Last year, I wrote a popular blog entitled 9 Lies Your Agent Told You (For Sellers). The sister blog for Buyers seems long overdue. Enjoy!
Lie #1: “The best time to buy is NOW.”
There is no ‘best time to buy’ and there is no ‘best time to sell’. It truly depends on your individual needs, goals and the kind of property you’re looking to buy. A good realtor will listen to what you want to accomplish and work with you to reach your goals.
Lie #2:” There’s no cost to have me work for you – the Seller pays me.”
Well, this one is partly true…the Seller IS the person who technically pays the Buyer Agent. But! The Buyer Agent gets paid via the proceeds of the sale, which of course is the money you the Buyer are paying the Seller. Buyers often mistakenly don’t do their homework when picking an agent to represent them because they aren’t directly paying them, so it seems like it’s free. It’s not. I’ve seen people spend countless hours comparison shopping online for a $300 purchase and then turn around and hire the first agent they meet. Picking the wrong agent can cost you thousands and thousands of $$$ and sleepless nights too.
Lie #3: “You’ll have a better chance of winning the bidding war if you make an offer through me, the listing agent.”
This is not only unfair to all the other Buyers, it’s also against the REALTOR Code of Ethics. When there are multiple offers on a property, the agent who represents the seller is forbidden from revealing the contents of any other offer. They can’t say: ‘The highest offer so far is $1,040,000 so if you bid $1,041,000 the house is yours.” Yes, they can represent you – but they can’t reveal anything to you that isn’t revealed to everyone else.
Lie #4: “I can represent both you the Buyer and the Seller – there’s no difference to the service I can provide.”
Real estate law is very clear about what is allowed when an agent represents both the Buyer and the Seller. It’s called Multiple Representation and it’s anything but the same service you’d get if you and the Seller each had your own representation. When an agent works for both the Buyer AND the Seller, they are acting as mediators and have certain obligations:
- Confirm in writing that all parties understand and consent to the agent representing both parties
- Do what is best for both Buyer and Seller (it’s hard to provide the best service for one party when that usually means sacrificing something for the other party)
- Not reveal confidential information to either side [Related: Should I Buy with the Listing Agent?]
Lie #5: “It’s normal to sign a one-year Buyer Representation Agreement in Toronto.”
The Buyer’s Representation Agreement (BRA) is the document that confirms that you are committed to one real estate agent and that they work in your best interest. It also allows the agent to reveal information about the house/price/street/neighbourhood that is to the detriment of the Seller (because they work for you) and from the agent’s standpoint, it ensures that their efforts will be rewarded if you buy a house because you’ll buy it with them.
That said…how long these agreements are in place vary from city to city and it’s important to know what’s ‘normal’ where you live. Commonly in Toronto, Buyer Representation Agreements are signed for 3 months.
BREL Tip: Before you sign the BRA, find out what the agent’s or brokerage’s policies are if you aren’t happy with your agent. (For example, at the BREL team, we’ll never hold someone to a contract if they aren’t happy with the service we provide). The scariest part about signing a BRA is that you could be committed for a long time to an agent you don’t like.
Lie #6: “I can help you buy in Toronto, Mississauga, Hamilton, London, Sudbury-or wherever you want to buy.”
REALTORS are licensed by the province of Ontario, so technically, yes, we can sell real estate anywhere in Ontario. What’s important to know however is that there are dozens of real estate boards across the province and real estate agents generally only have access to the historical house and price information for the board they belong to. So for example, if I am part of the Toronto Real Estate Board, I don’t automatically have access to what’s happening in Oakville, Hamilton or Sudbury – and that’s crucial information for me to have if I’m going to represent you. Let alone that an out-of-town agent doesn’t know the intricacies of that specific market or the types of properties found there.
BREL Tip: Real estate is local. Hire local.
Lie #7: “When you work with me, you have to work with my mortgage guy.”
We’ve heard from a number of Buyers who were told that they had to work with a particular mortgage broker, and that’s just not true. While you may benefit from a preferred relationship that your agent has (in terms of mortgage rates or service), you’re always free to choose your own lender. And that goes for real estate lawyers, insurers and home inspectors too. If your agent is pushing a particular service provider on you, make sure to ask if they are getting any kickbacks.
What did I miss? If you’ve been lied to by a real estate agent, share your story below (no names please).