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Understanding ‘Subject To’ Clauses for Real Estate Transactions

Published August 27, 2019 by Real Estate Leads

As is the case with any profession, there’s a whole lot of terminology that newcomers need to get up to speed with understanding, and do so as soon as possible. The bulk of them will be answered thoroughly during your real estate licensee training before you get your license, and as we’ve said so many times knowledge is persuasion power when it comes to both doing your job well AND attracting new clients who will be more likely to see you as reputable IF you obviously know your stuff.

Here at Real Estate Leads, our Canada online real estate lead generation system is an excellent way to put you in those situations – more specifically, where you have the opportunity to convey your real estate expertise to prospective clients. If you’re new to the business, it’s an excellent investment into putting the power of the Internet to work for you and giving you a leg up on meeting people who are genuinely interested in buying or selling a home.

But back to topic, a Subject To is one of the most common qualifying conditions that will be attached to the sale of a home, and as the listing realtor they’re definitely a ‘big deal’ as more often than not failing to meet the Subject To conditions means the offer will quickly be dead in the water. So it goes without saying that having an airtight understanding of them is really going to benefit you.

Subject To ____, Not Subject 2

That heading is chosen there because it’s not that this is the 2nd of a list of subjects. Rather, it’s the sale is subject to (condition being met as stipulated by potential buyer submitting offer). That’s the first important distinction you should be making here.

In terms of property sales, a common clause that is included in many agreements is that the sale of the property is subject to the sale of another property. This is what’s referred to as a suspensive condition, and that means that if the sale of a property is subject to the sale of another one, then if that event does not take place the transaction lapses and the buyer would not have to initiate any further cancellation of transaction proceedings, either through their realtor, the brokerage, or a financial institution.

Most often, this simply means that the purchaser needs to sell his property in order to raise funds to pay the seller. Do note that many realtors will insist that any ‘subject to the sale of another property’ clause in any agreement should include a condition to protect the seller, if that’s who they’re representing.

When accepting a ‘subject t’ offer which includes only a simple term like stating the offer is subject to the sale of the purchaser’s property within, say, 60 days then that will mean that the home’s seller is bound to this one purchaser for 60 days and that they cannot sell to another buyer within that time frame. If the home does not sell to that buyer within the allotted period, the seller’s home then goes back on the market.

Time Limitations are Important

As a means of protecting the buyer and the seller, a good realtor will ensure that the terms and conditions state that the ‘subject to the sale of another property’ clause is limited to a certain period of time. The home seller should be advised to keep on marketing his property within this period. It’s also common if another offer is received within the period to then give the existing buyer an option to eliminate the subject to condition.

It’s also standard for sellers to have the right to accept an offer with better terms and conditions.

Subject To Advantages

Subject To conditions benefit sellers when they are still allowed to market the property and if they are able to maintain control over the offers that can be accepted.

Obviously, there’s much more to gain for potential home buyers. This is especially true when the purchaser is not in a position to pay for the home without receiving funds from the sale of his current home, as mentioned. It’s common knowledge that the purchaser should never eliminate this clause unless he has other means to pay for a property.

In addition, there is always the possibility of another buyer who has sufficient funds available immediately coming along and offering to buy the property. There are 2 rules that come into play with subject to clauses, and they are as follows:

Rule 1:

The purchaser has a fixed time frame where they need to have the property sold by a certain date. They then put the property on the market at a realistic market value in order to sell within the given period. The estate agent selling such a property should give the purchaser ample information to establish a realistic market value.

Rule 2:

This one applies when the buyer is not able to compete with a cash offer. In this instance, the buyer should then accept that they have not sold their home and the intention of the seller is to get the money from the sale of his home as soon as possible..

More often than not, would-be buyers have no other choice but to purchase with a “subject to” condition, so be prepared to work with them – a lot. Understand as well that subject to offers normally come in higher than cash offers, and that puts some pressure on the home owners for obvious reasons. Do they take the sure thing (cash offer) or do they roll the dice and hope the subject to offer works out?

Sign up with Real Estate leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are not delivered directly to you, but delivered only to you. That’s right, you get them and no other realtor does. That’s because you also have the ability to claim your own exclusive region of any city or town in Canada. Your region, your leads for that region, and your success in that region.

Follow the lead of other satisfied realtors and get in on this big-time marketing advantage today!

Growing Optimism Regarding Housing Market Amongst Canadians

Published August 20, 2019 by Real Estate Leads

Earlier this year, the CMHC joined economists and many other industry experts in declaring that the market for detached homes in Canada was now ‘flat’ – meaning that it wasn’t moving in either direction and thus favouring either buyers or sellers OR meaning increased or decreased property values for homeowners.

It would appear that things have changed since then. Have they changed enough to warrant a change in the ‘flat’ condition of the detached home market? That’s up for debate, but of course as well all know there’s much more to the market and housing stock in Canada than just detached, single-family dwellings. Sure, they may be the shining pinnacle of home ownership, but the reality is that the ‘norm’ of what housing and should entail is shifting very rapidly in todays’ world.

Ascribing to and working with these new bigger-picture realities is a part of what separates a great realtor from a good one, and as we keep harping at here – knowledge is real power in this business in much the same way it is for any of them. Here at Real Estate Leads, our online real estate lead generation system is an excellent way for realtors to harness the power of the Internet and get so much more out of their prospecting efforts. And that means opportunities for you to flex your real estate industry knowledge muscles!

Stronger Market Performance Seen

The consensus seen nowadays is that Canadians have an increasingly positive outlook on housing, and that’s something of a marked change from as recently as 2 summers ago. This has been amplified by stronger market performance and an increase in housing starts across the country as a whole.

The Bloomberg Nanos Canadian Confidence Index confirms this, with a posted a 58.6 reading that’s up from the 58.3 seen at the end of June. The increase may seem small at face value, but in this context it’s significant. Vancouver and Toronto continue to be the very centres of real estate activity and demand in the country, and accordingly this growing optimism is being bolstered by surging home sales in Toronto and Vancouver.

Both cities enjoyed 24% growth last month.

National Economy Influences

This is then coupled with a steadily recovering national economy, along with downward movement in borrowing costs. As a result, ever greater numbers of Canadians are less intimidated at the thought of a potential housing downturn.

According to a recent Bloomberg-Nanos survey, 43.2% of respondents believe local real estate prices in their area should increase in the next 6 months. Oppositely, the percentage of those expecting lower prices came in at 15.2%, which was decidedly lower than the 2019 average of 16.4%.

This more positive consumer outlook is buoyed further by higher levels of construction activity or building ‘starts’ as they’re referred to in the industry. Recent CMHC figures indicated that the national trend in housing starts was 208,970 for last month (July), an increase from the 205,765 units that were started in June.

Most notable here were High levels of activity in apartment and row starts in urban centres, and these housing types and the locations of them were integral in reflecting in the high level of the total starts trend in July.

The ‘Smart’ Choice: Multi-Family Development Starts Leading the Way

Vancouver in particular was key to all of this and provided a major boost – upwards of 85% of the market’s new housing starts last month were in the multi-family development category. Of course, these types of developments flourish in environments where available land constraints and supply-demand imbalance that’s drastically weighted towards demand make them the much smarter choice for civic planners and the like.

We can expect to see much more of multi-family home development projects all across Canada, and the trend is definitely something that’s worthwhile for realtors to take note of in being increasingly aware of where the market is going, and the types of housing that will make the most sense for many of their clients.

And so speaking of clients, we highly recommend that you sign up with Real Estate Leads here and receive a guaranteed monthly quota of qualified, online-generated buyer and / or seller leads that are delivered to you exclusively – no one else will receive them, and as such you benefit exclusively. And not only that, but you’ll also have your own region of any city or town in Canada protected for only you as well.

That’s provided it’s still available and that another realtor hasn’t beaten you to it, so if this online lead generator for realtors in Canada sounds good to you then don’t delay in getting onboard with this!

3 Things Many Real Estate Brokerages Won’t Tell New Agents

Published August 12, 2019 by Real Estate Leads

This topic here today is quite a natural one given the fact that this service will be most attractive to new real estate agents in Canada. The majority will have already chosen a real estate brokerage and the bulk of you will likely be very happy working out of there. Some will have yet to make that decision, though, and it’s in the interest of helping these fledgling professionals that we’re going to use this week’s blog to share some realities of being new to a real estate brokerage that you may not be aware of.

Here at Real Estate Leads, our online real estate lead generation system in Canada is an excellent way to increase the effectiveness of your client prospecting efforts and help you build your client base more quickly. Paired with the usually less-than-rosy realities of what it’s like to be new to the business and a brokerage you’re about to learn of here, the value of using technology to get your business gaining steam is probably going to be that much more attractive.

So let’s get right to it – 3 realities that most new realtors aren’t told during the brokerage interview.

The Curveball Pitch

Brokerage interviews are usually 30-minute sales pitches where the brokerage aims to impress on the new realtor why their brokerage is going to the best spot for them to branch onto. You’ll be making money for them, so they need you as much as you need them. Most brokerages will keep it all very upbeat and positive as a result, and avoid mentioning anything that could be perceived as a negative for them or the profession as a whole.

It’s not so much that they want to omit the information for its own sake. It’s more that they don’t want you thinking the bad stuff only happens at their brokerage.

Yes, all these pitfalls to extensive success early in a real estate career will apply to every new realtor and whichever brokerage they end up choosing to work with.

  1. Real Estate Business is Difficult, and You May Fail

To say directly – or even imply – that real estate is easy money is really doing a disservice to someone. Unfortunately, real estate is not as easy money as a lot of people make it out to be. It requires a great deal of hard work, patience and persistence. The fact of the matter is that real estate sales involve a lot of time doing a lot of work, and often for no money. There’s a lot of running around, researching, networking, following up, and showing and submitting of offers – all with people who could be ready to submit an offer or leave you entirely hanging after all you’ve done for them.

The success rate in real estate for newbies isn’t high can be pretty low and it’s possible that you may end up being one of the 1 in 6 realtors who leaves the profession within one year of becoming licensed – as is the statistic from the RERC (Real Estate Regulators of Canada).

  1. You Get What You Pay For

Brokerages make money by charging their fees. Charging agents to be a part of their brokerage is how real estate companies make money. That may be with a monthly desk fee, a commission split, an annual fee – or a combination of all three.

Just as it is in any business, the more you are able to charge equates to having more services, value and time you can provide. It’s simply not possible to provide quality real estate services to your clients if you’re charging discount rates. This applies to brokerages too, so choose wisely with this very important fact front and center in your decision process.

Unfortunately it’s fairly common for some agents to think they can pay the lowest possible brokerage fees and still get good service from it. That’s unlikely – be wary of brokerages that offer lower brokerage fees, as you truly do ‘get what you pay for’ here too.

  1. Prepare for An Extended ‘Cash-Strapped’ Period

A new real estate agent is always going to be in the process of building a real estate business. If you’ve ever spoken to any business owner, you’ll know that money is usually tight in the beginning. The biggest reason for that is there’s a lot of upfront costs that are being incurred ongoingly while you’re not creating income – or creating very little of it. Going for months like this in the beginning can make this business very intimidating.

Again, the reason brokerages won’t be telling you this very clearly is that they don’t want to think that’s a reflection on them. It’s the nature of the business, and so it really is smart to be prepared for a less-than-smooth start to your real estate career. Focus on the right things, provide real service and value, and be very proactive in learning the trade and you’ll be much better equipped to get through the lean period without second-guessing your career choice.

Sign up with Real Estate Leads here and receive a guaranteed monthly quota of buyer and / or seller leads that are yours exclusively. You have your own region of any city or town in Canada, and all of the leads generated by individuals in that region will be sent to only you. It’s a sure-fire way to supercharge your client prospecting efforts and ensure that your new real estate business becomes profitable sooner rather than later.

Best Approaches to Selling Renter Occupied Homes

Published August 6, 2019 by Real Estate Leads

Homes that are revenue properties with tenants in them may not be sold as regularly as homes that a primary residences for the owner, but it’s not exactly an uncommon scenario either. Particularly if you’re a real estate agent working in one of the Canada’s big metropolitan areas. Listing a home with tenants currently living in it is going to present a different set of challenges for a realtor, and as is always the case if you’re equipped with the knowledge to meet those challenges and sell the home for those clients in a reasonable period of time then you will definitely be making a favourable impression on them.

All of which is important, because in the same way that establishing clients is difficult, having repeat clients is preferable. You start at the start naturally, and here at Real Estate Leads our online real estate lead generation system is a proven-effective way of being put directly in touch with individuals and couples who are legitimately considering buying or selling a home in the near future,

And yes, it may be the possibility that they are selling a home that’s been a revenue property for them that they’ve been renting out. If that’s the case, it’s not going to be as straightforward as if the owners were living in the home.

Let’s look at the best approaches to selling renter occupied homes here today.

Sell the Home Once It Becomes Vacant

Waiting until the tenants’ lease is up and then selling the home after they’ve vacated it is the best option, but obviously it may not be be possible. If it is, though, you then hold off on listing the property until it’s responsible – and legal – to insist that the tenants vacate the property. The sellers gets flexibility with staging the home and showing the property. Do keep in mind the changing average days on market for homes in the region and be conveying this to your client – with a particular focus on how long they may need to go without revenue for it.

If the renters are on a month-to-month lease, follow Provincial laws and be the go-between to deliver proper notice to end the tenancy. Most Provinces require you to give the renter a specific period of time to vacate without cause. If they are on a fixed-term lease, keep in mind that lease does not disappear or become invalid just because the owner now chooses to be selling the property.

Sellers need to honour the rental contract, unless of course the owner and renter can come to a mutual agreement to end the lease early. This does happen, although just as frequently it doesn’t. Sometimes your client can offer the tenant a move-out settlement, which could include the rental rate times the number of months left on the lease, moving stipends, or a deposit and first month’s rent on another rental. All are good suggestions and show good faith on your client’s part.

Sell the Home While It’s Occupied

Here’s where it gets challenging – Your seller may not want to wait for the lease to expire or give up on rental income as the property remains vacant while it’s on the market. In such cases, the agent will need to work around the reality of renters living in the property.

As the realtor, it will be your job to coordinate between the owner and the renters, and you need to really be proactive and take the initiative with this. Open and active communications always make this a much smoother process.

Start by telling your seller that they need to ensure their renters are entirely up to speed about the selling process, and they should encourage the renters’ cooperation by whatever means necessary. It is also a good idea to check the lease agreement for any clauses that relate to a renter’s cooperation during showings.

Showing a Renter-Occupied Home

It’s pretty straightforward to imagine that showing the renter occupied homes is where the biggest challenges might arise. That’s correct. Homes can stay on the market longer than necessary if the condition of the property is less than ideal, so it’s important to work with renters to keep it in as showing-ready condition as possible as often as you can. This can be tricky, and especially so if the renters not particularly keen to see the home sell quickly and they have to move.

Follow Provincial Laws and the Lease

Provincial laws will determine how much advance notice you will need to give renters before you can enter the property for a showing, inspection, staging, taking pictures, maintenance, or repairs. Most Canadian municipal jurisdictions will have bylaws where a 24-hour or longer notice is required to enter a property for a non-emergency issue.

You can also expect some renters to be frustrated at the way the showing times will impinge on their privacy. Again, try to work with them as best you can give as much advance notice as possible for anything that may involve them. Offering incentives is a great way to encourage tenants to accommodate showings is to offer incentives. Here’s a few that your client may find agreeable:

  • Rent discounts: Offering a monetary reward for helping an owner sell a rental property is going to appeal to pretty much any renter. Have your client offer them a reduced rate as compensation for the temporary
  • A weekly or biweekly cleaning service: This will keep the house show-ready and encourage the tenants to maintain tidiness in the home. It may even help tenantsget their security deposit back.
  • Restaurant gift certificates or movie tickets: this gets tenants out of the house during showings and they get to enjoy themselves at no cost.
  • A hotel room during an open house weekend: Tenants will like having a nice place to stay for those weekends when open houses are scheduled for Saturday and / or Sunday.

Taking steps to include current tenants in the selling process is always helpful when selling a home with tenants. If your seller can be made to understand the importance of communicating with their renters it is extremely beneficial and conducive to selling that home that much more quickly.

Sign up for Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are delivered to you exclusively and for your privately served region of any city or town in Canada. It’s your region, they’re your leads, and that’s the way it’ll be for as long as you stay with us. So many realtors across the country have found out how beneficial this is to growing their real estate business, so we encourage you to do the same.