What is a Buyer's Representative?

Sellers, Buyers and Agency Relationship

ECO Realty is your Buyer's AgentThe buyer's agent is a licensed real estate representative that specializes in representing the buyer in a real estate transaction. This is often a more challenging position that the listing agent, since the buyer is usually assuming debt, and facing greater emotional and financial challenges than the seller. This imbalance underscores the importance for the buyer to have their own representation; the listing representative is a professional negotiator working on behalf of the seller.

Since 1994, home buyers in British Columbia have been able to attain specific agency representation in the real estate transaction process. Before this time, only the seller was entitled to legal representation through their listing representative. It was not well known that the representative working on behalf of the buyer was actually working primarily for the seller.

Before buyer representation was put into effect, most real estate representatives amassed listings as a survival strategy. As a result, buyers did not receive the attention they deserved. It was not uncommon for a representative to show 20 or more homes to clients before a purchase decision was made. It was a long and tedious process that sometimes ended with the buyers losing interest, changing representatives or making uninformed impulse decisions. Fortunately, with the advent of equitable representation, many representatives now act exclusively as buyer representatives, providing home buyers with the option to obtain advocacy.

Does using a Buyer's Agent increase the cost of purchase?

Services as a buyer's representative are offered without charge; they are paid out of the proceeds of the transaction . That means that when the seller gets their money from the sale, they pay the listing agent who will then pay the buyer agent their share.

How to get a Mortgage?

Understanding how mortgages work can be as daunting as it is necessary, especially if you are purchasing your first home. There is new terminology to be learned, various mortgage styles to choose from and an ever-changing financial environment to contend with. The more you learn, the better safer your equity will be.
Familiarize yourself with the factors that affect how much interest you will pay. These include the amount of debt you take on, your down payment size, the rate option, amortization period and repayment frequency. If you are shopping for a home, getting mortgage-approved is your first step. The most important thing is to be honest with yourself about the mortgage you can afford - then you can find the one that is right for you.

Mortgage Management

Down Payment

The size of your down payment is usually the greatest determinant of how much interest you will pay. The larger your down payment percentage, the less interest you will pay. If you are able to choose a less expensive place, you can allocate a larger chunk of money to your down payment. This will result in a smaller principal, meaning you will have smaller interest payments.

Mortgage Type

What kind of mortgage do you need? That depends on what type you are, and what you will be using the property for. Will you live in the home long-term, or will you sell it once the market heats up? There are two basic mortgage rate types - fixed and variable, and two basic repayment options - open or closed.

  • Fixed-rate mortgages come in different lengths, ranging from 1 to 40 years, but are typically set for 5-years periods before renegotiation. They give the temporary security of remaining the same rate regardless of market fluctuations. These are ideal for people who are on a lower or a fixed income.
  • Variable-Rates - These rise and fall with the market rate, and are lower than fixed mortgages. However, there is no guarantee what they will cost as time passes. People who use these are typically investors, who are planning to resell or rent, or people with enough income that they do not have to worry about fluctuations.
  • Open - you can pay off the loan at any point without a penalty. These usually have higher payments
  • Closed - the borrower pays it back on a set schedule. To pay it down faster, you can break the terms of the mortgage, but there is usually some kind of penalty such as three months' payments incurred. Sometimes you can negotiate an annual penalty-free extra payment if you get a regular windfall from your tax refund.

Amortization Period

This is the length of time you take to pay back your loan. The shorter the amortization period, the more interest you will save, though the greater the payments will be. Typically, borrowers will be able to afford a 25 to 30 year amortization, though banks have been stretching them out to 40 year periods lately. It is wise to choose an amortization period that fits your budget and allows wiggle room for contingencies. If you have a roof repair, you will not want to have to leverage yourself further.

Payment Frequency

There are different frequencies at which you can pay back the loan, monthly, semi-monthly, biweekly and accelerated weekly. Repayment frequency has a dramatic effect on the amount of interest you will pay as well as your amortization length.
The most basic is the monthly payment option. This is the easiest to maintain, because most salary earners know how much monthly income they have. This option results in lower monthly payments, but much more interest in the long run.
There are different frequencies at which you can pay back the loan, monthly, semi-monthly, biweekly and accelerated weekly. Repayment frequency has a dramatic effect on the amount of interest you will pay as well as your amortization length.

Frequency of Payment Comparison
  • $325,000 purchase
  • $16,250 down payment (5%)
  • $307,000 mortgage 35 year amortization
  • 4.5% interest rate
  • 5-year term
  • No changes over 35 years
Monthly Payment: $1,445.00
  • Interest paid over amortization = $299,895.94
  • Interest paid over the first 5 years = $66,282.71
  • Amount remaining after the first 5 years = $286,582.71
Accelerated Weekly Payment: $361.25
  • Interest paid over amortization = $239,973.62
  • Interest paid over the first 5 years = $65,030.32
  • Amount remaining after the first 5 years = $278,105.32
  • Accumulated interest savings = $59,922.32

Getting Approved For a Mortgage

Why Preapproval

If you are shopping for a home, getting preapproved for a mortgage should be your first step. Preapproval gives you some distinct advantages:

  • Setting a suitable price range - Determining what you can afford before looking will prevent you from falling in love with a home beyond your range and then comparing all subsequent properties to it.
  • Creating a hedge against rising rates - Securing an interest rate gives you time to find a home with your financing ready. Your rate will not increase for a given amount of time, usually 120 days from any increase to the current rate. If rates decline, your lending institution will adjust yours down accordingly.

What You Will Need

Whether you go through your bank or a smaller broker, the lender will want to know several things to minimize their risk, your credit history, income and debt. Be prepared to discuss:

  • Credit History - This is the main determinant in whether and how much you may borrow. With your permission, the broker will check your credit through a credit agency such as Equifax or Transunion. They are looking for late payments and reliability of payback.
  • Income - Depending on the broker's requirements, you may prove your income with your most recent Revenue Canada Notice of Assessment and up to year's pay stubs.
  • Debt - The broker will have a record of your debt from the credit check. Debt does not disqualify you from getting a mortgage, but certain factors may influence how much you may borrow. The lender will consider your debt to income ratio and your type of debt. If the ratio is low, you can borrow more. Debt such as student loans are considered an investment in the future and is lower on the scale of risk than debt resulting from shopping sprees or bad investments.

Finding a Mortgage

Down Payment

If you are shopping for a mortgage you will have two choices, a bank mortgage specialist or a mortgage broker. It is worthwhile to talk to a few different brokers to compare products.


Some advantages of going through a bank is that by taking into consideration all your accounts and lines of credit, they can save you thousands in fees by customizing your borrowing strategy and managing your money flow. If it is your own bank, the lender will already know your credit history and may be more willing to lend to you. A limitation of banks is that they can only offer you the rate of the bank they are working for.

Mortgage Brokers

Mortgage brokers operate independently of the banks. They may provide a wider range competitive mortgage products, and may be able to negotiate you a better rate. For this reason, they have been growing in popularity in Canada.

If you are starting your home search and know a broker you are comfortable working with, arrange an hour or so to meet with them. Your bank is a good place to start. If you require recommendations, ask a good friend who has used one in the past or contact a trusted Realtor®, as they will be able to recommend reliable brokers they have worked with over the past.


Deposits on a Home Purchase

Do I need to put a deposit down when making an offer on a home?

You are not required place a deposit to secure a place, but it is worth considering, especially in a perennially hot real estate market like Vancouver, BC. Offering a deposit shows the sellers that you are serious about buying the property, and it may just give you the leverage you need to close the deal before someone else has the chance to outbid you. This is particularly important your offering price is the same or lower than the list price. Typically, the higher the deposit you offer is, the better your bargaining position will be.

Is a deposit the same as a down payment?

These are different. The purpose of the deposit is to show your commitment to buying that property. The down payment has more to do with negotiating your mortgage. However, if you do end up buying the property, it can go toward the purchase of the home, payment of commissions or back to the buyer.

Making the Deposit:

If you proceed with the deposit, the money will be put into your brokerage's trust account. In British Columbia, it is legally required to be in the account for 10 business days, meaning that it will not be available for you to be used if you find a home you like better during that time. That is one of the ways that it shows you are serious, so be certain that you really are!

How big should the deposit be?

A standard range for a deposit is usually between 5-10% of the property's selling price. Therefore, $17,500-30,000 would be an appropriate amount to put down on a house priced at $350,000.

The upon final subject removal clause and following due diligence

An effective strategy that real estate representatives use to ensure that the money is released to the sellers only once it is a done deal is to make the payment contingent upon final subject removal. The buyer's lawyer or notary will draft a contract requiring a number of conditions be satisfied through due diligence in order to release the money. For example, these conditions would likely require that the buyer will have seen minutes of strata meetings, an inspection or inspections have been done on the property, all restrictions have been made known to the buyer, financing has been put in place and so forth. These are not escape clauses; they are intended to ensure that there are no dangerous or expensive surprises for the new owners.

Will I lose the deposit if the deal does not go through?

Your deposit will be returned quickly in almost all cases if the deal falls through, but the process by which it is released can vary. In exceptional cases, it can become more complicated. Here are a range of scenarios; they are only guidelines, as legal proceedings can become far more complicated.

Offer rejections and counter-offers

If your offer is rejected, you get your deposit back quickly, that is, at the expiration of the 10 business days it sits in the account. If the seller gives you a counter-offer, and you do not accept, the seller does not have the option to go back to the original offer, which means that you are not obliged to carry on with the deal if you have changed your mind.

The conditions of subject removal clause are not met

If the conditions of the contract are not met, the funds are normally released to you quickly. Though it is extremely rare, sometimes the sellers may refuse to sign off on releasing the money. In this case, the funds must be released by a judge. This is why the subject removal clause is a good strategy. Should the buyers change their mind because of an issue with the property, subject removal essentially documents that in the course of due diligence, an unforeseen problem was divulged, showing that the buyers were acting in good faith. This is why the subject removal clause is a good strategy.

You change your mind

If you change your mind because you saw a better deal, but all the conditions of the contract have been met by the buyer, or if you try to renegotiate in mid-deal, that is a different story. You have entered a legally binding contract, and the seller can take you to court, where the judge can order you to perform the conditions of the offer. You could incur a penalty such as losing your deposit, or you may have to follow through and buy the home.

What to Expect in a Foreclosure Sale?

Bank Foreclosure Sale

When the borrower of a mortgage defaults on payments and cannot come to an agreement with the grantor, the lending financial institution normally gives 90-120 days notification that they will begin foreclosure proceedings in order to recover monies loaned to the borrower. For this to happen, the mortgage borrower will have typically been in arrears for 90 days.

If the borrower cannot either sell the home or bring the mortgage up to date, the lender will submit an application for the conduct of sale, which, if approved will authorize the property's sale, and it will be listed. Should the property be listed, the agent must respect the borrower's rights by giving adequate notice for showings, refraining from Sunday showings and so on. It can be more of a challenge to view a foreclosed home, so a potential buyer should prepare to be more flexible going in.

Foreclosure listings are offered on an as-is, where-is on the date of possession basis, as the lending institution will not make any representations as to the property's condition. The buyer should also be ready for that possibility that the owner, resentful at the loss of their home, might leave the property in poor repair.

Foreclosure sales pertain only to the property and its fixtures. Chattels appliances, drapes, storage units, and so forth are never in the offer. Arrangements to buy such items can be made separately. Once you have viewed the property and decided that it is suitable and reasonably priced you are ready to make the offer.

Making the offer

The offer, called the contract of purchase and sale is prepared on your behalf by your REALTOR®. The usual subject conditions such as inspection and financing will be present, and there will also be a special clause designating it subject to the approval of the British Columbia Supreme Court.

Once the lending institution receives your offer it will be negotiated until a mutually satisfactory offer is reached. You then carry out due diligence by performing a mortgage appraisal, an inspection, title verification, and so forth. This leaves the only remaining written subject conditions subject to the approval of the British Columbia supreme court. It would now be appropriate to provide a deposit, on bank draft, for a minimum of 5% of the offered price. This would go into your buyer agent's trust fund, and become part of the purchase price.

Waiting for the offer to be approved

Once the lender's representative has the offer, he or she will apply to the court for a date when the offer can be presented for approval. This is typically 10-15 days following the removal of your subject conditions and the payment of your deposit. You and your REALTOR® should be present at the court hearing. Your offer amount will appear along with the courtroom number on a list in the courthouse lobby. This is one way the court fulfills its mandate to protect the borrower by ensuring they receive the highest possible price. This also means that your offer must be close to the fair market value. Even if the lender is willing to accept your bid, the court will not necessarily approve it; as its function is to protect the foreclosed upon owner.

At this time, the listing agent will usually meet with other prospective buyers that might want to bid on the same property. The lender's representative will then gather other offers and get them ready to present to the judge or master. At this time, you may now change your first offer; this is the reason you need to be at the courthouse. There are not always other bidders present but you must be prepared for that contingency.

Once all bids are submitted, the judge or master reviews them, hears the recommendations of the lender's lawyer and decides which offer the court will approve. Usually, the current owners are given a month to vacate the property, but on occasion the courts will permit up to two months.

From here, the deal carries out in the regular way.

Articles Disclaimer

Though we strive to ensure that the presented material is reliable and correct, it is intended for informational use only. ECO Realty Inc. does not guarantee this material's accuracy or completeness. The information presented by this material is not intended, nor should it be relied on as a substitute for professional certified legal advice in real estate dealings or any other dealings of a binding legal nature.