Welcome to RochefortRealty.com - Susan and Stephen Rochefort

Buyers Q&A

COMMISSIONS

How do Real Estate agents get paid?

If the property is an MLS listing, the buyers’ Real Estate agent is paid by the commission set by the sellers’ Real Estate agent on each property. The buyer would not be responsible to pay any commission in this instance.

WORKING WITH A REALTOR®

When should I start actually looking at homes with a REALTOR®?

As soon as you are pre-approved by your bank or a mortgage broker, you can begin looking at homes. We would not recommend looking at homes prior to getting pre-approved because you may find something you fall in love with and then find out you do not qualify to purchase it!

Do I have to call the Realtor that has the house listed to view the house?

No! In Alberta, any Realtor can show you any house that is listed on MLS. If you have chosen to work with a REALTOR®, your REALTOR® would prefer to show you the property rather than you calling the Realtor® who listed the home. Remember, REALTORs® are paid based on a commission. So, if you are working with multiple REALTORs®, the only REALTOR® who will get paid, is the one that writes the offer with you.

How do I choose a REALTOR® to work with?

Choosing a REALTOR® can be a difficult task. In Central Alberta, there are over 400 licensed REALTORs® and like any profession, REALTORS® are not all created equal! In our opinion, here is what we would recommend you do:

Think about what you are looking for in a REALTOR®, personality is a large part of this profession so think about what type of personality you are compatible with
Ask friends or family if they can recommend a REALTOR® to you, if not, start searching on the Internet and touring open houses
Open houses are a great way to interview REALTORs®
Look through websites and see if there are testimonials posted. Do the testimonials give you an indication of the type of personality the REALTOR® has and is this a fit for you?
Interview more than one REALTOR® to get a feel for what different people have to offer
Find out if the REALTOR® is part-time or full-time and how often you will be able to get a hold of them.
Find out what types of technology the REALTOR® uses (eg. Internet, e-mail, text messaging, etc.)
Send an e-mail to the REALTOR® and see how long it takes for them to respond, this could be an indication of how attentive the REALTOR® will be to you
Ask how many assistants the REALTOR® has, more might not always be better in this business!
Find out if you will be working directly with the REALTOR® or mostly with their assistants…you are paying the REALTOR® to represent you, not their assistants!
Ask how many clients the REALTOR® works with at one time. More can be less in this business. Do you feel the REALTOR® will have enough time for you?
The number of years a REALTOR® has been practicing may not always equate to the same in practical experience. For instance, a REALTOR® may have been in the business for 10 years but only closes 5-8 deals a year. A busy REALTOR® will close between 30-40 deals a year. So, the more deals a REALTOR® closes in one year, could equate to more practical experience than year’s in the business.
Test your REALTOR® – ask how many deals the REALTOR® has closed (or commonly referred to in the business as “ends”) in a fiscal year (January to December) and then call the local Real Estate board to find out if this number is accurate.
Don’t be afraid to FIRE a REALTOR® if they are not doing their job! Your REALTOR® should be living up to their promises!

OTHER COSTS RELATED TO THE PURCHASE

How much money will I need for other costs besides my down payment if I purchase a property?

At minimum, We recommend that you expect to pay $3,000 for basic items such as;

lawyer fees and disbursements which will cost between $1,200 to $1,500
property tax adjustments which can cost between $200 to $1,000
home inspection approx. $400
title insurance approx. $250

There could be other costs associated with your purchase depending on your situation. The costs listed above are general expenses that most buyers will incur.

DEPOSIT QUESTIONS

How much of a deposit do I have to give when I make an offer?

This depends on the type of property you are purchasing and how you are purchasing the property. For instance, if you are purchasing a property between $250,000 and $300,000, we recommend a down payment of $3,000 to $5,000. The larger the purchase price of the property, the more the down payment should be. For purchases over $400,000 we would recommend a minimum down payment of $5,000. The down payment may also be an item that the seller wants to negotiate. The seller may expect a larger down payment to ensure your commitment to the purchase.

When is the deposit payable?

The deposit is payable immediately after your offer is accepted by both parties. The deposit is given to the Real Estate company that has listed the property and is held in a trust account until you take possession. Our suggestion to our clients is that they provide us with a cheque at the time we write the offer.

Can I lose my deposit?

Generally speaking, the only time you can lose your deposit is if you remove conditions on your offer and do not take possession of the property as agreed in your contract. If you can NOT fulfill the conditions in the contract (ie-you are not approved for financing), your deposit will be returned to you, provided your financial institution will provide a letter to the seller and their agent, stating you are not approved for financing.

DOWNPAYMENT

When is my down payment due?

Your total down payment is not due until you see the lawyer to sign all of the paperwork. This typically happens a week or two before possession day. The only money that is payable when you write the offer is the deposit.

WRITING AN OFFER

How much do I offer?

This really depends. It depends on 4 factors:

What the current asking price of the property is.
If there are other offers competing with your offer to purchase the property.
How important the property is to you
Whether the market is a buyers market or a sellers market

This is where the expertise and honesty of your REALTOR® comes in. You must trust your REALTOR® and feel confident that they are providing reliable information. As part of the services we provide to our clients, we assess the asking price based on comparable sold properties for the area.

Although every REALTOR® will have their own negotiating style, there are a few general concepts you should understand:

There is no magical percentage for offers. For instance, not every offer should be 10% below asking. Some may be less and some may be more. It depends on how reasonable the asking price is.
Not every seller has to sell their home. Some sellers will be more motivated than others. There are sellers who list their property just to see how much they can get for their property and may not be willing to negotiate much lower than their asking price. There are other sellers that have to sell and these may be more willing to negotiate the price.
Be prepared to walk away. It is important for you to determine what the most is you are willing to pay for the property. If the property is priced too high, then be prepared to walk away.
Competing offers require a much different strategy. You will need the advice and experience of your REALTOR® to know how to handle this type of situation.

For the month of September 2007, the average home (which includes houses, townhouses, half duplexes and condo’s) sold for 5,881 less than asking price. On a $300,000 home, that is less than a 2% discount!

If my offer is too low, can my offer insult a seller?

In our opinion, yes it can. If your offer is too low, a seller may decide that they will not even counter your offer. We do not recommend a low offer if you really want the property. If you decide to drastically change your offer, the seller could interpret this as desperation and you could end up paying more for the property than if your offer was more reasonable the first time.

What if I don’t find anything I like in my price range, should I look at houses over my price range incase there is a reduction in the price?

Normally we suggest that it is reasonable to look at homes that are $5,000-$10,000 over your price range but not more than this. You will be very disappointed if you find a house that is more than you can afford and the sellers will not budge on price! For example, if you are approved up to $350,000 and you are looking at houses in the $365,000 price range, it could be that the houses at $365,000 have already had $30,000 in price reductions so it could be difficult to negotiate the price down to $350,000. Our suggestion to our clients is that we assess these properties on a case by case basis.

If I find a house I like, how do I make an offer?

This is where the expertise and experience from a REALTOR® is required. You can expect to spend approximately one hour getting the paper work together and signing the “Offer to Purchase”. Once your offer is made, your REALTOR® SHOULD present your offer to the seller and the seller’s REALTOR®. This is where the negotiation begins. It is important that you are available either by telephone or in person in the event a counter offer is made from your offer. Once the offer is accepted by the seller, any changes to the contract must be initialed by both parties.

What happens after my offer has been accepted?

Assuming you have placed conditions on your offer, you will have timelines to fulfill these conditions before the property is sold. The nature of the conditions will determine what is required.. Here are some general conditions:

Financing condition – your mortgage broker or bank will need to have the information for your purchase immediately! As a service to our clients, we fax a copy of the offer, along with a copy of the MLS listing to your mortgage broker or bank, on your behalf.
Home Inspection – a property inspection will need to be booked if a certified home inspector is going to be used. As a service to our clients, we will arrange the appointment with the home inspector that our clients choose.

What are conditions in an offer?

Conditions allow for a set amount of time for the buyer to get things in order without being penalized or legally bound to purchase the property. Conditions also ensure that the buyers deposit is protected. If you can not fulfill your conditions, for example, the bank will not provide you with financing, then your deposit will be returned to you!

What are some of the standard conditions?

A few of the standard conditions are:

Financing Condition – this gives time for the buyers mortgage broker to confirm that the lender will provide funds for the purchase.
Property Inspection Condition – this gives time for the buyers to have an inspector review the property
Condo Document Review Condition – this ensures the buyers receive the condo documents from the seller and gives time for the buyers to read through these documents and seek legal advice.
Sale of a Buyers Home Condition – this allows the buyers time to sell their own property

How much time do I get for conditions and finalize the offer to purchase?

Typically you will receive between 5 to 7 business days to get your finances in order, have a property inspection completed or review condo documents.

Is there more paperwork after I make the offer?

Usually there is. If you placed conditions on your offer, you will have to remove those conditions once you have fulfilled them. There is a form called “condition removal” that has to be signed by all buyers to remove conditions. If you have a variety of condition dates, then you may have to sign several condition removals to remove each condition. There may be amendments needed to the contract as well. For instance, if the seller and the buyer agreed to change the possession date, an amendment would have to be done to make the change.

HOME INSPECTION

Do I have to get a home inspection?

It is not required by law but as your REALTOR®, we highly recommend that you have a home inspection completed. A home inspector can provide an objective visual inspection to the property to determine future maintenance issues with key components of your property such as electrical, plumbing, heating and even potential water problems. This is also a great way for buyers to determine what types of maintenance costs they can expect over the short term.

What is the cost of a home inspection in Red Deer?

We would suggest you budget $400 for a home inspection in Red Deer for a standard property such as a townhouse, half-duplex or single family home. If the property has more than one dwelling (eg. a single family home with two suites), there will be additional costs. For a home inspection outside of Red Deer, there are additional costs for travel.

How do I arrange a home inspection?

As a part of the services we provide to our clients, we will arrange a home inspection on your behalf. You may find your own home inspector or we have the names of 3 home inspectors that we can recommend.

Can I be at the house while the home inspection is going on?

Absolutely! We recommend that our clients are present for at least the last 30 minutes of the home inspection. This gives our clients the opportunity to go through the home inspection with the inspector and ask any questions they may have. Since the home inspection will take anywhere between 2 and 3 hours, most of the inspections will take place in the morning or early afternoon whilst trying not to inconvenience the sellers too much. Ensure you are able to make accommodations in your schedule to be present for at least the last 30 minutes of the home inspection.

When do I pay for the home inspection?

Payment must be provided immediately after the inspection. Most home inspectors will accept cash, cheque or VISA.

LAWYER

Do I have to use a lawyer to complete my transaction?

Yes you must use a lawyer for this transaction when working with most REALTORs®. Your lending institution may also require that you use a lawyer regardless if you purchase your property through a REALTOR® or through a for sale by owner.

When do I sign the papers with the lawyer?

Approximately one week before you take possession of your home, the lawyer's office will call you to set up an appointment. You must be prepared to make this appointment a priority in your schedule as these documents are extremely important. Without these documents, the funds can not be transferred and you will not be able to take possession of your property.

Who sends the paperwork to the lawyers and when does it go to the lawyer?

The Real Estate office that listed the property will send all the paperwork to both the seller's lawyer and the buyer's lawyer. It will be sent to the lawyer's office AFTER all conditions have been removed. As a service to our clients, we will follow up with the lawyers office to ensure they have received all of the paperwork they require.

What do I need to bring with me to the lawyer?

Generally speaking, this is what the lawyer will require from you;

2 pieces of ID for each person that is listed on the mortgage documents. One piece of the ID must have a photo. The recommended ID is a drivers license and one of the following: major credit card or social insurance card.
A void cheque – for your lending institution to withdraw your monthly payments from
A certified cheque or bank draft with the cash to close. Generally speaking, the cash to close is the rest of your down payment including the lawyers fees and disbursements, title insurance and any property tax adjustments.
Proof of insurance on your new home

UTILITIES, INSURANCE & PROPERTY TAXES

When should I get the utilities set-up for my new house?

We would recommend getting these in place as soon as your offer becomes unconditional. You will have to call each utility company (gas, power, telephone and the city or town for garbage and water) to get your information changed into your information.

What do I need to do with insurance?

We would recommend getting your insurance in place as soon as your offer becomes unconditional. The lawyer will require proof of insurance prior to your lending institution releasing your mortgage so the sooner you can have this in place, the better. Also, make sure that your insurance company faxes the information to your lawyer.

How are my property taxes paid?

This is an important conversation to have with both your mortgage broker and your lawyer. Normally, property taxes are paid in full once per year. Most cities and towns in Central Alberta allow you to make monthly payments but you must ensure you have filled in the appropriate paperwork. Red Deer’s monthly property tax program is called T.I.P, which is short for tax installment plan. Go to this link for more information: City of Red Deer - Tax Installment Plan

POSESSION DAY

What time will possession happen?

According to the contract, possession is to happen at noon but given the complexity involved in the transfer of the funds, this rarely happens. We tell our clients not to expect to take possession until 2pm.

What happens on possession day?

As part of the services we provide to my clients, we do a walk through of the property PRIOR to our clients taking possession. That way, if there are any major problems, we can try to have them addressed immediately. We will have arranged a time to meet our clients at the property prior to possession day. Upon that meeting, we will do a walk through of the house, ensuring all the items that were listed in the contract remained in the house. We will also turn the appliances on to make sure they work, run the taps, flush the toilets, turn the showers on, etc. to make sure everything is in good working order. We will make sure you have information such as alarm codes and mail keys. And then the house is all yours!

What happens if something is broken when I take possession?

Legally, the contract indicates in section 4.2, “When the buyer obtains possession, the property will be in substantially the same condition as it was in when this Contract was accepted.” So legally, the buyer has the right to sue the seller if the property is not in substantially the same condition. In our experience, if there is a problem, the first step is for the REALTORs® to work with their clients to find a mutually beneficial solution to resolve the issue(s). If this is not possible, the problem escalates to the lawyers. In our experience, the lawyers attempt to work with their clients to find a mutually beneficial solution. If this does not work, then the buyer would sue the seller. Most times, the seller is reasonable and prepared to take responsibility for any problems that are found on the day of possession. It should be expected that if a seller has listed their property with a REALTOR®, the Realtor has educated their client as to the responsibilities they have as a seller. As a part of the services that we provide to our clients, we give our sellers a checklist of items to have completed by possession day.

Does the house have to be clean when I take possession?

No. There is no provision in the contract to force the sellers to ensure the house is cleaned before you move in. You can expect that on possession day, the house will look similar to the same condition you saw it when you viewed the property. Everyone has a different definition of clean so expect to spend the first day cleaning rather than unpacking!