Buying a Home in Canada

Home Buying Mistake

February 21, 2012

Another home buying year is about to get underway and again, in 2012, some 450,000 residential homes will sell on the Multiple Listing Service®(MLS®) in Canada. But unfortunately, again this year, hundreds of thousands of buyers will short-change themselves by failing to take advantage of the system – which I estimate will result in them collectively overpaying well over Cdn $1 billion dollars for their homes.

The MLS®has been around since the 1950s and I am amazed that after all this time, people are still mystified by it. Almost all homes listed by real estate agents are placed on the MLS®because it is, by far, the best way to get them sold. The Canadian Real Estate Association reports that in 2011, 856,000 homes were listed on the famous system and that 456,000 sold -- for a new-listings-to-sales ratio of 53% across the country. This means that when a for sale sign with an MLS®logo appears on a property, there is a 50-50 chance that it will soon be advertised as sold.

The concept is pretty simple: the listing company offers a huge part of the commission paid by the seller – often 50% of it or more -- to the first REALTOR®, from any firm, that brings in an acceptable offer. This means that you can purchase the MLS®home of your choice from the REALTOR®of your choice.

And because of this, buying an MLS®home from the agent on the sign is the very worst thing you could do. Why? Because that agent has a contractual obligation to try to sell you the house for as much money as possible. But what most buyers don’t realize is that agents from other companies owe nothing to the seller and are therefore free to work for them on the transaction. 

Informed buyers take advantage of this by swinging a deal with an agent that works for another company. You want the money offered on the MLS®, Mr. REALTOR®? Well, it is yours if you agree to work for me. You provide me with a list of all the MLS®homes that match my requirements; I pick the ones I wish to view; and your job is to tell me everything that is wrong with them. You fail to mention the old roof, old windows, crack in the foundation, bad drainage, small rooms, smelly basement or anything else that I notice and I find another representative. You treat me like a friend and in the end help me negotiate the price of the best home down and the money is yours. I plan on taking my time; and I want no pressure from you. I have no use for a salesperson what I am looking for is a buying advisor. Is this a service you can provide?

Any REALTOR®can do this, and it is 100% free on the purchase of almost all MLS®listings. Some real estate firms actually specialize in this service. Exclusive Buyer Agents or EBAs work for firms that are 100% dedicated to buyers. These companies do not take property listings and never work for sellers. Their job is to educate, advise, represent and protect buyers. This thing is all they do.

I opened an EBA office in Halifax in 1996 and have so far helped closed to 300 local families and individuals on the purchase of MLS®homes and not one of them has ever had to pay a penny for my services. This thing is the way of the future and since nobody in the media seems interested in spreading the word and teaching buyers how to use the system to their advantage, I decided to do it myself.

We all have friends, family, co-workers, and neighbours that will be buying a home this year. Tell them about this. It costs nothing and asking a real estate professional to have their back in exchange for a piece of the MLS®commission pie could save them thousands of dollars in the end.

This blog will be an ongoing thing. Send me any question you may have. It will be my pleasure to answer them here so everyone can learn at the same time.

Cheers,

Alain Savard

Mortgage Rates

Discounted rates found on the internet on December 7, 2018.

Fixed-Rate Mortgages

1-year closed: 3.20% (3.20%)
2-year closed: 3.30% (3.24%)
3-year closed: 3.39% (3.39%)
4-year closed: 3.55% (3.55%)
5-year closed: 3.39% (3.39%)
7-year closed: 3.74% (3.74%)
10-yr closed:   4.04% (3.99%)
Qualify. Rate:  5.34% (5.34%)

Variable-Rate Mortgages

BofC’s Target:   1.75% (1.75%)
Banks' Prime:    3.95% (3.95%)

5-year: Prime - 1.20% or 2.75%

Some rates may only be available to people with top credit living in specific areas. BofC stands for Bank of Canada. The "Qualifying Rate" is used to qualify borrowers choosing terms of 4 years or less. The rates in bracket are from November 30, 2018.

 

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