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Friday, October 07, 2005

Consumer Best practises

Consumer best practices are published by the Real Estate Council of Alberta. More information about RECA can be found at www.reca.ab.ca

Consumer Best Practices
1. Use the services of a licensed real estate brokerage. In order to assist another person in a real estate purchase or sale in Alberta, a license is required. Real estate brokerages and agents must be licensed by the Real Estate Council of Alberta (RECA) and comply with the Real Estate Act. Consumers are protected when they deal with a licensed individual for several reasons: Education: To become licensed, an individual must complete a real estate course and pass an exam. Insurance: An individual must have errors and omissions insurance to quality for an Alberta real estate license.Assurance Fund: Consumers are protected against any loss arising from frauds or breach of trust by a licensed real estate agent by the Real Estate Assurance Fund, a fund financially supported by all licensees.Standards: When a licensee conducts business, they must adhere to business standards and comply with an industry Code of Conduct designed to protect consumers. Supervision: A licensed real estate agent must be registered with a licensed brokerage and can only trade on behalf of that brokerage. In accordance with the Real Estate Act, the broker supervises the business conduct of all the agents registered to the brokerage and ensures the business of the brokerage complies with the laws of Alberta. Many of these laws are designed to protect consumers. A consumer who deals with an unlicensed individual does NOT have these safeguards. Is your “agent” licensed?It’s simple to check for a licence. To check whether a particular firm or individual is licensed to trade in real estate in Alberta, click licence search on the right side of any page in this website. Alternatively, contact RECA’s information officer at 228-2954 (in Calgary) or toll-free in Alberta at 1-888-425-2754.

2. Make an informed choice when selecting a real estate brokerage or agent.There are over 10,000 real estate licensees in Alberta and there are many marketing strategies used to obtain your business. It is important you select a real estate brokerage and agent for the right reasons.Tips to choose an agent/brokerage:
Ask friends to recommend an agent they have worked with successfully.
Ask the broker to recommend one of the agents of the brokerage who will be a good match for you and your needs.
Interview several agents and discuss your needs and expectations.
Ask for and assess their qualifications (education, experience, specialty areas, knowledge of the market place, etc.)
Check for a disciplinary history with the Real Estate Council of Alberta.
Request a written service and fee proposal.
Ask for and check references from the agent’s past clients.

3. The nature of the services you will receive should be discussed and agreed to in advance by both parties.Real estate licensees are professionals who want to provide you with the best service possible. Your relationship will be more successful if you clarify and understand the relationship between you, your agent and the brokerage. Clarify the nature of the services that will be provided by the agent. Ensure fees and costs are fully discussed and agreed to, in writing. Clarify what your options are if you are not satisfied with the services or quality of representation you receive. Also, discuss what your agent expects of you and your family. What are your obligations? What can you do to help your agent do a good job?

4. Listing agreements or buyer agency agreements should be in writing.It is a benefit from a service aspect and a form of protection for consumers to have written service agreements. These may be called a listing agreement and/or buyer agency agreement, or a similar description. Often these documents are on standard forms. If there is not sufficient room to detail the terms of your agreement on the standard form, simply ask for an addendum to be added to the agreement. A seller should have a written listing agreement with a licensed real estate brokerage. The agreement should detail the authority of the brokerage and real estate agent to list, market and sell the property. The agreement should specifically detail the seller’s responsibilities, real estate agent’s responsibilities, the fees to be paid, and the duration of the agreement. For buyers, a written service agreement should also be considered, particularly when the buyer is seeking agency representation (see Sec. 5). A written agreement confirms there is a commitment between a buyer and a real estate agent to establish a working relationship and outlines the expectations, obligations and responsibilities of each party.

5. Understand the concept of agency and representation choices when retaining the services of a brokerage and a real estate agent.When you retain the services of a real estate brokerage and agent to represent you, you become the client and they become your agent. As your agent, they must act in your best interests and fulfill all their fiduciary duties to you, including duties of good faith, full disclosure, competence, obedience, and accounting. Discuss these duties with your agent and ensure you understand them. In some cases, your agent may ask for you to authorize their actions as a “dual agent” and to sign a dual agency disclosure form (Note: for sellers, this authorization is often part of the “standard” listing form.)A dual agent is an agent who proposes to represent two parties in the same transaction at the same time (e.g. an agent who represents both a seller and a potential buyer on the same property).It is a challenge for one agent to represent the interests of two parties at the same time. Therefore, their fiduciary duties to each of the parties must be limited significantly. You should not authorize an agent to act as a dual agent unless you fully understand what this type of agency relationship means and what implications it has on your agent’s ability to represent you in a real estate transaction. The onus is on your agent to fully explain the meaning of dual agency and to obtain your informed consent in writing.

6. Communicate honestly and clearly with your agent – disclose all relevant information.A real estate agent represents you (the client) in dealings with third parties. As your agent, they must act on your authorization and based on the information you have provided. In order to avoid misunderstandings in the relationship, it is important you do not make any assumptions. Ask questions in situations where you do not fully understand what the issues or choices may be and give your agent clear instructions. To provide you with effective service and protection from potential liability, your agent needs to be fully informed of all relevant information in your possession. If you are a seller, this is particularly important with respect to property defects. These property defects are described as “patent” or “latent”:
A patent defect is a fault in the property that is readily observable to the untrained eye of a potential buyer (e.g. a broken pane of glass, old roof shingles or peeling paint).
A latent defect is a material defect not readily observable by a potential buyer (e.g. a serious crack in the foundation that has been covered over with paneling or improper wiring covered by drywall). As a seller, you must disclose all latent defects about your property to a potential buyer, otherwise you may be liable to the buyer for the costs of repairing such defects. Therefore, ensure your agent is fully aware of any latent defects to the property. If you are a buyer, ensure your agent is aware of all of your property needs, transaction requirements (e.g. possession date) and any financial constraints. A fully informed agent is in a better position to provide you with timely, efficient and effective service. Be upfront and honest with your agent and discuss any issues or concerns you have. If you do not receive satisfactory responses from the agent, discuss the problem with the broker.

7. Avoid signing a document you have not read, cannot read, or a document you do not understand.This is one of the most important responsibilities you have to yourself and your agent. Do not sign any document unless you are sure you know its meaning and its effect on your transaction. Take the time necessary to read any document you have been asked to sign. This may mean reading over the document several times at your own pace. Your agent should not interfere in this process or pressure you to sign a document you have not read. If the document has become difficult to read due to changes, counter-offers, or fax transmissions, ask your agent to prepare a new, clear contract that is easy to follow and legible. If you do not understand the nature of the document, a particular clause or term, ask your agent for clarification and assistance. While an agent cannot give you legal advice, they should be able to explain what a particular clause or term means and its effect on you. Do not hesitate to ask for or seek assistance legal advice at anytime.

8. Avoid signing a document you do not agree with in all respects. Typically, the agent will prepare the document and present it to the client approval and signature. A real estate transaction is made by a contract. You will be legally bound by the contract and could be sued if you do not fulfill your obligations. Therefore, the contract should only reflect the terms you are in full agreement with. The entire contract is enforceable. If you agree with most of it and disagree with certain provisions, do not sign the contract. Advise your agent and seek changes to those provisions through further discussions or negotiations.

9. Avoid signing a document that may be false or misleading. Often you will be asked to sign a document you have not personally created or a form you have not filled in yourself. Once you sign it, you are responsible for its contents, whether or not you prepared it. All signed documents must be truthful and factually accurate. Point out any errors in the document to the agent and correct any errors before signing.

10. Support your agent in the performance of their duties. Real estate agents are not successful unless their clients are successful. They want to do their best to ensure their clients achieve their goals. However, the work of a real estate agent is challenging. The duties and responsibilities are many and not easy to accomplish. Therefore, in order for a real estate agent to successfully represent you, they need your support and cooperation. There are a number of ways you can do this:
Be available to communicate with your agent at all reasonable times.
If you are away for a period of time, advise your agent and indicate how you may be reached during your absence.
Cooperate with all reasonable requests from your agent.
Carefully consider information or advice your agent gives you. They are providing this to assist you in the transaction.
Timeliness in real estate transactions is important. Provide informed and clear responses in a timely manner.
If you receive any contact or inquiries from other agents or third parties, refer them to your agent. This will ensure your interests are protected and prevent confusion or misunderstandings in communications.

11. Keep records of everything related to your transaction or services provided by the agent. A real estate transaction is a complex process that leads to a legally binding contract. For your own protection, it is important for you to maintain a complete record of the transaction. You are entitled to receive copies of all documents and contracts from your agent. Keep these, in addition to copies of any documentation you have provided to your agent together in one file. Make immediate notes of any verbal promises or representations made to you by your agent. Make immediate notes of any verbal directions you have given to your agent. Whenever possible, follow-up a verbal promise in writing.

12. Provide feedback to your agent and the broker. Everyone needs feedback in the workplace. If you are satisfied with the services you have received and the quality of representation, let your agent and broker know! They appreciate knowing they have done a good job and met your expectations. If you have concerns about the services you received, communicate your concerns to your agent in a timely fashion. Give your agent a reasonable opportunity to address any concerns you may have. If you are not satisfied with the response of the agent, communicate your concerns to the broker. Pursue your concerns with the broker until there is a satisfactory resolution. Many agents and their clients have built a trusting relationship and work together through many real estate transactions over the years. A satisfied client will refer their agent as a trusted service provider to their friends, family and co-workers. This is what all agents strive to achieve. However, a real estate transaction can be stressful and problems can occur. By following these guidelines you can make a meaningful contribution to a successful outcome for you and a positive relationship with your agent.


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