive for referring the buyer to a particular service.  Sometimes mortgage companies, inspection companies and other service providers provide rewards for referrals from real estate agents.  The buyer is entitled to this information.

Such full disclosure enables the buyer to see all compensation/rewards that the brokerage/agent may receive and from whom.  The buyer then has a full picture of the surrounding elements of the transaction.

It is appropriate to provide a client with copies of all documents which have been signed during the buying process.  If you have not received them -- ask for them.

Representation by One Lawyer

Q- The buyer and I have chosen the same lawyer to complete our real estate transaction.  Could this be a problem?

A - It is not a recommended practice in most of Canada (except for Quebec) but it does happen from time to time.

If the real estate transaction goes smoothly, there are normally no issues.  However, if a problem surfaces with the transaction, the lawyer cannot represent both of you adequately.  In that situation, the lawyer will act to represent one of the parties and ask the other to get different representation.

In the meantime, if the lawyer is comfortable representing both buyer and seller, both of you will have to sign a document acknowledging that there are some limitations to such a representation.  You may wish to have the lawyer explain more fully what that would mean in your situation.