Third of investors unprepared for buying process

It is a cardinal sin for investors not to be prepared or knowledgeable about the home buying process, but new figures point out that a third (32 per cent) of first-time investors admit to just that.

The survey, published by the Real Estate Council of Ontario (RECO), also found that 26 per cent of investors wished they had a better grasp of the buying process, 21 per cent wished they had looked at more properties and 14 per cent wished they had a better understanding of the contracts involved.

Other findings include:
  • 43 per cent said there were sections of the real estate contract when they bought or sold a home that they did not fully understand.
  • 36 per cent mistakenly think that after a real estate contract is signed, a buyer or seller has a trial period during which they can cancel it, and an additional 33 per cent said they do not know.
  • 55 per cent incorrectly believe that if you place a conditional offer on a home and the deal doesn't proceed, you automatically get your deposit back.
"Signing your name on the dotted line is not something to be taken lightly when you're dealing with binding contracts for significant values, so we encourage home buyers and sellers to be comfortable with the details before they sign anything,” says Joseph Richer, RECO registrar.

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  • by 2014-11-06 2:02:12 PM

    Two reasons.
    Number one: The other two thirds are real estate agents are very reluctant to share this information with UN-Real Estate Investors because knowledge is power and knowledgeable investors will soon be asking why they are paying double BUY and SELL SIDE full bore commissions when most of them they are doing their own BUY SIDE research.

    Number two: The institutional and constant drop-out rate of new Realtors is 70% the first year and 90% the second yea,r and 90% of these agents are part-time and Real Estate sales are not their main source of income.

    Conclusion: Investors have an 80% chance of dealing with a part-time licensee who is about to drop out of the business and has NONE...ZERO... practical knowledge of the complete BUY/SELL cycle.

    How to fix this: Complain vehemently to the provincial Real Estate councils that new licensed agents, like in any other profession, must have a Learners or Intern designation for the first year in practice so investors know who they are dealing with.

    Why that will never happen: The real estate industry is now in the business of producing fee-paying real estate agents and they induce these new agents to sign up for expensive two-year contracts with franchised offices by offering them the chance to win the real estate "DOUBLE ENDER" commission lotto, rather than actually teaching them Real Estate.

    Too bad. Real Estate used to be a respected profession. Now it's just a Ponzi Scheme of revolving door agents, with each new agent paying thousands in fees to get through the door before dropping out and being replaced.

  • by Witness to incompetence 2014-11-10 4:13:28 PM

    I work in an administrative capacity in real estate for several years. I am continuously shocked by the lack of knowledge of newer agents (licensed up to 4 years). Agents ask me how to do a comparative market analysis (wow!), another asks what a ravine property is, some do not know how to check what the specific schools are for an area. Worse, some agents do not understand how to determine the expiration date of conditions, when a waiver must be submitted, before the agreement becomes null and void.

    The number of offers I have read without all the proper clauses to protect buyers is also troublesome (submitted by agents from across TREB districts). In the sale of condos, the listing agent is often reminded to order the Status Certificate, something which should be done immediately after the agreement is signed.

    There is a lack of understanding of documents, procedure, proper wording, insufficient MLS listing info for clarity. Even getting the number of storeys a property has wrong (pretty basic). I've rolled my eyes so many times, they are permanently stuck in upwards mode. On what basis are such agents "advising" their clients on real estate matters?

    Fortunately there are a number of excellent, diligent agents but they are in the minority. Being licensed in real estate should not automatically be equated with being professional (a true misnomer when referring to sales reps, many with only a high school education).

  • by Mortgage Guy Geoff 2014-11-11 5:48:25 PM

    Of course the previous comments are indeed valid as we've all experienced Realtors who lack the desire and/or knowledge to perform their roles adequately for normal purchases let alone the unique characteristics of investment purchases. Having said that, the fault is not all theirs alone. The customers themselves are partially to blame for either getting into something without doing their own research and/or allowing the transaction to proceed without forcing the people acting on their behalf to sufficiently explain whats happening. If you don't slow it down enough to satisfy yourself that all is in order, as described in the article you run the risk of becoming a victim of incompetent or malicious operators. Some might suggest this is part of the investing ball game - get burned, learn, and move on better for it.

    Anyway, in an ideal world we would all be better operators no matter what part in the process we play. In reality though we can only control our own behavior and therefore we must take responsibility for protecting our own interests and not be too quick to blame everyone else if something goes wrong.

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