August 03, 2014
Once when the buyer has selected the house he would like to purchase, the next step is to negotiate the selling price of the house. To do that, the buyer's agent will require the buyer to sign a series of documents. Some documents are good for the buyer to sign. Some documents are not! One of them are waivers!
Waivers is a simple form that the home buyer signs to waive the conditions in the contract to purchase to house. The conditions in the contract, which is usually conditional upon financing, home inspection and appraisal value, protect the buyer from having to buy the house, if the buyer conditions cannot be satisfied. The contract usually indicates the conditions must be met within a week where the buyer uses that time to find a lender and home inspector to see if the house satisfies the conditions. If and only if the conditions are met, should the buyer then sign the waivers.
Now, imagine this:
You are new home buyer. Your trustworthy Real Estate Agent hands you a bunch of documents to sign. How often do you actually read through each document? There are so many documents and they can be so confusing. What is the likely hood of you simply giving up reading the documents and just signing everything the Agent tells you to sign?
Now Imagine if your Agent sneaks in the waivers and you being in a state of total confusion, what is the likely hood of you actually signing these waivers?
1. The moment the home buyer selects a house to buy, the agent will then have to proceed with several contracts to sign.
2. These documents are presented in a complex manner that confuses the buyer. The first couple of contracts, the buyer must really sign.
3. At this point of confusion, the buyer would eventually lose concept of understanding and pretty much, will sign anything because it just appears everything needs to be signed, any ways.
This the moment when the Agent quickly sneaks in the waivers and the buyer without even knowing it, signs it because the buyer becomes unaware of what the document is really about!
Now at this point, the scam is not yet finished because the waiver still has to be sent to the seller.
So how does the Agent trick the buyer into agreeing to send the waivers to the sellers?
1. The contract will expire in week. So the Buyer's Agent only has a week to send the waivers to the sellers.
The first thing the Agent does is calls the lenders and other parties involved early to see how the process to checking the contract conditions is going. By calling early, the lenders and other parties will not be able to claim the property to be purchased is no good. In fact, more often than not, the lenders will actually tell the agent there will always be a way to get the money for financing. The lenders say that really just to comfort the Agent they he is in good hands.
2. Using this confirmation, the agent quickly tells the home buyer, the lenders are ok and the house is good. The agent then ask if the buyer is would agree to waive the conditions now because the agent would be too busy later on claiming he is on an educational course.
3. The homebuyer trust the agent and sees that the conditions will most likely go through. So to help the Real Estate Agent, the home buyer agrees.
Now, it is done deal. The Buyer's Agent now has the right to send the waivers to the seller's agent and the contract is no longer nullable. The buyer must now buy the house. The home buyer may not even know the house was overpriced.
This happens. It happens in Ontario. I am releasing this information because Canadians must know. Quite frankly, orea.ca may not even be aware of it or is not doing anything about it.