Before Rushing Out To Buy A House And Hire A Realtor Consider What Information You Plan To Divulge
Buying a house is a big deal for a home buyer however there are certain topics you should avoid discussing with your realtor.
I’m still in awe how houses are selling for hundred’s of thousands of dollars over asking price.
After some research, I found out that if you plan on selling your house right now it’s a hot market for sellers.
This means that there is a limited inventory of houses on the market and plenty of buyers.
Although, if you are a buyer get out the pocketbook because you’re competing with Toronto pushing their way West and beyond.
Houses are selling for a minimum of $100k over the asking price with zero renovations and little maintenance to the home.
It’s sort of nutty to see that but that’s what’s going on.
Hiring A Realtor
When you hire a realtor they should be good at what they do and stay true to their CREA (Canadian Real Estate Association) code of ethics.
As a home buyer you have to understand that the real estate agent is on your side.
I believe it’s ok to get cozy around your realtor but they are not your buddy or best friend.
Well, some of you may hire your buddy or best friend which can end up a blessing or a war zone.
If you are not feeling the vibes with a realtor then don’t sign with them.
Many of you may not know this but you don’t need to disclose certain information to a realtor that you’re not comfortable with.
You always have the option to interview a realtor and ask them for referrals.
They want to find you a house that you love and make money at the same time.
How To Avoid A Bad Realtor
However, there will always be a shady realtor in every city, likely more than we can count.
The name of the game for a realtor is to sell the house for a home buyer or seller and for some, at any cost.
An example might be your realtor talks to the other realtor divulging any personal info you’ve told him/her.
So, the home buyers agent could tell the sellers agent the max amount his client is willing to pay.
Certain agents may be greedy and work together to sell a house just for the income.
An example might be when an agent views a house to create a comparable selling price.
Let’s say the realtor comes up with $325,000.
The home seller calls another agent for feedback and the starting price was $525,000.
Why is there such a massive price difference?
Either the realtor wants to buy it under false pretenses and flip it by pricing it low and selling it high.
The realtor wants fast money so pricing it low would sell fast and money in his/her pocket.
By the way, this is a true story.
With-in 3 months, the house sold for over $500,000 with a happy buyer and seller.
She’s pretty happy that she went with her gut feeling and did some research before listing the house with a realtor.
One last example of a shady realtor is the realtor listing the home and convincing the homeowner to sell it to a cash buyer before it hits the market.
By doing so the realtor can pocket the commission however, to cover their tracks has someone else sign off on the sale, perhaps a family member who is also a realtor.
This is another reason why many homeowners and buyers choose to use the For Sale By Owner (FSBO) way of selling a house fast.
The owner of the house is in charge of what is going on and the home buyer and seller avoid the middle person, the realtor.
By doing so commission is out the window which can be a huge savings for both parties.
Right now a realtor can charge anywhere from 1% to 5%
The real estate agent commission fee in Ontario, Canada is 5%. The commission is usually evenly split between the seller’s agent and the buyer’s agent – typically 2.5% to the seller’s agent and 2.5% to the buyer’s agent. According to the industry standard in Ontario, the seller typically pays a 5% commission on the final sale price of a property.
10 Topics To Avoid Discussing With Your Realtor
I’m not real estate guru nor have I bought more than one house in Canada in my lifetime.
I’ve had the opportunity to hire a realtor and participate in the home buying process with a good friend.
Most of my role was to listen and have a look around for potential problems.
Below Is what I would never tell a realtor however your comfort level may be different.
How Much Money You Earn
I don’t even discuss how much money we earn in our household with anyone.
To be fair, I don’t really think anyone needs to know my income especially a realtor.
Some realtors are great communicators and buying and selling experts.
They can read a buyer or seller like a book so watch what you disclose and how you react to certain questions and situations.
You Don’t Understand Real Estate
Don’t ever tell a realtor that you don’t understand the process of buying or selling a home.
Any good realtor will go through the process with you so all you need to do is listen.
Perhaps, doing reasearch online about buying and selling homes in Canada may also guide you.
The reason for not disclosing your knowledge of real estate may take away your leverage.
Timeline For Moving
You don’t have to say anything to your realtor about when you need to move.
Don’t compromise your buying or selling power by allowing your realtor to know how fast you need to get in or get out.
If you are serious about an offer the seller will have a move in date provided and if it works great if not send your offer back with a new date.
Where You Work
Oh, so you’re a doctor! You must make really good money and can afford the best and biggest homes.
You’d be surprised what people can assume by your career and a realtor who is out of touch with finance will use that to their advantage.
Not all wealthy people want big homes however there is plenty of homeowners who purchased a home at the top of their budget.
By doing so the buyer could put themselves in a situation that requires dipping into emergency savings.
Worst case scenario if your mortgage goes into arrears you can always sell your house and move on.
Why You are Buying A House
You might be an investor from overseas or perhaps you want to flip homes for a living to earn extra cash.
You don’t need to tell your realtor anything about why you want to look at homes to purchase.
A couple we know flipped houses and earned enough to sell their home for over $800,000 and built a 2 million dollar mansion. (well it looks like a mansion to me).
Perhaps you are buying a house because you want to be a landlord or knock down a house to build.
Don’t show stress and don’t beg your realtor to do anything to get the dream home you’ve just fell in love with during a showing.
You may just get it and pay more than what you bargained for.
How Much Money You Have In The Bank
I don’t know why anyone would want to tell their realtor how much money they have in the bank.
You also don’t need to tell your realtor your ceiling price.
Always remember that what a bank or mortgage broker tells your top dollar could sink you.
Creating a budget that includes a mortgage and property taxes is a smart financial move.
By doing so you will find out how much you can afford when looking at homes for sale.
Your Renovation Plans For A Home
Getting back to shoddy realtors be cautious about what you plan to do with the house.
Disclosing potential renovations could motivate a crook realtor to buy or sell the home to a friend.
As bizarre it may sound it happens and people flip houses left, right, and center for fast cash.
Of course, that is a worst-case scenario but keeping your mouth sealed is the best option.
Your Relationship Status
Your realtor does not need to know if you are going through a divorce.
By doing so the realtor has put themselves in a position to try and get you into a home faster.
Home buying pressure can work against you if a realtor feels forced to act fast.
The realtor may convince you to buy a house that’s not right for you to relieve the stress.
Also, consider keeping your private life private as a realtor to motivate you to accept a counter-offer or the seller’s last offer price.
The realtor might tell you to forget the house inspection or convince you to accept any contingencies.
Shopping for a house with little pressure on the realtor will work out for buyers in the end.
Maximum You Are Willing To Pay For A House
If your real estate agent schedules a home viewing never let your realtor know you’ve fallen in love.
Keep it to yourself and then let your realtor know that you’d like to put an offer in.
Never tell the realtor how much you are willing to pay for a house if you don’t want to become house poor.
Getting into the real estate market today is tough for anyone, especially millennials with student loans they need to pay.
A good realtor will tell you what they think the top-dollar offer might be and if it’s worth it.
Once your realtor who you’ve hired to do the work gives you their opinion you have options.
Take it or leave it.
However, if you are willing to pay over the asking price you’re free to do that too.
Final Thoughts About What A Realtor Needs To Know
At the end of the day, it’s up to the buyer and the seller to disclose what they want.
This is not a post to bash real estate agents but rather what I see no need telling them.
I know some realtors may not agree with me and that’s fine as we’re all entitled to our opinions.
So, let me know yours.
Discussion: Did I miss any other topics that a realtor does not need to know?
Drop your comments below, as I’d like to hear about your experiences.