Month: March 2023

Whether you’re looking at a condo in the city or a detached home in the suburbs, the search for your dream home is an exciting time! For many prospective buyers, the period between the decision to buy and the day you get the keys to your new home takes a back seat to your dreams of the exciting times ahead. As a buyer, you need to be informed and educated through every step of the process. It can be challenging to set aside your search for the perfect window treatments when your agent is asking you to sign a document you don’t understand: the Buyer Representation Agreement (BRA). To help you tackle this, we are going to give you the short and sweet explanation of what a Buyer Representation Agreement is, so you can get back to the decisions you’re excited about making!

What is a Buyer Representation Agreement?

This document is a written contract that defines the relationship between you and the brokerage, and how the agent will represent your best interests. It outlines the services your real estate agent provides and what they expect from you, including:

• The agent’s duties and obligations to the buyer
• Agency relationships
• The scope of the agent’s duties
• Buyer obligations

Homebuyers will sign a BRA when they’re working with a real estate agent and are ready to make an offer on a home.

What are the benefits and drawbacks of a BRA?

By signing a BRA, you enter into an agreement in which your real estate agent will represent you in the home buying process. Advantages include:

• Representation – A BRA ensures that your real estate agent works in your best interests and abides by the services listed in your contract. They can handle much of the home-buying process on your behalf, including negotiating, inspecting, and paperwork.
• Clarification – A BRA formalizes your professional relationship by clearly laying out what your real estate agent expects from you and what you can expect from them.
• Negotiable – Most of the terms in a BRA can be negotiated with your real estate agent.

Disadvantages of a BRA include:

• Locked term – By designating a real estate agent as your representative, your real estate agent will always receive a commission if you purchase property during the contract term.
• Exclusivity – With an exclusive BRA, you will not be able to use another real estate agent. If you are unhappy with your current agent, there are steps you can take to break your agreement and engage another agent.

How is a BRA presented?

While the agreement can be written, oral, or implied, it will ultimately be required by law to be reduced to writing with your signature in order to protect everyone involved.

When should you sign a BRA?

Like anything else you place your signature on, it’s important to fully discuss and understand the services provided, the cost related to the services, and that the written agreement is clear. Typically, a BRA is signed before you begin working with the real estate agent.

What will happen if you don’t sign?

According to the Code of Ethics, the broker and salesperson must protect and promote your best interest as their client on top of being fair, and honest. While you can choose to be a customer rather than a client, be aware that there could be some differences in how you are represented.

What is multiple representation?

Multiple representation means that a brokerage represents both the buyer and the seller of a property. There are no standard terms of service for multiple representation, so you need to consult the representation agreement before any offer is submitted. Multiple representation must be consented to in writing, so make sure you ask questions and are comfortable with how it may affect the services provided to you.

What is a holdover clause?

A holdover clause is an optional clause in your BRA. It means that once your BRA expires if you purchase a home after a certain number of days (usually 30 to 90 days) that came to your attention during the BRA, you must still go through the agent to purchase the home, and they will still receive a commission on the home purchase or lease.

Learn more about the many other important home buying steps so you can spend time where it really matters! Are you ready to take the next step? Contact us!

 

Renters across Canada have been struggling with rising rent costs and wondering how they will be able to save for a down payment while renting. With some money management tricks and adjustments to your daily living, you can save for a down payment. It might go slowly, but every little bit helps. Here are some tips to save for a down payment while renting.

1. Make a Budget and Stick to It

Making a budget is the easiest way to make your financial goals happen. When you have a plan for where your money is going, it puts the power back in your hands and gives you an idea of how long it will take to save for a down payment.

To make a budget, write down your monthly income. Then, list your monthly expenses, including your savings goal. Your expenses should always be less than your income; otherwise, you are going into debt. Track your spending to ensure your budget is accurate. But the trick is that if you want to save enough for your down payment, you must ensure you stay within budget as much as possible.

2. Get Rid of Your Existing Debt

Qualifying for a mortgage does not end with saving enough for a down payment. Mortgage lenders will also look at your debt-to-income ratio (DTI), the percentage of gross income used to pay minimum monthly debt payments. If you have a high DTI, you are a risk to the lender, who will be less likely to approve you for a mortgage. However, if you work to cut down your existing debt while saving for your down payment, you can get approved for the house you want.

3. Cut Unnecessary Spending

Another way to boost your down payment savings is to cut back on a few luxuries. For example, consider buying groceries and making meals instead of ordering in, working out at home for free instead of paying for a gym membership, or taking public transit. Then, take the money you would have used on those splurges and put it into your savings account for the down payment.

Some people might be willing to sacrifice just about everything to have their house sooner, but most of us would rather not sacrifice our quality of life. Make a line in your budget for fun things like a night out with friends, and ensure you don’t go over budget. Saving for a down payment is not worth sacrificing your mental health.

4. Lower or Eliminate Rent Costs

Your most considerable monthly expense is likely your rent, so an effective way to save for a down payment is to cut your rent costs. Although moving is not fun, it can save you thousands of dollars annually. Renters who work from home can choose a location with a lower cost of living, while those who work in an office can find a cheaper apartment closer to their work, saving them expenses for both housing and transportation. Then, take the difference in your expenses and put it in your savings account for your down payment.

5. Add Extra Income

While cutting expenses is an effective way to create room in your budget to save for a down payment, another way to save is to take on a side hustle. There are many opportunities for part-time work, such as driving for Uber or Skip the Dishes or becoming a tutor. You could also start your own home business cleaning houses, pet sitting and dog walking, or doing yard work. It doesn’t have to be fancy if it earns you extra money for your down payment.

6. Immediately Save Any Bonuses or Gifts

If you receive regular bonuses at work or a tax return each year, these can easily be contributed toward your down payment savings without sacrificing your quality of life. To take it up another notch, ask for down payment contributions in place of gifts for your birthday or Christmas. If you feel you are missing out on fun for yourself, set aside a predetermined percentage or amount to use as you want, and put the rest in savings.

With these tricks, you can save up for a down payment while renting. Set up a savings account dedicated solely to your down payment and watch as your efforts pay off – literally!