Cause and Effect in Real Estate

The local real estate market is brisk and buyers are feeling the pressure to move quickly when a new listing becomes available. As a result, some buyers are calling the listing broker to book an appointment instead of waiting for their broker – who has been diligently searching for a home for them – to make the call. After they have visited the house with the listing broker, the buyers then call their broker to write their offer, thinking they’ve saved some time. What they don’t realize is that, per Quebec real estate law, they’ve just ensured that their broker is no longer entitled to their commission, even if they do all the work of crafting the offer and getting the best possible deal.

In real estate law, Cause and Effect says that the broker who is the cause and effect of you buying the house is the one who gets paid the commission, not the broker who did the paperwork. The listing broker you visit the house with will be considered the ‘cause’ of your purchase. Your broker, who will spend days writing the offer, overseeing the building inspection and doing the research to ensure you are protected, won’t get paid for their efforts.

Open houses

What about open houses? By law, it’s considered the same as visiting with the listing broker. However, if you tell the broker at an open house that you are working with another realtor, most brokers will respect that relationship.

Just a quick question…

“I will just call the listing broker to answer a quick question, then I will call my broker if I want to see the house.” Again, this can cause issues for your broker. Always tell the listing broker you are already working with someone if you call them with questions. Better yet, ask your broker to do it for you. They may even know the answers already!

Many buyers assume that if they visit with the listing broker they are unrepresented. In reality, according to real estate law, the listing broker automatically becomes their broker of record for that particular house.

If you like your broker and have a good working relationship with them, you should let them work on your behalf. After all, they’re in the best position to know your needs and wants and are more likely to represent you well in the negotiation process.

Pre-Listing Building Inspection

Recently, I had a client comment that she hadn’t realized how much work a real estate broker does after the offer to purchase is accepted. Getting a signed offer is just one part of the sales process. Getting from the signed offer to the notary’s office to finalize the transaction is just as important – and sometimes just as challenging.

The building inspection

The building inspection is one such challenge and it can cause the delay or even the cancellation of a transaction. A building inspection is a very common condition included in the Promise to Purchase. It’s intended to give buyers some protection against purchasing a property that might have major flaws that could affect its value or its safety, such as foundation cracks, roof leaks, mould issues and more. While the building inspection has its limits, it gives potential buyers a better idea of the overall condition of the property.

If the building inspection uncovers important issues with the property, the potential buyers can ask the seller to fix them before both parties go to the notary. The buyers also have the option to cancel the purchase entirely, leaving the seller right back at square one.

Disclosing the building inspection results

What sellers might not know is that, should a buyer walk away from a sale because of a building inspection, the seller must then declare the issues uncovered to every future buyer interested in making an offer. Transparency is important to avoid future lawsuits, but sometimes inspectors’ opinions differ. What if the inspector was inexperienced, overestimated the issue or was, simply, wrong? It happens.

After a bad inspection, owners should bring in experts in the field to verify the building inspector’s findings. This can take time and money, especially if the inspector pointed out several issues. For example, a foundation expert will charge hundreds of dollars to just to come and give their opinion, and while they’re carrying out their own evaluation, the seller may be missing out on new buyers.

The pre-listing building inspection

So how can a seller help ensure a negative inspection doesn’t jeopardize their sale? In my 20+ years as a real estate broker, I have seen many deals die because of building inspection issues. I would have to say that the majority could have been avoided if the owners had just invested the $500-$700 on a pre-listing building inspection. And all the heartache and stress of a failing deal could have been avoided, too.

A pre-listing building inspection allows the owner to find any issues, big or small, that might make a potential buyer hesitate. They can then choose what to fix. If there is a costly repair the owner doesn’t want to deal with ahead of time, they can simply declare it in the Seller’s Declaration and the buyers can make their offer accordingly. This way, there will be no surprises after offer negotiations.

The seller should chose a well-respected local inspector – one real estate brokers have used in the past and trust. The buyers can then decide whether to make the inspection a condition to their offer or to just read the one provided. For the seller it means a stronger offer with a higher closure rate. Remember: building inspection clauses can delay an offer becoming firm by an average of two weeks.

The only negative to doing a pre-listing building inspection is the $500-700 cost to the seller, but if it helps them make thousands of dollars more selling their home, isn’t it worth it? I recommend all my sellers do pre-listing building inspections and the ones who have, haven’t regretted it.

Pre-listing inspection reports save time, stress and money!

Information made available in this guide 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.

Preparing for visits

The most common complaint I hear from sellers is the need to keep their house clean and ready for visits. More than a few clients have told me they wish they could just move out until their house is sold!

Preparing your house for visits by potential buyers is extremely important and yet, I’ve seen houses where the owners clearly didn’t understand this. If you don’t clean you house before visits, even the best broker is going to have trouble selling it.

Smell

You might not realize that your home has a smell to it, but someone visiting it for the fist time will – especially if it smells bad!

Some culprits to consider:

– Pets. Make sure the cat litter is clean and, if possible, out of the house. Dog beds smell like dogs, so wash them regularly while your home is on the market, and store them into the garage during visits.

– Basements. Basements tend to be damp, so they need dehumidifiers. Musty-smelling basements are a huge turnoff for potential buyers.

– Cooking odours. Do not cook especially fragrant foods like bacon, curry or fish the day of a visit. The smell lingers and visitors might find them offensive. The smell of baking cookies, on the other hand, can leave people with a positive impression of your home.

– Fragrances. Do not go overboard with scented candles or scented room sprays. They can be overpowering, and visitors will think you’re trying to hide something.

To try instead:

– Flowers. A beautiful bouquet can freshen up any room. With a little TLC, they can last a week or two and are worth the investment.

– Natural cleaning products. Replace your usual cleaning products with all-natural, lemon-scented products that leave a pleasant fresh smell without being overpowering. Another option is plain vinegar, which leaves no smell at all once it dries.

Sight

De-clutter, de-clutter, de-clutter!  You want potential buyers to be able to imagine themselves living in your house. With this in mid, pack away as many of your personal effects as possible, clear out closets and cupboards, and minimize furniture. Then give your house a thorough cleaning.

Kitchen and bathrooms are especially important to buyers, so make sure that yours look their best. They should sparkle! The bathroom should feel like a spa, so buy some new fluffy towels and a bathmat. Clear countertops of personal items and – please – make sure the toilet lid is closed!

Aside form the obvious de-cluttering and cleaning, you should also think about:

– Packing it up. Purchase a few large plastic storage bins and when visitors come, quickly sweep everything off the counters and tables into the bins. Then store them in the cupboard with the lid closed – or better yet, put them in the trunk of your car and leave with them.

– Lighting. Bright rooms are more welcoming and look bigger. So turn on all the lights and open the curtains and blinds (unless the view is terrible!).

– Access. Walkways should be cleared of snow, wet leaves and toys. Potential buyers shouldn’t have to come in through the back door because you haven’t bothered to shovel the snow. Every visit should start by way of the front door. For your visitors’ safety, stairs should be kept clear as well.

– Details. Finally, when was the last time you clean your light switch plate covers? You may not notice the smudges and fingerprints, but I assure you the buyer will.

Sound

Soft music is always welcome, but the key word is soft – as in turned down, low background music. The buyers aren’t there to rock it out!

Get out!

You, your kids and your little dog too! Buyers don’t feel comfortable wandering around someone’s home while the owners are watching them. Buyers will rush through their visit so as not to inconvenience them.

If you can’t leave, try to be as inconspicuous as possible. Do not be that owner who follows around the buyers to show them all the good qualities of your home. This backfires more often than is successful.  For example, if the you tell the buyer there are a lot of kids in the area, the buyer may imagine he will be over run with kids screaming, when truly there are only 5 kids living close by. Everyone interprets things differently!

Make a good impression

Often, after a day of visits, I hear buyers giving nicknames to the houses we’ve seen. Do you want to be the dirty house or the dream house? The smelly home or the house with the great light? How about the bra house? The owner of one home we visited had her bras and underwear hanging to dry in the bathroom! I have even had the naked house, where a man walked out of his bedroom bearing all. You can imagine how that visit ended!

So take a good look around your home. Walk around and look at it as though it were your first time seeing it. Will it make the right impression?

You may think buyers look past your belongings and your clutter to the house and its layout, but most of the clients I’ve worked with are influenced by how the house is presented. You want buyers to walk away remembering all the positives – that’s when you’ll get an offer.

***The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.***