I spoke to a real estate salesperson who offered to buy my house if he can’t sell it after a certain length of time. Can he do this, and should I sign him as my rep?
The short answer to your question is that the type of arrangement you mentioned isn’t specifically prohibited under the Real Estate and Business Brokers Act, 2002 (REBBA), so you may wish to consider the salesperson’s offer if you need to sell your home quickly and obtaining the highest selling price isn’t necessarily your primary motivation. It’s a valid business practice. Still, it’s always wise to ask questions, examine the fine print and consult a real estate lawyer.
As the regulator of real estate salespeople, brokers and brokerages in the province, the Real Estate Council of Ontario (RECO) has received complaints from consumers who entered into agreements similar to the one you described. Many of the people who complained told us they believe their salesperson wasn’t sincere when they made that offer, didn’t explain the limiting conditions properly or used it merely as a negotiating tactic to get them to list their home with the salesperson’s brokerage. We don’t receive many complaints of this type.
If you’re interested in the salesperson’s offer, ask about their experience and strategy for selling your home, as well as more detailed questions: how many similar homes has the brokerage purchased? Will you be paid full market value for your home? What are the limiting conditions or details of this type of program?
Make sure you understand all the fee considerations and have a clear picture of what the net dollar (after expenses) purchase will be. You can expect the agreement to be in writing and include a written itemization of the costs involved, and that the salesperson walk you through them, line by line.
When a registered salesperson or broker gives you an offer to purchase your property for their own use, they must give you written disclosure of information such as whether they are buying it for themselves or a related person, any facts that may affect the property’s value, and any plans they may have for it.
Real estate salespeople, brokers and brokerages know they must treat their clients with honesty and integrity, and promote and protect their clients’ best interests in a real estate transaction because they could face disciplinary action if they fall short of those obligations. Accountability is important in such important transactions; that’s why I strongly recommend using a registered real estate salesperson or broker when you’re ready to buy or sell a home.
The decision to sign with this brokerage is entirely yours, but I encourage you to do your homework and to understand the risks of the agreement you are considering. Also, interview several candidates before you decide, and remember to look them up on the RECO website.
If you have a question for Joe about the home buying or selling process, please email firstname.lastname@example.org.
Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.