Real Estate

help submitting home offer

  • Last Updated:
  • Feb 12th, 2016 12:12 pm
Tags:
None
Deal Addict
Apr 18, 2012
1600 posts
257 upvotes

help submitting home offer

hey guys,

so three years ago, when i got my first house, i pretty much searched on realtor and found the house i liked then called the realtor and he pretty much filled out the form and submitted offer. He basically earned 2.5%

i found a second home which i want to put in an offer and was wondering if someone can help me.

I definitely want to include the mortgage approval and home inspection clause. apart then that, what form do i fill up and who do i submit it to? the seller's realtor i assume? i definitely want the clause because i won't be selling my first home, so might be a chance where mortgage doesn't get approved.

anything else i can read up on so i know what to do prior to submitting offer?
36 replies
Deal Addict
Aug 30, 2011
3537 posts
1279 upvotes
Ottawa
Get your own realtor. It costs the seller not the buyer, and for such an expensive important decision as buying a house, why risk it?
Member
Apr 10, 2013
457 posts
131 upvotes
OttawaGardener wrote: Get your own realtor. It costs the seller not the buyer, and for such an expensive important decision as buying a house, why risk it?
While I agree you should consider working with RE agent if you are not sure what you are doing (even if you know what you are doing, RE agent can still help) - the above argument is complete BS.

The claim "it cost the seller" is such BS (most often fed by RE agents themselves) because at the end of the day it's the buyer's money that get exchanged into the seller's pocket, and the RE commission is practically built-in into the price of the house. So while technically the seller pays for it - they pay for it using the buyer's money.

This is easily shown by the fact that if you work with the listing agent (acting as double agent practically), you can always work with the agent to get discount on the commission so you get some money back because he/she would have earned 2.5% + 2.5% - so he/she will probably be happy to double dip with just 3.5% in total or so.
Deal Fanatic
User avatar
Oct 22, 2007
6110 posts
1117 upvotes
Mississauga
If I'm selling a home and a real estate agent was involved, I still wouldn't change my bottom line therefore someone has to cover the cost of any realtor. In other words, I would increase the price which means the buyer is going to absorb the cost.

The statement "It cost the seller, not the buyer" is true, but the buyer will altimately pay for the cost of the realtor by having the commission added into the selling price. That's the way I see it.

The other option is to get a Real Estate Lawyer to draw up the papers.
Deal Addict
Aug 30, 2011
3537 posts
1279 upvotes
Ottawa
The seller already has a legal agreement with her/his Realtor which spells out the division of commission, so presumably buyer's agents were welcomed to bring buyers. OP is not knowledgeable enough to handle this on his own, and a real estate lawyer will cost him.

Also, we have no idea where in Canada OP lives, many places are a buyer's market. The seller would be foolish to suddenly increase the price in this situation.
Sr. Member
May 23, 2007
642 posts
384 upvotes
Kanata
Find yourself a 'buyers agent' and they will do all the work for you. I wouldnt do it on my own.
Deal Addict
Apr 18, 2012
1600 posts
257 upvotes
i am in Ontario.

The reason i don't want to use an agent is mainly becuase of the 2.5% which i am ultimatley paying for.

I would decrease my offer and negotiate with the buyer's agent.

I have seen few deals go down and most of those times, the agent simply writes down the clause and talks on behalf of you. Nothing else.

I just needed to know which forms to use.
Deal Addict
Dec 28, 2002
3178 posts
423 upvotes
You can download the forms yourself. If you still have a copy of the offer for your first house, just follow it and fill in the blanks. Then send it to the selling agent
Deal Guru
User avatar
Feb 2, 2014
11233 posts
3350 upvotes
Toronto
snipe2014 wrote: i am in Ontario.

The reason i don't want to use an agent is mainly becuase of the 2.5% which i am ultimatley paying for.

I would decrease my offer and negotiate with the buyer's agent.

I have seen few deals go down and most of those times, the agent simply writes down the clause and talks on behalf of you. Nothing else.

I just needed to know which forms to use.
No, you're not.

When I list a property for my clients and the buyer comes to me directly (with no agent), do you really think I am giving them a discount just because they have no agent? Of course not! I am still trying to get as much money as possible for my client (the seller). That's my job....it is my duty to work in my client's best interest.

Based off of my experience, it's easier to get a higher sales price from a client with no agent vs a client with an agent (because a good agent has better valuation and negotiating skills).

Which city are you in? What type of property are you buying? The harder it is to value the property, the more beneficial it is to have an agent.
Kevin Somnauth, CFA
Principal Broker/Owner - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
Sr. Member
May 3, 2013
760 posts
475 upvotes
Toronto
snipe2014 wrote: i am in Ontario.

The reason i don't want to use an agent is mainly becuase of the 2.5% which i am ultimatley paying for.

I would decrease my offer and negotiate with the buyer's agent.

I have seen few deals go down and most of those times, the agent simply writes down the clause and talks on behalf of you. Nothing else.

I just needed to know which forms to use.
You would only need the Agreement of Purchase form. Be careful when drafting your clauses. A buyer submitting their own offer isn't uncommon, but could be a godsend to the seller. The buyer may have offered too much, end up in multiple bids, or worse, submitted an ill-written clause or mess up the dates on the form.

You will end up paying the 2.5% anyways in some shape or form. The seller has already agreed to pay a set rate to both agents, by doing it this way, you are offering up the buyer commission to the listing agent. It will be up to the listing agent to decide if s/he is willing to cut down on the 2.5%.
Deal Addict
Dec 21, 2010
1864 posts
1174 upvotes
GTA
Best of luck. You are clearly saying that you are quite capable and don't need any assistance other than RFD.

If you decide you would like to work with a professional who can assist you, there are a number of ways you can find someone willing to help you out.

The point that was made about cutting the buyer's agents commission made me laugh. As a buyer, do you think that YOU are privy to what the seller is paying their agent? Well guess what. You're not. As a Realtor who has worked on many, many, MANY offers where a buyer has approached me to handle their offer, I then become their Representative, as well. Therefore, it truly is in your best interest to work with someone who has your best interest in the transaction.

Just because some peeps on RFD claim to have all of this "inside knowledge", you shouldn't always believe what you read. Especially when I can bet that the vast majority have never reviewed both a Buyer and Seller's Commission Trust Agreement at the time of their transaction.

As well, don't forget that we have something called Insurance. If something goes wrong, our clients and ourselves are protected. That alone should be able to give you enough peace of mind when many times real estate transactions falter.
Award Winning Realtor - I LOVE MY JOB!!
At the end of the day, you're the boss and need to make sure I'm worth your rate of pay!
Deal Expert
Aug 2, 2001
18945 posts
10527 upvotes
snipe2014 wrote: i am in Ontario.

The reason i don't want to use an agent is mainly becuase of the 2.5% which i am ultimatley paying for.

I would decrease my offer and negotiate with the buyer's agent.

I have seen few deals go down and most of those times, the agent simply writes down the clause and talks on behalf of you. Nothing else.

I just needed to know which forms to use.
Wouldn't you be better off finding an agent to work for a reduced or fixed commission?

The realtor is there to get the best price for their clients, not to negotiate their commission with you. The commission comes from their client's sale.
Deal Addict
Jul 11, 2010
1294 posts
329 upvotes
Toronto
snipe2014 wrote: hey guys,

so three years ago, when i got my first house, i pretty much searched on realtor and found the house i liked then called the realtor and he pretty much filled out the form and submitted offer. He basically earned 2.5%

i found a second home which i want to put in an offer and was wondering if someone can help me.

I definitely want to include the mortgage approval and home inspection clause. apart then that, what form do i fill up and who do i submit it to? the seller's realtor i assume? i definitely want the clause because i won't be selling my first home, so might be a chance where mortgage doesn't get approved.

anything else i can read up on so i know what to do prior to submitting offer?
I think that you need to forget about whether a realtor will earn his/her commission and trying to get a better deal by handing the offer to the listing agent. Two things stand out. You are asking what forms to fill out and you said that you are not selling your present home. You need to make sure then that the mortgage approval condition is iron tight in your favor. Will you be able to carry both properties? Will the ratios that are used to see if you qualify fall under the limit? There is no comparison with the money you are trying to save from the realtor and what you could lose or be sued for if your conditions are not worded correctly. You need to either hire a real estate lawyer and let him/her draw up an offer and then look at it again if it is sent back to you or go with a realtor. Either way you have to protect your interests in this deal and that costs money.
Deal Addict
Apr 18, 2012
1600 posts
257 upvotes
say the house is 500K..

if i go with an agent, and offer the asking price of 500K, they would have to give up $12,500 to my agent.

I was going to go and offer 490K and say, you are still saving 3K

I just used those numbers as examples..

but this is getting way to complicated.. because now the seller's agent won't even show me a house with a realtor.. what the hell is that?

I'm just going to call up my old realtor. he's a nice guy and all i was just thinking i could save some money bynot using one.
Deal Addict
Jun 11, 2005
2823 posts
459 upvotes
loriblum wrote: Best of luck. You are clearly saying that you are quite capable and don't need any assistance other than RFD.

If you decide you would like to work with a professional who can assist you, there are a number of ways you can find someone willing to help you out.

The point that was made about cutting the buyer's agents commission made me laugh. As a buyer, do you think that YOU are privy to what the seller is paying their agent? Well guess what. You're not. As a Realtor who has worked on many, many, MANY offers where a buyer has approached me to handle their offer, I then become their Representative, as well. Therefore, it truly is in your best interest to work with someone who has your best interest in the transaction.

Just because some peeps on RFD claim to have all of this "inside knowledge", you shouldn't always believe what you read. Especially when I can bet that the vast majority have never reviewed both a Buyer and Seller's Commission Trust Agreement at the time of their transaction.

As well, don't forget that we have something called Insurance. If something goes wrong, our clients and ourselves are protected. That alone should be able to give you enough peace of mind when many times real estate transactions falter.
CdnRealEstateGuy wrote: No, you're not.

When I list a property for my clients and the buyer comes to me directly (with no agent), do you really think I am giving them a discount just because they have no agent? Of course not! I am still trying to get as much money as possible for my client (the seller). That's my job....it is my duty to work in my client's best interest.

Based off of my experience, it's easier to get a higher sales price from a client with no agent vs a client with an agent (because a good agent has better valuation and negotiating skills).

Which city are you in? What type of property are you buying? The harder it is to value the property, the more beneficial it is to have an agent.
I am not in your industry, but even for hot markets, one has a ballpark figure as to what the commission rate is. It is not a figure that is randomly selected from 0% to 100%.

For CdnREGuy, yes it is your duty to maximize the selling price, but there is potential for everyone else to come out ahead if the buyer's agent was not present. If the house is selling for $1M and the commission rate is 5%, the seller nets $950k and the two agents would get $50k in total. One possible outcome is that the buyer pays $990k, and the selling agent gets $29k, and the seller nets $961k.

As for Loriblum and assuming I am reading your post correctly, I personally would not want an agent handling both sides. There is an inherent conflict of interest, because your commission is based on the ultimate sale price. Having one agent represented by both sides, IMO, should not be allowed.
Deal Addict
Dec 21, 2010
1864 posts
1174 upvotes
GTA
Exactly!! Having one agent handle both sides CAN be very very very tricky!!! Not to say it always is, but it can be.

The OP is essentially handing the entire deal over to the listing agent, whether he agrees and understands or not.
Award Winning Realtor - I LOVE MY JOB!!
At the end of the day, you're the boss and need to make sure I'm worth your rate of pay!
Deal Addict
Jun 11, 2005
2823 posts
459 upvotes
That is not to say, of course, necessarily that the buyer's agent adds no value.
Deal Addict
Dec 21, 2010
1864 posts
1174 upvotes
GTA
mudd_stuffin wrote: That is not to say, of course, necessarily that the buyer's agent adds no value.

On the contrary! The Buyer's Rep absolutely adds value! Moreso than the seller's rep, typically.
Award Winning Realtor - I LOVE MY JOB!!
At the end of the day, you're the boss and need to make sure I'm worth your rate of pay!
Deal Addict
Aug 30, 2011
3537 posts
1279 upvotes
Ottawa
If I had a dollar for every post on RFD where the buyer wants to have the seller's Realtor reduce their commission - and have that savings passed on to them, I'd be rich.
Sr. Member
May 3, 2013
760 posts
475 upvotes
Toronto
mudd_stuffin wrote: As for Loriblum and assuming I am reading your post correctly, I personally would not want an agent handling both sides. There is an inherent conflict of interest, because your commission is based on the ultimate sale price. Having one agent represented by both sides, IMO, should not be allowed.
Representing both sides is tricky. But in OP's case, it's worse because the listing Realtor is representing the seller and NOT representing the buyer. So whatever the buyer comes up with, the listing Realtor (who is probably familiar with the industry and has processed many deals) has a significant advantage and can (and will) take advantage of the situation in favour of the seller.

Top