The Holdover Clause; Does It Matter To The Buyer?

There was a recent CBC news story about a gentlemen who bought a house and was sued by his former agent for commissions "owed". The challenge here is that when you are selling your home a hold over clause usually negates when you sign a new listing agreement with an agent. When purchasing and signing a Buyers Representation Agreement (BRA) the holdover clause is not replaced with a new contract.

The concern here shouldn't be the holdover clause, it should be the BRA in the first place. Why should an agent get the exclusivity to my purchasing if they are not doing their job. In most cases, like the one in the CBC story, if the agent is enforcing a BRA holdover, it's likely they were not living up to the expectations of the client. Simply put, they didn't do the job they were contracted to do. I would think that, as a professional, I should work at earning my clients trust and respect to keep them loyal to me, not be a smooth talking salesman and sign them to a contract locking them up for upwards of 6 months.

The worst part of this story, IMHO, is that the governing body (RECO) says the buyer is at fault. This is what happens when you have self policed industries working under what could be considered a monopoly.

What are your thoughts? How would you feel if someone didn't do their job and you got told you had to pay $12,800 to them because they made you sign a bunch of papers as a "trusted professional"?


M

What A Home Buyer Needs To Know About Using A Real Estate Agent

I have had the two opposite ends of the spectrum come across my desk in the last 10 hours.

Last night while at a St Paddy's Day party I had a great chat with a local Cambridge real estate agent. One that I had yet to really meet, but was bound to eventually as our kids go to the same school. We had a great chat over the food table (where else would I be) about how she approaches sellers and how she coaches her buyers that are looking to purchase a home that is listed with PropertyGuys.com. It was refreshing to hear a proactive approach where she explains to her clients that she is getting paid by them, whether it is included in the asking price or not, and she advises them to pay her directly through the lawyer so they can better negotiate the purchase with the seller.  She doesn't call the seller to ask "Will you compensate me?" She calls and asks if she can show it to her buyers. She brings up commission if and only when they are discussing an offer. Usually she is able to say her buyers are paying the commission so they don't have to worry about negotiating the rate. An agent that is progressive and doesn't hide behind the numbers.

Today I hear from one of the clients I listed last week that were happy to report they had an offer. It turns out in their negotiations with the buyer's agent the agent wanted 3% instead of the traditional 2.5% a buyer's agent typically starts at.  Our sellers were very clear that if the real estate agent wanted 3% that his buyers would have to pay more for the house. The agent proceeded to advise his clients to put in a higher offer to maintain his high commissions. So I ask you this, who's best interest is this agent looking out for? Last time I checked taking money from unsuspecting people was thievery.

IF you are going to use an agent to buy a home I will give you a few suggestions.

• First, don't sign a Buyer's Representation Agreement unless it is specific to A house and for a short period of time (7 days). 
• Second, discuss commissions up front with your agent.
•  How are they getting paid? 
• Will the agent drop their commission if they can't negotiate a price that is acceptable to buyer and seller? 
• How much commission are you willing to pay?
• If you end up buying an agent listed house will they pay you back a portion of the commissions? 
• Third, know that if you are using an agent to buy a house, it is not free. You are paying more for the house because your agent gets paid through the purchase.

At the end of the day, you the home buyer decide if you want to use an agent. We coach PropertyGuys.com clients on how to interact with your agent and show them that if they maintain their bottom line (or more) and you are satisfied paying more because you brought an extra mouth to feed, why not entertain the offer?

M

Who Drafts The Offer To Purchase In A Private Home Sale?

When you are selling your home without the services of a traditional real estate agent one of the big looming questions is "Who will write up my offer to purchase?" (also called the purchase and sale agreement)

As a Private Sale Professional, I get asked this question everyday.

The true DIY person will simply Google "Offer to Purchase" and download a form. I am of the belief that most people should not be completing legal contracts for what is typically their largest financial asset. I believe that we sure can negotiate the specifics that will make up that contract, but to enter into it before a lawyer has had a chance to review it is not in either parties best interest!

This is where the PropertyGuys.com Offer Maker and Legal Pro program come into place. Most lawyers are going to charge you upwards of $250 to draft an offer to purchase. Working as either a buyer OR seller with PropertyGuys.com our Legal Pro team will work with you 7 days a week to review any offers, draft your purchase and sale agreement, advise on anything an agent has brought you asking for a signature, or simply answer any questions relating to the legal aspect of buying or selling a home.

You can get a Legal Pro or you can call Saul, your choice.



M

How Does Your BRA Fit?

They are not one size fits all, or so my wife tells me!

Garth Turner had a great post on his Greater Fool blog exposing the Buyer Representation Agreement and the dangers of signing one.

There were a lot of really good points brought up in this blog. The one area that he didn't get into is that not all agreements are equal. A BRA is as varied as a seller's agreement and depending on the local real estate board or even individual realtors, they can differ.

For the first time I am going to ask for homework. Think about what you would look for in your BRA. If you could write a BRA that would fit you like a...well bra, what would it look like?

M