Buying a house with a real estate agent

A homeowner may decide to sell his/her home without an intermediary or may decide to enlist the help of a real estate agent. A person buying a house can also decide to search for a house on his/her own or to be represented by a real estate agent.

What are the steps to buy a house with a real estate agent?

The steps to purchase a home are the same with or without a real estate agent. Note however, that the real estate agent acts as an intermediary. As such, it can influence the course of the transaction.

For this reason, those who prefer to limit the number of participants in a transaction and simplify the exchange between parties directly involved generally decide to sell without a real estate agent.

When the buyer is represented by a real estate agent, he will not have any contact with the seller. The real estate agent will tour the home with the buyer, will provide information on the property and it is he/she who will present the buyer’s bid to the seller. In a case like this, the buyer is likely deprived of direct contact with the seller who knows the property, the neighborhood and the benefits of home.

Moreover, when a buyer makes an offer him or herself, it allows for an open discussion and an amicable agreement without any pressure from a third party.

How much does a real estate agent cost?

The services of a real estate agent are not free. Here are some scenarios that will help you to better understand how a real estate agent is paid:

When a seller hires a real estate agent to sell his/her home, they agree on the amount of commission the real estate agent will be paid. The average commission is 5% + tax of the value of the property (which is often several thousands of dollars!).

Seller’s Agent vs Buyer’s Agent

When a house is for sale with an agent (the seller’s agent) and the buyer is represented by

an agent (the buyer’s agent), the latter will be paid the same commission agreed to between the seller and the seller’s agent.

For example, if the seller has agreed to pay 5% to his/her agent and the buyer has his/her own buyer’s agent, the commission will be shared between the two real estate agents. The seller’s agent decides how much of the commission to offer the buyer’s agent.

Representation Contract

When a property is for sale by a homeowner without a real estate agent, the buyer can communicate directly with the owner. If the buyer wants to use a buyer’s agent, he/she will be responsible for the agent’s remuneration.

In fact, since July 2012, buyers who want to work with an agent when the home they are buying is not for sale with an agent must sign a contract with the buyer’s agent, thus guaranteeing the agent’s remuneration.

If I buy a house with a real estate agent, am I protected?

Buying a house with a real estate agent does not guarantee the home buyer protection by guarding against latent defects. It also does not preclude a professional home inspection or the necessity of closing the transaction with a notary.

In addition, a real estate agent is not qualified to give legal advice as he/she is not a notary or a lawyer. Notaries are specialists in real estate law. On its website, the Chambre des notaires du Québec also stresses that "only notaries have the necessary legal expertise to ensure the protection of rights of the buyer, vendor and creditor."

Why do real estate agents claim to offer protection?

When it comes to the "protection" offered by brokers, some mistakenly believe that this protection encompasses any foreseeable issues. But what are real estate agents actually referring to when they talk about "protection"?

When real estate agents mention "protection" they are often referring to their professional insurance. This insurance is mandatory for any real estate agent to practice in Quebec.

The protection afforded to the buyer by this insurance is rather limited. It only protects the buyer from damages that result from a professional mistake on the part of the real estate agent. And this is only the case if the FARCIQ (Fonds d’assurance responsabilité professionnelle du courtage immobilier du Québec) agrees that a fault was committed and that it resulted in the damages.

In conclusion:

  • With or without a real estate agent, the steps to purchase a home are the same.
  • A notary is a specialist in real estate law, and is therefore the most objective and impartial professional to help you with the legal aspects of the sale.
  • Buying a property is not necessarily complicated but does require attention and care.
  • If a real estate agent is in any way involved in a sale, he/she will be compensated.
  • Eliminating the intermediary can sometimes facilitate negotiation.
  • In an ideal real estate transaction, all parties are satisfied
  • A real estate agent is not authorized nor qualified to give legal advice.
  • The legal guarantee applies whether a real estate agent is involved or not...

Did you know?

Even when home buyers are represented by a real estate agent, Quebecers are actively involved in the process. Most of those surveyed say they have conducted more or as much research as the real estate agent representing them. And almost 50% found the property they wanted on their own*

*Source: Results from an online Extract Marketing Research survey, conducted among 1170 Canadian homeowners (Quebec, Ontario and Alberta) aged 25 to 64, from April 23rd to May 12th, 2014.