Summary: The Top 4 Questions to Ask Your Real Estate Agent
In this article, we’ll look at the top 4 questions to ask your real estate agent to ensure you’re well-prepared for your next property transaction. Whether you’re a first-time buyer or experienced, we cover closing costs, house hunting, offers, and Property Disclosure Statements.
1. What are closing costs when buying or selling real estate?
Closing costs include expenses beyond the property price, with your agent explaining potential costs early. These expenses are paid on the week of possession in order to exchange keys from seller to buyer.
Buying costs are commonly around 2% of the total purchase price. Expenses incurred may include:
- Cash to Your Mortgage is the purchase price after deducting your deposit and your lender’s net mortgage advance.
- Land Transfer Tax is calculated based on the value of the property. Review Manitoba Land Transfer Tax online for purchase price-based totals. (Click here to calculate the applicable land transfer tax payable using the Modern Money Mortgage Calculator).
- Property Tax Adjustment ensures equitable tax payments between buyer and seller for the current year.
- Mortgage Interest Adjustment – you are required to collect interest at your Lender’s rate for 31 days in case there are delays in funding. In almost all transactions, your lawyer will be able to fund on closing and can promptly refund these monies to you.
- Boundaries Verification refers to the many options available to satisfy yourself and your lender that your new home and outbuildings are on the actual property. Majority of lawyers will recommend you add this cost (around $250) to provide further security during closing.
- Transaction Costs – Legal fees and taxes for your lawyer’s services.
Selling costs are just above 4-5% of the total sale price. These expenses are:
- 4-5% Commission Cost – Sellers cover the Commission Costs for agent services. This includes their marketing, negotiating, prospecting and overall professional real estate services. Real estate agents split the total commission in listing and buying transactions.
- Boundaries Verification refers to the many options available to satisfy yourself and your lender that your new home and outbuildings are on the actual property. Majority of lawyers will recommend you add this $250 cost to provide further security during closing.
- Transaction Costs are legal fees and taxes for your lawyer’s services.
Other costs can be incurred on closing. This all depends on the specifics within the written offer. However, the breakdown listed above are generally the expenses that you’ll come across whenever buying or selling real estate in Manitoba.
2. I Want to Buy My First Home. Where do I start?
Buying your first home is an exciting process. Whenever I work with buyers, I begin by asking them to create a hierarchy list to help them organize their home buying criteria. This list should contain: budget, location, age, size, residential home or condo, proximity to amenities/work that appeal to the buyer. This list will most likely change as you begin your home search. However, having this completed beforehand will give you a preliminary compass for your exciting journey in buying your first home.
b) Confirming Your Budget
Once you have set your goals, it is vital to ensure you are pre-approved for the home you wish to buy. How do you get a pre-approval? Look to set up an appointment with a mortgage professional at your personal bank/credit union or an independent mortgage professional. Completing this key step in the beginning of your home journey will allow you to search specifically for the homes you are approved for. As a result, this may adjust your search criteria or adjust the timing of your purchase.
c) House Hunting
Now that you know your budget and have a “wish list” for your home purchase, you and your real estate agent will begin home hunting by setting up an auto mailer which will e-mail you listings which meet your search criteria. From there, you will begin to book appointments to visit homes that you’d like to see. Whenever you are ready to write an offer on a property, your real estate agent will assist you in doing so!
3) How does an Offers Date Work?
Depending on areas and price ranges within certain markets, listing agents will use the offers date scenario as an effective way to sell your home. For example, right now there is a shortage of inventory within Winnipeg and an abundance of buyers within the $400,000 and under price range. This is due to COVID-19 delaying home sales within the months of March, April and May due to health reasons and the fact that interest rates are at an all-time low.
Listing agents will plan to under list a property and market it aggressively through their own customized professional marketing campaign. They will declare an offers date immediately so that all interested buyers know that if they would like to write an offer, it is due on that day and time. The amount of time they will plan to give prospective buyers to visit the property ranges between 3-7 days.
When that offers date arrives, the listing agent will present all offers to the vendor. Whenever there are 2 or more offers, you are now in a multiple offers situation, which means that all respective buyers are competing against one another in order to purchase the home. The listing agent will notify all buyer’s agent how many total offers there are on the property and ask them if they’d like to make any changes to their original offer. Communication is important during this step, make sure you and your agent have your cell phones ready.
The listing agent cannot disclose any of the buyer’s offers to any of the competing buyer’s agents, as this would be malpractice. In multiple offers, it’s a sealed bid; put your best foot forward and craft a strong offer for success!
4) What is a Property Disclosure Statement?
Understanding the Property Disclosure Statement (PDS)
The Property Disclosure Statement (PDS) is a tool that is available to buyers to protect their interests. This statement is signed by the sellers and in it they advise that they have disclosed any defects or problems of which they are aware. If a seller is not aware of a problem, it won’t be noted in the PDS. If a seller has not lived in the home, they will not be able to provide a PDS as they cannot comment on the condition of the home.
Buyer’s Choice and PDS Completion
Your own agent should be able to tell you before you go to see a property if a PDS will be available for the asking. It may even help a house hunter to decide what properties to view. If the answer is “no,” some buyers may wonder what the seller doesn’t want to tell them about the condition of the property.
A buyer doesn’t have to ask for a PDS. You can just stroke that condition out before you submit your offer. If that happens, a seller won’t have to provide you with a PDS, even if it shows on the listing document that he is willing to provide one. While getting a PDS protects your interests, the decision to do so is up to you. With these changes, more house buyers will be asking for a completed PDS and we’re pretty sure that most sellers will be quite willing to provide them.
Once the buyer is satisfied with the completed PDS, the contract becomes complete.
By adding the PDS as a schedule or attachment to the Offer to Purchase, prospective buyers will be aware of the type of information they can get from a seller before they make an offer.
You’ll know in advance if the seller will provide a PDS when a registered agent lists the house.
Remember these top 4 questions to ask your real estate agent and you will set yourself up for success!
David is a REALTOR® working in Winnipeg, Manitoba at Royal LePage Alliance. Interested in buying a home or have Winnipeg real estate questions? Contact me today via the provided number or email!