There are a lot of misconceptions about buying real estate, here are a few of the most common misconceptions, and ways to protect yourself. Research shows that many home buyers wish they'd done something differently when they bought their home, including:
- having a better grasp of the process
- seeing more houses before buying
- having a home inspection
- spending more time researching
- interviewing real estate professionals before selecting one
- understanding the contracts involved better
As with many things in life, when it comes to buying a home, a little planning and preparation goes a long way. Here are the most common misconceptions about buying and selling real estate:
1. The terms and conditions in contracts are standardized. Many people believe representation agreements have standard terms like the length of the contract or the services offered. It is mandatory to sign a buyer representation agreement in Alberta when purchasing a home with the help of a real estate agent. This is a new requirement so it's understandable that there is some misunderstanding about these agreements, but they've actually been around for a long time (they used to be optional). There are different types of agreements (exclusive and non-exclusive), and there is no standard length of time, fee, or set of services that is included in a representation agreement whether it be for buying or selling a home. We'd be happy to explain more about these agreements, contact us anytime.
2. After a contract is signed, there is a trial period where the contract can be cancelled. With the exception of new condo purchase contracts, there is no trial period when it comes to representation agreements or purchase contracts; once you've signed a contract you've agreed to everything that is written in the contract. There are frequently conditions in purchase contracts, that must be met in order for the deal to proceed, but you can't back out just because you feel like it. For example, you've agreed to purchase a home, but you have an inspection condition. You must act in good faith, and remove the inspection condition unless you find something during the inspection that would stop a reasonable buying from moving forward with the purchase. If you back out without good reason, the sellers would likely win if they decided to sue you. Don't sign a contract you don't intend to follow through on.
3. You automatically get your deposit back If you place a conditional offer on a home, and don't proceed. Did you know you need a deposit to buy a home? In most cases an initial deposit is required within a few days of the offer being accepted, and an additional deposit is given if and when conditions are removed. In most cases if you don't remove your conditions, you get your deposit back, but that's not always the case (see point 2 as one example). Holding and releasing deposits has a complex set of ever-changing set rules, so ask what happens to your deposit before you agree to give one.
4. Signing an agreement with one agent doesn't limit you to working with that agent. In this case it really depends what you've signed. You have the option of working with other agents under non-exclusive agreements. An exclusive buyer representation agreement commits you to working with the agent you signed the agreement with, for the length of time and for the fee stated in the agreement. It also commits the agent to working for you, and providing the services agreed to in the contract. If you've signed an exclusive agreement and chose to work with other agents, you're at risk of owing more than one agent a commission when you decide to buy.
So, how do you avoid making these, and many other mistakes when buying or selling a home?
1. Do your homework. Researching online t is a great start, but there is a lot of information out there. Check out the tips and tools on the RECA web site, and make sure you read this Consumer Relationships Guide. The very first sentence of the guide states: "Real estate professionals have a regulatory requirement to present and discuss this Guide with you," so you might as well familiarize yourself with it now.
2. Find an agent you trust. Interview agents, ask friends and family for recommendations - don't just work with the first agent you meet. Check customer satisfaction ratings - some brokerages post real-time, third-party verified ratings of all their agents on their web sites - don't just count on testimonials. Google the names of agents you're considering and see what you find. Also remember, everybody makes mistakes, if you find a complaint about an agent or brokerage, ask them about it. The way someone handles problems tells you more about them than any testimonial.
3. Understand what you're signing. Most people think the hardest part of buying a home is finding the right home. Things get awfully complicated when you don't understand what you agreed to when you signed on the dotted line. Many agents, like the agents at Liv Real Estate offer free consultations or seminars to explain what you're going to need to know, before you need to know it. Contact us today to schedule a no obligation, one-on-one, "buying a home" consultation or, if you also have a home to sell, a "getting ready to sell" consultation.
The boy scouts aren't kidding with their motto: "Be prepared." When you're prepared, and find an awesome agent to work with, buying and selling real estate can actually be fun!