We started a new video series the other day. Alasdair Douglas (my business partner) and I video our thoughts and advice about buying and selling real estate in Kitchener Waterloo.

In this video, I start out in the parking lot of Prudential Grand Valley Realty on my way to buy a new printer and talking about why I go through so many printers. I end up stopped in traffic, marveling about how the price of houses has gone up so much.

This is great acting. The Academy will be calling.

Filed under: Around Kitchener Waterloo, Buying Real Estate, general news, home, video by Keith Marshall
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QUESTION: Every so often, I find listing Brokers having to pursue their Vendor client for the commission on the sale.  Recently, I had attended a court action dealing with this very issue.  Below is a brief summary of what occurred in that case.  I hope this particular case will serve to provide both potential Vendors and listing Brokers/Agents with some insight of each party’s duties and responsibilities  within a listing agreement — dealing specifically with the issue of entitlement to commissions.

ANSWERS: Briefly, the Vendors had retained the services of a listing Broker to assist in selling their present home.  A listing agreement was entered into by the parties. The Agent of the Broker (the “listing Agent”) that was employed for the sale proceeded to market the property by establishing a realistic sale price, listing the property onto the Multiple Listing Service, and, advertising the property in various real estate magazines.

Within a few weeks, the listing Agent located Buyers and a binding Agreement of Purchase and Sale (the “Agreement”) was executed with the closing date set for three months down the road.  Copies of the Agreement were forwarded to each party’s solicitor and everything seemed on track.  One month later, the Purchasers contacted their Agent and advised they were not going to honour their obligations under the Agreement, and, were leaving the province the very next day.  Of course, the Purchasers actions were without any legal basis. Without any Purchasers, the Vendors decided to continue listing the property.  The reason for the Vendors not bothering to pursue the Purchasers was simply because the Vendors had committed to purchasing another property once they had, what they believed to be, a firm sale of their home.

The listing Agent commenced a second search for purchasers through advertising and so on.  In the  meantime, the Vendors, located purchasers on their own.  However, by this point the Vendors had become very worried and anxious as they had committed to buying another home for which, it seemed, they would not have sufficient funds.  In their frustration, they entered into an Agreement of Purchase and Sale with the buyers they located and did not involve their listing Agent.

In court, it was discovered the Vendors had the opinion and belief  that the Agent was not entitled to any commission since: a) he did not locate the final purchasers; (b) he was the one responsible for  locating  the Purchasers who subsequently absconded; and, (c) he was the cause of the Vendors considerable stress  and aggravation over the three month period.   Simply, the Vendors blamed the listing Agent for the entire mishap.

Following a somewhat lengthy trial, the Court held the Agent to be entitled to his full commission for the following reasons:

1) The Court found the Agent had performed his duty fully under the listing Agreement by locating qualified purchasers and entering into a valid and binding Agreement of Purchase and Sale.  Stipulated in most standard listing Agreements, and specifically in this case, is a clause which states the listing Agent is entitled to commission upon procuring “a valid offer”.   Therefore, the listing Agent had fulfilled his duty and it was through no fault of his the Purchasers absconded.  Given the above clause, the Court held proper services were provided and commission was appropriate.

2) The Court also found the Vendors had been aware of another clause in the listing Agreement (which is common in most standard listing Agreements) dealing with the duties of the Vendors and their listing Agent.  Specifically, the clause imposes a duty upon Vendors “to direct all inquiries concerning the property to the listing Broker”.   Accordingly, once the Vendors located purchasers on their own, they were to inform the listing Agent.  The listing Agent would then have been involved in preparing and negotiating the second Agreement of Purchase and Sale.  However, the Court found the only reason the listing Agent was not involved in assisting in the preparation and negotiation of the second Agreement of Purchase and Sale was due entirely to the Vendors failing to satisfy their duty under this clause.  As a result, the listing Agent was held to be entitled to his commissions under the listing Agreement.

In my years of practice, I have always found there to be two sides to every situation.  In this particular case, we can all empathize with the Vendors and their situation of having executed an Agreement to buy another home and subsequently discovering the sale of their own home may not occur.   On the other hand, the listing Agent was desperately searching for another purchaser to buy the Vendors property.  Neither party can be blamed for the actions of a reckless third party.  In the end, the listing Agent did try to find new purchasers throughout the three month period.  In the search process, the listing Agent held several open houses, spent considerable amounts of time and money on advertising and viewings, and so on.  The court did not see any reason for penalizing the listing Agent for an event that was truly beyond his control.

Finally, listing Agreements that Vendors and Brokers enter into are there to protect all parties concerned.  They clearly outline, amongst other matters, each parties responsibilities, and the duration of the relationship.  The listing Agreement is intended to simplify the process and prevent costly litigation.   In the past, court actions for commissions were quite common.  Today, they are not as common, thanks in part, to the listing Agreement clarifying each parties roles and responsibilities.

More from Victor Hussein as he talks about:

Title Insurance

Mortgage Renewal

Pricing Your Home Correctly

Fences and Property Lines

Tips and Traps when buying a home

Victor Hussein is a Kitchener Waterloo lawyer, specializing in real estate.

Filed under: 365 tips for buying or selling a home in KW, Selling Real Estate by Keith Marshall
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According to a recent BMO report, even in the face of high house prices, elevated debt, and slowing employment, the Canadian real estate market remains strong due to our low mortgage rates and low unemployment and immigration. In 2012, home sales are expected to remain steady.

Prices will also remain near constant.

Depending on where in Canada you reside, the economy and a current state of the real estate market will see differing levels of correction next year. For example, resource rich provinces like Alberta and Saskatchewan are expected to outperform other regions since their economies are expected to grow the fastest. Waterloo Region too, will out-preform many other markets. In other markets, like Vancouver where real estate is somewhat overpriced, the market is vulnerable to correction.

Affecting all markets in Canada, there is a threat that interest rates will rise thus cooling the market. However the reverse is also true if rates remain low the market heat up again. Don’t you love economic predictions?

To sum up, across Canada the real estate market is still strong but is slowly cooling down. And so far, we’ve weathered the global economic turbulence very well.

Looking for something else to do? Check out 365 things to do in KW. Now also available in Cambridge and Guelph.

Filed under: Around Kitchener Waterloo, Buying Real Estate, general news, interest rates, real estate trends by Keith Marshall
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The Waterloo Region real estate market is changing. It’s cooler. It’s finding its balance. Houses are taking longer to sell. Prices have to right. Buyers are allowing themselves the luxury of taking their time.

Although in Kitchener Waterloo home prices are still rising and it’s still a seller’s market, the market is finding balance which means the old rules don’t work the way the way they used to. The way real estate agent’s price and sell homes, not to mention advise their buyers is changing too.

It used to be home inspections were just for buyers. The right to have the home inspected has for the past twenty years one of the conditions of purchase. It is a “peace of mind” thing mostly, but home inspections sometimes uncover latent defects.

For sellers, the first rule of selling is “make it easy to buy“. This goes beyond staging your home, cleaning it up, depersonalizing and de-cluttering. It goes beyond freshening things up with a new coat of paint or floor or light fixture. More and more sellers are taking a pre-emptive strike by getting a home inspection.

It’s recommended for a couple reasons:

1) it shortens the buying cycle. Typically, buyers have home inspections up to a week after the offer is accepted. Even with the hottest buyers, buyers remorse can set in when all the financial, insurance not to mention small flaws about the home start bubbling to the surface. The home inspection can come at the end of a very long cooling off period.

2) Inspections alway raise some issues. With a pre-inspection, the homeowner can address the issues in the negotiating phase of the offer, with an adjusted price, or by doing the needed work.

South of the border, our American cousins have been doing pre-home inspections for many years and it’s been shown to sell houses faster and for more money. Pre-home inspections have also been shown to lead to multiple offers.

All-in-all, pre-home inspections make sense to me as a real estate agent because inspections are often a hurdle buyers can’t jump over quickly.

If you’re looking for something to do, check out 365 things to do in Kitchener Waterloo. Now, also available in Cambridge and Guelph too!

Filed under: advice, real estate trends, Selling Real Estate by Keith Marshall
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Tighter mortgage lending rules and rising house prices are squeezing more and more first-time buyers out of the property market. In the face of this, many property developers, builders and real estate agents are starting to believe rent-to-own schemes may be a win-win scenario for both buyers and sellers because it allows those who can’t qualify otherwise to secure down payment on a home of their own.

Under the current government lending rules, mortgages can only be provided to bankrupt persons three years after they’ve started rebuilding their credit. Self-employed individuals, meanwhile, need at least two years experience running their own business before getting approved. Rent-to-own programs are also meant for people who have slight problems that keeps them from qualifying for a mortgage and need time to build up a down payment.

The programs put a portion of the monthly rent towards the eventual purchase of a home, usually for about three years, at which point the renters can decide to buy and unlike leasing to own a car, homes generally appreciate in value over time. This means, theoretically, if the renter decides not to buy the property when the option date comes up, the owner can either keep the property and find a new rent-to-own customer or sell the property at fair market value. For the owner, there is very little risk. For the renter, he’s paid higher rents than he would have otherwise but does not have the chore and expense of selling his house he’s changed his mind about home ownership.

If you are looking for something fun to do, check out 365 things to do in KW. Now also available in Guelph and Cambridge too.

Filed under: investing in real estate, mortgage, real estate trends, Uncategorized by Keith Marshall
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