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     One of the greatest changes in real estate practice in the last dozen years has been the introduction of representation for the buyer. Buyers had always thought that if they were being shown properties by an Agent that he was representing them and would always look out for their best interests and that the Listing Agent would represent the sellers. If both parties were dealing with the same Agent, then the buyers assumed that they would be treated fairly. However, the Listing Agent's only obligation was to the seller, who was his client, whereas the buyer was considered to be a customer, a vast difference in treatment.

     If the Listing Agent allowed other Agents the opportunity to bring buyers through the property, he did so with sub-agency. This meant that the 'buyer's agent' became a sub-agent for the seller, who was the client, and that the 'buyer's agent' also considered "his buyer" to simply be a customer.

     What did this understanding mean? If the buyer submitted an offer through "his buyer agent", and the "buyer agent" knew that the buyer would pay more than the submitted offer, then the "buyer agent" was required to inform both the Listing Agent and the Seller of that fact. Conversely, if the "buyer agent" knew pertinent information about the seller, he was forbidden to disclose this information to "his buyer." Similarly, if the Listing Agent were dealing directly with both seller and buyer, then he would disclose gleaned information only to the seller, and withhold such from the buyer.

     All of this had been taking place behind the buyer's back, and without the buyer's consent. As a result of legal judgements, buyers today must agree to the type of relationship that they have with a real estate agent, which includes the role of the Agent, and which party he represents. Many Agents now represent only one party in a transaction. In certain cases, dual agency takes place.

     In the event of dual agency, it is vital that each party recognizes, in advance, the limitations that will be subsequently imposed. For example, if a property is in a poor location (See Location, Location, Location), will the agent hosting an open house discourage buyers from making an offer because of it? Will he advise the buyer, in advance, of restrictions against the property (See Real Property Report) limiting the use of the land? And one of the greatest assets of a good agent is negotiating skills. Under dual agency, for which party is the agent negotiating?

     The above (and other) situations emphasize the importance of the home-buyer having his own representation. How can you identify a qualified buyer's agent? The Real Estate Buyer's Agent Council (REBAC) is the country's oldest and largest association of real estate practitioners representing buyers in real estate transactions. Some of the nation's most skilled Buyer's Agents hold the Council's prestigious "Accredited Buyer Representative" (ABR®) designation. And an ABR® can work exclusively for you, at no cost to you. Engaging a qualified Buyer's Agent in your search will help eliminate 'buyer's remorse' the morning after, and years after.

     Most real estate agents today will readily be a Listing Agent for one transaction and a Buyer's Agent for another transaction, which obviously are two very different roles. Although some agents are qualified to do both, many are not. Associations have been formed to provide supplementary training to agents to give full representation to buyers. Such accreditation gives assurance to buyers that this "most important financial decision" will not be made casually. An "ABR" (Accredited Buyer Representative) gives such representation.

      In the search for a home, some agents exclude certain properties on the MLS (Multiple Listing Service), and most agents do not show 'exclusive listings' and 'for-sale-by-owners.' A true "Buyer's Agent" will allow the buyer the choice of considering all the properties that are available that meet the buyer's criteria. Although the Listing Agent of a property has pledged to always work in the best interests of his client, the seller, most agents do belong to various boards or associations that have specific rules and codes of ethics. It should be kept in mind that builders and for-sale-by-owners do not belong to these boards and are consequently not bound by the same rules or codes of ethics (See story in Suites and Zoning). Buyers of such properties are never clients; they are customers.

     A lawyer's role in all transactions is to process a written agreement and see that the terms therein are completely carried out. Thus, BEFORE signing an 'Offer to Purchase,' it is imperative that the buyer is 100% certain that everything is fully understood and that nothing is missing. The lawyer cannot undo the agreement, or add into the agreement (unless both parties agree in writing). The lawyer does not examine the property, nor listen to the verbal assurances given by the seller or the seller's representative, so that the lawyer could give advice to the buyer and obtain protection in writing. Any verbal assurances that the seller may have given are usually not binding, and often, little or no recourse is available. Examples on the following pages show the types of serious problems that a diligent Buyer Agent can help buyers avoid.

   The information on this site is sponsored by Randy Wall of CIR Realtors, Calgary. He has the expertise necessary to provide true representation for real estate buyers. He would be happy to work exclusively FOR YOU, at no cost to you. Call for a no-fee, no-obligation consultation.       Tel: (403) 284-2008.       

     First-time homebuyers have a number of opportunities open to them. One of these is the option to use a down payment as low as 5%. Another is being able to withdraw RRSP funds. Each qualifying individual purchasing the qualifying property may withdraw up to $20,000, exempt from taxation. These funds must be repaid over the following years (up to 15 years).

     Please note these important points:
     - determine, in advance, if one or more persons are qualified for this program
     - eligible funds must have been in an RRSP for at least 89 days
     - it is not necessary to use the total amount withdrawn from an RRSP towards the down payment. Funds may be withdrawn          and used for other purposes. It may be advantageous to increase the RRSP funds available (through a loan or otherwise) to          decrease your income tax. This would depend on your income level and tax situation.
Click HERE to go to Home Buyers Plan.

      If financing will be required to purchase a property, then a mortgage will need to be obtained. A mortgage of 80% or less financing is called a conventional mortgage. Financing above 80% is called high-ratio, and requires mortgage insurance.

     C.M.H.C.'s insurance fee is as follows:

     Additionally, C.M.H.C. second mortgages are available for purchases and renovations and must be for a minimum amount of $10,000, and total maximum financing of 90%. The insurance fee for a second mortgage is the lesser of:
     - the above applicable fee applied to the total of the two mortgages, or
     - 5% of the second mortgage.

     In Alberta, by law, all mortgages are assumable. Thus, if a property that is for sale has an existing mortgage on it, a decision should be made as to whether the mortgage should be assumed. This would depend on a number of factors, such as the interest rate, the amount of the mortgage, the remainder of the term, etc. Another important factor is whether or not the seller faces a payout penalty if he must discharge the mortgage. If so, then the assumption of the mortgage by the buyer should be negotiated into the total purchase price. All of these factors should be considered in a cash-to-mortgage offer. Another option offered by some sellers (depending on the property and on the existing real estate market) is a vendor-take-back mortgage.

Click HERE to go to Home Buyers Plan.

Click HERE to go to CMHC.

     During the home-shopping process, one will hear the term mortgage broker. What is a mortgage broker? A mortgage broker is an important professional for a home-buyer that requires financing. In the past, one buying a home went to a bank, probably where he had a chequing account or other accounts, and obtained a mortgage. There are, however, dozens of financial institutions, not just banks, that offer mortgages. A mortgage broker is in contact with a large number of these institutions. Does it benefit the home-buyer if one deals with a mortgage broker?

     Absolutely! First, a mortgage broker will review your financial history. If there are matters that need attention, these can be addressed in advance to improve your qualifications. Secondly, when a mortgage broker submits the mortgage requested, the financial institutions are essentially "bidding" on the mortage. This means that the most favourable interest rate possible for the home-buyer is generated. This rate is invariably far better than the posted bank rates.

     How much do mortgage brokers charge for their service? This should be one of your first questions for the broker. For a typical mortgage to someone with good credit, there should be no charge. Find out for your particular situation. Most of the preliminary work can be done right over the phone, or in a short time period in the office. Mortgage brokers are licensed provincially and must adhere to business guidelines established by law.

Click HERE to go to Pro-Link Mortgages.

   The first step of the home-buying process was determining the range of properties to search. The next step is the neighbourhood that is desired. The decision of not selecting the biggest or highest-priced house on the block is important in obtaining value for the dollar spent, both present value and future value. The buyer agent will be able to compare the average sale price of properties in a given neighbourhood, together with a dollar-per-square-foot figure. (Also, see Location, Location, Location)

   The buyer should also give to the buyer agent a list of needs and wants in the desired house. Likes (and dislikes) about the buyer's present property should be noted. The functionality of homes viewed should be considered. Does the house have a good floor plan for your lifestyle? Will there be problems with congested areas? What will happen to the house or yard in different seasons? Whether new or resale, all homes will require some adjustments or upgrading. Will the costs of these make the asking price unreasonable compared to a home requiring less work?

   Is the current use or proposed use of the property legal, especially with respect to suites? Have decks, basement or other development, been done with the required permits and regulatory approval? Does the seller have a current Real Property Report (See Real Property Report), together with municipal compliance? Are there easements or other encumbrances against the title of the property that would prohibit certain uses? All these factors should be considered by the buyer or the Buyer Agent to avoid frustration.

   If a buyer decides to view open houses without the Buyer's Agent, some things must be considered. The buyer should never forget that the listing agent has committed to work for the best interests of his client - the seller - and has had a relationship with the seller for weeks or months. He will be scrutinizing the reaction of the buyer to the property. Demonstrations observed now can be used later in negotiations, even if the buyer is using his own Buyer's Agent.

   VERY IMPORTANT (This should be read carefully.) If a buyer makes an offer to a listing agent without using an agent of his own, then the buyer must sign a form acknowledging dual agency. This document states that the Listing Agent will have no duty of confidentiality to the Buyer and that the Listing Agent will disclose to the Seller all facts known which affect the value of the property (For example: What was the buyer's reaction to the house? For how much is the buyer qualified to pay? See also Types of Agency).

   These are the traditional three answers given to the question of whether your purchase of real property is a good investment. But, is location that important in real estate? The short answer is 'Yes,' but several factors must be considered. Of primary importance is the reason for your real estate purchase. If the property will be used as your principal residence, location is paramount. In this case, though, location has a far different meaning than for an investment or holding property.

   What steps, then, should be taken in choosing your home? A tour of the street (and lane) of your potential new home is a must, not only while viewing the house, but at various times of the day and week as well. After you've moved into your new home, neighbouring domestic animals or party animals may quickly dampen your enthusiasm. Will the current amount of vehicle traffic or aircraft noise have an impact? Will this change in the future (esp. in a new subdivision)?

   While touring the neighbourhood, observe closely the direction that it is taking. In a newer neighbourhood are the houses and yards being maintained and the landscaping completed? In an established neighbourhood, are renovations taking place? Are houses that have become severely dilapidated being replaced with new ones or being totally remodeled? Do you have school-age children? Where will they now go to school, and how will they get there? Are there parks and recreational facilities accessible nearby? As well, parents and children may participate in frequent functions or activities, where traveling time must be worked into your schedule. Is public transportation close and adequate for your needs? Are stores available for your shopping needs? And, of course, the new route to the office or worksite must also be considered.

   There is a constant demand for properties that contain a suite. Most municipalities regulate various areas by means of zoning. This permits grouping of commercial, industrial, retail and residential zones of differing types and densities. Sometimes an area is rezoned or the by-law affecting an existing area is changed, and as a result, a property might now be considered "legal non-conforming." In this situation, 'grandfather' protection often applies to the properties in an affected area. However, the City of Calgary has informed at least one property owner that his legal, non-conforming structure could no longer remain standing and had to be redeveloped to conform to the currently existing by-laws.

   A property with a suite is often called an up/down duplex. A semi-detached dwelling is often called a half-duplex or a side-by-side. The City of Calgary Land Use By-law has the following definitions:
     - "duplex" - a single building containing two dwelling units, one above the other, each having a separate entrance
     - "dwelling unit" - two or more rooms used or designed to be used as a residence by one or more persons and containing          kitchen, living, sleeping and sanitary facilities
     - "semi-detached dwelling" - a single building designed and built to contain two side-by-side dwelling units, separated from each          other by a party-wall extending from foundation to roof.

   R-1 zoning permits single-detached dwelling; i.e. no duplexes, no suites, no semi-detacheds. R-2 zoning permits duplexes or semi-detached dwelling, but requires a minimum lot width of 15 metres and a minimum lot area.

   What can happen to illegal properties? One example is of a person who bought a property from a for-sale-by-owner. The property contained a suite and the seller was renting out the suite at the time. The seller gave the assurance that since the property was zoned R-2, the suite was legal. What the seller neglected to say was that the lot width was only 12.2 metres. Some time after the buyers took possession, the tenant of the suite complained to the city. The city inspector determined that the suite was not legal, and the new homeowner was ordered to remove all cooking equipment, 220 wiring, counters, sinks and lower cabinets.

   When a property has been selected and the buyer wishes to submit an offer, price is one of the biggest considerations. Some may feel that there is a rule of offering so much less than the list price. On this point, there are no rules. Generally, one expects that the Listing Agent has recommended a price close to market value. In some cases, the sellers may be "fishing," that is, they will only sell if they receive an offer on their inflated price. In other cases, the house may be underpriced, and the buyer's agent would likely recommend submitting a full-price offer. In a strong sellers market, many properties have sold for a higher price than listed.

   One of the important roles of the Buyer Agent is to be a third-party negotiator for the buyer. Because of the excitement involved when a suitable property has been found, the buyer agent can proceed in an objective manner and possibly help avoid a poor decision being made hastily. This may include the buyer paying too much for a property, but it also may mean that the buyer decides to wait before submitting an offer on a good property. It can be very frustrating to "lose" a property to another buyer who was prepared to act. Thus, if the buyer views the right property and it is in the right price range, the buyer must feel comfortable in the analysis that the Buyer Agent will provide, and be prepared to make an immediate decision.

   A Real Property Report is a legal document illustrating the location and dimensions of the property boundaries. A Real Property Report shows the location and dimensions of all buildings and improvements. It shows the location of any visible encroachments onto or off of the property by adjacent buildings, utility poles, driveways, etc., and where fences are located. It also shows measurement-related encumbrances or interests registered on the property title such as utility rights-of-way, roadways, and a neighbour's right-of-access.

   These restrictions can limit construction of garages or other accessory buildings. It is very important to have knowledge of the above facts before submitting an offer-to-purchase on a property. Prospective plans for use of a property may change significantly as a result.

CLICK HERE for more information on Real Property Reports.

   The buyer should always remember that an "Offer to Purchase" is a legally binding contract. Once signed, the buyer MUST proceed according to the terms and conditions therein. Failure to do so in a good faith manner may result in the forfeiture of deposit money and legal action. A capable Buyer's Agent or real estate lawyer can prepare this document in the buyer's favour. It is important to understand what is contained in the offer and, also, what is not, before signing.

   A blank "Offer to Purchaser" form should be read and familiarized in advance. Thus, when the buyer is ready to write an offer, it becomes easier to simply fill in the appropriate information. In addition to price, other items are negotiable in the offer to purchase. Commonly, chattels, or unattached goods, such as fridge, stove, etc. are negotiated. The possession date can be important to one party and less to the other. It can be negotiated as well. If one party accommodates the other, then a different concession might be obtained to compensate.

   Conditions Precedent are conditions that must be met in order for the contract to proceed. Common ones are financing or a professional property inspection. A professional property inspection is strongly recommended. When any condition precedent has been filled, a waiver of that condition is given, and the party proceeds to the next condition. If there are no further conditions, then the transaction is firm or final. If a condition is not waived by the stated time, then the transaction is terminated, unless both parties agree otherwise.

   A good-faith initial deposit is given at the time of the original offer, and possibly an additional deposit later. The larger the deposit that can be given, the better the offer will appear to the seller. If a buyer is not using a Buyer's Agent, extreme attention should be paid as to where the deposit will be held, and what are the conditions governing the deposit and its release. Deposits should be placed in a trust account, usually by the Listing Real Estate company. If conditions form part of the offer, the deposit is fully refundable until the conditions are waived. If no conditions form part of the offer, or once the conditions have been waived, the deposit is no longer refundable (unless otherwise agreed to).

   Virtually all first-time buyers and many repeat buyers looking for a home ask about foreclosures. Can one find a 'great bargain' in a foreclosed-upon property? To answer, one should first understand the foreclosure process. When a property owner is late on one or more mortgage payments, the financial institution holding the mortgage has the right to begin foreclosure. This is a lengthy, procedural action, lasting from six to twelve months. The property owner can, at any time during this process, pay back the amount owing and retain the property. If the property owner does not do so, the title for the property will be eventually put under the ownership of the financial institution or C.M.H.C.

   When the property is now listed for sale, it legally must be sold for not less than reasonable market value. There have been foreclosures where the property has been vacant and for sale for over a year in an attempt to achieve maximum sale price. Another important consideration is the reason that the property owner stopped making payments. It could be a change in his financial position, a long-term mortgage at high interest rates, letting the property become run down, etc. These are usually negative selling features for the property. If a buyer wants to take advantage of such a situation, though, it should be done before the property goes into foreclosure. An informed real estate Buyer's Agent will be aware of such properties.

   A basic economic principle that is heard is that of 'supply and demand.' This simply reflects the fact that if the supply of a good or service exceeds the demand for that good or service, then the price will fall. If demand outweighs the supply available, then the price will rise. This principle is no more readily apparent than in the real estate market.

   For example the new home market has a number of factors that influence the price of a new home. The builder faces various costs, such as raw land prices, infrastructure costs, materials, trades or labour costs, all of which are equally affected by the supply and demand principle. If, for example, unemployment is high, tradesmen and labourers will lower their rates to obtain the contract (weak demand of labour). The builder can then determine whether to use these savings to either increase his profit or to reduce the selling price of the home. This will depend on whether the demand for new homes at that time is weak or strong.

   Now, consider the resale home market. Good communities appeal to most people. If new home prices move in one direction or the other, the homebuyer will weigh the pros and cons of a resale home (location, condition, functionality, etc.) against the price of a new home in a new area. A dearth of resale homes for sale (small supply) can lead to almost panic buying (strong demand). This results in overall price increases. When other homeowners see these rising prices, they may be tempted to also put their house up for sale. If this turns into a flood of homes for sale (large supply), then buyers will take their time choosing a home, offering much less than the asking price (weak demand). When the sellers' expectations are not being met, the sellers will withdraw their homes from the market. As more do so, the supply of homes shrinks and the supply/demand cycle is complete.

   The real estate industry often uses the terms "buyers' market" or "sellers' market." These terms can be mathematically analyzed by the sales-to-listing ratio of the MLS. A balanced market has a sales-to-listing ratio of about 50% to 55%. This means that in a given month, for every 100 properties newly listed, there were 50 to 55 properties that sold during that month. The fewer the number of sales, the more the market becomes in favour of buyers, and prices may decrease. The greater the number of sales, the more the market becomes in favour of sellers, and prices may increase. (See Supply, Demand and Prices)

   In a strong "sellers' market," there may easily be offers being made by more than one buyer. In addition to price, the seller will weigh the conditions and terms attached to each offer. Under these conditions, the buyer's agent must use all tools available to ensure that his client's offer is the one that is accepted. If the buyer requires financing, and this is a condition of the offer, it is imperative that the buyer's agent shows a copy of the buyer's preapproval certificate at the presentation of the offer. If there are no competing offers, a preapproval certificate will likely still help the buyer in negotiations and aid the seller to accept the offer.

   Additionally, the amount pre-approved by the financial institution will eliminate looking at properties outside the buyer's price range. Wasting time on such properties may mean that a good property in the buyer's range was not seen, and subsequently it was sold to someone else.

Pro-link Mortgages can provide over-the-phone preapproval information at no cost. Click HERE