The Buyer’s Contract to Purchase

The Buyer’s Contract to Purchase is a legal contract that allows a real estate broker to represent a buyer in a residential real estate transaction.  

Until recently, a verbal agreement between broker and buyer was all that was needed for a broker to represent a buyer, although brokers could – and did – use signed contracts in certain situations. In June 2022, a change to the Quebec Real Estate Brokerage Act made it mandatory for a broker to have a signed Brokerage Contract in order to represent a buyer. Along with changes to rules regarding double-ending, the updates to the Act are intended to clarify brokers’ obligations and responsibilities toward their clients, thereby assuring a worry-free transaction (We discussed these changes to the Act in a previous blog post).

The Brokerage Contract to Purchase clearly identifies what the clients are looking to purchase. It also clearly identifies the broker’s obligations to the buyer, including:

  • the broker is required to promote your interests and protect your rights
  • the contract clearly spells out your rights and the terms of your relationship with the broker
  • clearly-defined client objectives
  • access to for-sale-by-owner properties
  • advice on offer price + offer submission
  • negotiation on your behalf
  • assurance that the broker is representing your needs
  • the OACIQ is very strict when it comes to enforcing the Real Estate Act so you can have more confidence in your broker and your transaction

By signing a Brokerage Contract, buyers are giving the broker the exclusive contract to represent them in the home-buying process in the area and to uphold the stipulations specified in the contract. Buyers can visit open houses without their broker, but they must let the listing broker know they have a signed contract.

The Brokerage Contract to Purchase codifies some of the best practices brokers were applying in their practices – representing their clients’ best interests and clearly spelling out their obligations to their clients. Clarifying expectations and obligations helps build stronger relationships and helps ensure better outcomes for everyone.

In our experience, there is a clause in the contract that prospective buyers tend to be uncomfortable with, and that is the remuneration clause. Clause 6 outlines the terms of the broker’s compensation. With verbal contracts, it was understood that the buyer’s broker would get a portion of the commissions paid by the seller, but there wasn’t usually much discussion about just how much those commissions were. With the written Buyer’s Contract, the broker’s commission is clearly indicated – ahead of any offer to purchase being made. The commissions payable still come from the seller in most cases. However, if that commission is lower than the commission indicated in the contract, the buyer could be responsible for paying the difference. At Team Ellerbeck, we’ve solved this issue by adding a clause in Section 10 of the contract stating the compensation in 6.1 only applies to homes not sold on MLS and, additionally, the broker agrees to accept the compensation offered on the MLS listing, thus ensuring no surprise compensation costs.

It’s still possible to use a broker to buy a home without signing a contract BUT you lose your legal protections. Should you choose not to be represented by a broker, you can sign a waiver to that effect. But since the point of the BCP is to provide you with a worry-free transaction, waiving this right might not be in your best interest.

If you have questions about how the Brokerage Contract to Purchase will affect your home search, it would be our pleasure to discuss it with you.



Disclaimer: Information made available in this blog in any form is for information purposes only. It is not, and should not be taken as, legal advice. It is not in any circumstances a substitute for the advice or services of a notary or lawyer. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website.


Why Listing High Can Backfire

“Let’s try it at a higher price first, then reduce to the broker’s suggested price later if we need to.”
I can’t tell you how many times I’ve heard clients say this. While it is a pricing strategy that gets used a lot, in my experience, it isn’t usually the best one.

Say your experienced local broker suggests listing at $349,000 but you want to try higher – $399,000 for example. You list your home at 399,000$ and all the buyers who have been looking rush to see your home in the first two weeks. They have seen everything on the market already, so they know what they can get in the $399,000 price range. And your home doesn’t compare; it’s either smaller or not as renovated as the other homes they have seen. As a result, you don’t get any offers. Meanwhile the people in the under $350,000 price range won’t visit your home because it’s out of their price range, even though your house would have been perfect for them.

Sellers often say to “tell the buyers to make an offer” but buyers in the higher price bracket won’t make a low offer on your home because they want something bigger or more renovated. Buyers in the lower price bracket won’t make an offer because they won’t even visit a home they can’t afford on paper.
So where does that leave the seller? Cleaning and prepping their house for visits that won’t yield offers. When the broker finally convinces the seller to reduce their price, the buyers in the lower price range think there is something wrong with the house because it has been on the market for so long.

I’ve seen sellers wait too long to reduce and miss the busy Quebec spring market. Buyers overwhelmingly want to move in July once school is out. There is also the quirky July 1 moving date that can affect first time buyers. Tenants in Quebec have to give notice to their landlords by March 31 that they are cancelling their lease June 30. Thus, they must buy a home by the middle of March in anticipation of a July 1st move. The sellers of these homes must then buy a new house with occupancy for July 1st, creating a snowball effect for 2nd and 3rd time buyers who all end up having to move around July 1st. Why do you think movers in Quebec can charge 3x their normal rate the last week of June?

If you over-priced your home and missed the influx of buyers in the spring market you can take a break from all that cleaning because you won’t see as many visits during the summer holidays. Mind you, this year maybe a little different with the travel restrictions.

In today’s market, many savvy home owners and brokers are pricing spot on or just under market value to create a frenzy in the first few days of listing and encourage multiple offers, which in turn drives the sale price over the listing price. Lately, seeing 3 to 5 offers on a property within two days of listing is a common occurrence. In the last two weeks alone, I have seen listings selling from $2,000 to $30,000 over asking within two days of listing the property. The owner only had to clean and prep for a day or two and it was sold – no months of visits!

So, if your home has been on the market for months and you’re still waiting for the right buyer, remember there are three reasons a house doesn’t sell: Location, Condition and Price, and price fixes the first two!

The moral of the story is don’t over price your home and hope for offers. Work with an experienced local broker with strong a marketing strategy, price it right, price it tight and you won’t have to hope –  the offers will come to you.