Real Estate Talk:
Buying without a broker
I don’t need a broker to buy! I can do it myself! News: it’s not so easy
By Joseph Marovitch
In the past few weeks, likely prompted by the COVID-19 situation, I have had several inquiries and visits by “buyers” who are attempting to get property for cheap. The assumption is that the crisis is causing real estate prices to drop. This is not untrue. Prices have dropped as demand has diminished due to fear of becoming infected. However, we will overcome or adapt to the situation and life will go on. This means people must live somewhere, therefore, as demand increases, prices will rise.
Part of the broker’s job is to verify, as best they can, that buyers are qualified in terms of finance and intent. Verification takes place in the form of questions to the buyer or the buyer’s broker, as to why they want to buy, are they pre-approved, what are the requirements the buyer has and so on. Buyers that have brokers are partially vetted by their broker (the broker working for the buyer). Buyers that are vetted by their selling broker are less risky to work with.
… a broker can procure listings solely based on the buyer’s price range, preferred locations, number of bedrooms, bathrooms and parking required. The narrowed criteria save unimaginable wasted time.
Buyers that are not represented are riskier to work with for several reasons such as they embellish the truth or lie. A non-represented buyer can say they have sufficient funds when they do not. The buyer can tell you they are searching for an $800,000 property but secretly want to see if they can get an $800,000 house for $300,000. Another risk is the buyer’s knowledge, or lack thereof, of the real estate brokerage act, which applies to everyone, not just real estate brokers. A novice realtor does not always realize their obligations in terms of the promise to purchase, the seller’s declaration, the accuracy of listings, and how this can be a liability to the buyer.
A broker is required to accurately describe and properly price the property for the market. The listed prices are not random figures. They are determined by comparing other similar properties in the same area that both sold in the past 12 months, and those that are currently for sale or what are called active. The active properties are the competition. The sold property is a strong gauge as to what the subject property will sell for and what it should be asking.
This past week a buyer contacted me to visit a property in the Laurentians. The buyer was armed with the knowledge I provided in the listing, including the location, description and price. As they perused the property, comments were made by them, such as the kitchen is too small, the living room requires a different configuration, the master bedroom is dated. These comments were designed to set the seller up for a low offer. A few days after the visit the buyer called to say there were issues with the property and they were prepared to offer an amount that was far below the property value. My answer was no but I would be pleased to find property that was in the price range they provided. I was told it is okay because they have access to Centris and prefer not to work with a selling broker. I wished them the best of luck.
A knowledgeable broker would make their search far easier and waste less time. A property has an intrinsic market value that can be reduced if the property has structural issues or if the seller must sell. However, cosmetic issues are not a good tool to use on a seller who is not in a desperate situation. As well, a broker can procure listings solely based on the buyer’s price range, preferred locations, number of bedrooms, bathrooms and parking required. The narrowed criteria save unimaginable wasted time.
‘… public Centris listings provide summary information whereas the Centris your broker has access to provides in-depth detailed information regarding the property as well as the seller’s declaration, deed of sale, house plans sometimes and much much more.’
Once the buyer has decided on the property they wish to purchase based on the listing and visits, the broker can determine the actual market value range of the property, if there are leans against the property for bills or taxes unpaid, if there is a 30 or 60-day assessment against the property for those unpaid taxes or mortgage payments, that may be pressuring the seller.
All these factors assist in determining the amount the buyer will offer. This is what brokers do and if you are in any other field than real estate brokerage, you can make costly mistakes that are not covered by insurance like a broker is.
One other secret I am going to divulge is that the public Centris listings provide summary information whereas the Centris your broker has access to provides in-depth detailed information regarding the property as well as the seller’s declaration, deed of sale, house plans sometimes and much much more.
Real estate brokers are held to stringent rules in order to operate. They must provide accurate and honest service. They must conduct themselves in an honourable manner when they work and when they are out in public on their own time. Penalties for misconduct, dishonesty or any other deception range from financial fines, mandatory courses, loss or suspension of licence, all the way to prison time if warranted.
Should you have questions or comments, please refer to the comments section at the bottom of the page. As well, to view past articles, click here.
Next article: Business in the new normal / 3
State of the market
While the Canadian Mortgage and Housing Corporation (CMHC) is forecasting an 18% drop in real estate prices across the country, the Canadian Real Estate Association (CREA) is stating the opposite. As far as CREA is concerned, the Canadian economy is tough and will bounce back.
‘The threat is still in the air but as I stated earlier, we will adapt by either finding a cure or adjusting our behaviour. Either way, life goes on and so does the real estate market.’
Many realtors in Ontario and Quebec feel the same way. As I have stated previously, people must live somewhere and demand never disappeared. Demand has been suppressed since January, as there was a threat against our physical wellbeing looming in the air. The threat is still in the air but as I stated earlier, we will adapt by either finding a cure or adjusting our behaviour. Either way, life goes on and so does the real estate market.
Buyers can buy and sellers can sell as long as precautions are followed. A good broker will protect both parties or stop the visit. Just make sure you have a good broker. Your health depends on it.
Stay safe and have a peaceful weekend!
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Joseph Marovitch has worked in the service industry for over 30 years. His first career was working with families from Westmount and surrounding areas, hosting children between the ages of 6 to 16 as the owner and director of Camp Maromac, a sports and arts sleep away summer camp established in 1968. Using the same strengths caring for the families, such as reliability, integrity, honesty and a deep sense of protecting the interests of those he is responsible for, Joseph applies this to his present real estate broker career. Should you have questions please feel free to contact Joseph Marovitch at 514 825-8771, or firstname.lastname@example.org