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Dorota Dyman and Associates: Real estate fees, services are negotiable

Dorota Dyman and Associates: Real estate fees, services are negotiable | Dorota & Dyman Associates |

services are negotiableI’m going to be listing my home soon. What kind of services do real estate salespeople typically offer?

When it comes to real estate services, there’s no such thing as “typical.”

There are more than 63,000 real estate brokers and salespeople across Ontario, and each one of them will have their own approach and style.

Listing agreements you sign with a brokerage can outline a wide range of services, depending on your particular needs. A “full service” arrangement may include:

• staging your home, or providing tips to prepare
• marketing plans/strategies
• scheduling showings and open houses
• receiving and negotiating offers from prospective buyers
• providing detailed property information/features to prospective buyers or their representatives
• handling transaction paperwork, and
• referring you to a lawyer, mortgage broker, home inspector or other specialists you may need

That contrasts with a minimal service arrangement, where the brokerage might simply post the property on the MLS system but not provide any of the services listed above.

As you can imagine, there’s a lot of room for a middle-ground between full service and minimal service.

Remember that fees and commissions for services by real estate salespeople are not only negotiable to the services being performed, but can be a mixture of a set fee or a percentage of the sold price. As can be expected, the level of service should relate to the amount being charged ( ).

With so many possibilities, it’s important to consider your options and ensure the person you choose to represent you will provide the services you want, and at a fair price.

Do your homework. Start by asking friends and relatives who have recently bought or sold a home for referrals. Find out what they liked or didn’t like about the experience.

Then interview a few different real estate professionals, and get their references, before deciding on one. Keep in mind that, as with most things, the cheapest deal is not necessarily the best deal ( ).

Never assume that a service will be included. Communicate with your chosen real estate agent clearly and ahead of time, and get everything in writing.

Always read what you are signing and consider seeking legal advice if there are things you do not understand.

Also, if you choose to go with a minimal service option, understand that real estate professionals ( ) have ethical obligations and can’t simply take your word regarding key details about the property. They are required to conduct due diligence to ensure the MLS posting is accurate, which can include measuring rooms, confirming municipal taxes, zoning, operating costs, rental/lease items, and so forth.

It might seem daunting, but just take it one step at a time: think about what service level you need, identify representatives that can meet your needs at a price you consider fair, and make sure that there’s a mutual written understanding about what services will be provided.

Starting with clear expectations can go a long way to ensuring a positive selling experience.

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Real estate sector: Growth starting, but no bull-run yet

Real estate sector: Growth starting, but no bull-run yet | Dorota & Dyman Associates |
The real estate industry is anticipating relief in in Budget 2014-15, post elections.
Michael Hymer's insight:

The year 2013 was a year of survival for the real estate sector, but expectations are now high among developers and analysts. The industry is pinning hopes on a mid-year turnaround after the General Elections, it is not likely to materialise given the time lag for policy implementation.


So how would 2014 pan out for realty? The first three quarters would see much of the problems of last year persisting, before showing some signs of change. Few experts believe that prices in several locations will go northward.


That would be constraints since the problems of the sector remain unsolved, and policies have made no substantial impact, and those on the cards may not be enough to give the required momentum.


Persistent problems


It was a year of “slow-down, stagnancy and stalling” for real estate, says Sachin Sandhir, MD, South Asia, Royal Institution of Chartered Surveyors (RICS), a body certifying professionals and setting standards for the sector. “It was a year of much economic turbulence. The current account deficit has fallen to 1.2 per cent of GDP in July-September period, while inflation is again above 10 per cent, as recorded in October. Wholesale price inflation was at an eight-month high of 7 per cent while retail inflation crossed 10 per cent. The rupee dropped sharply by net 22 per cent during first two quarters. Private equity (PE) investments witnessed a drop of over 65 per cent for the quarter-ended September 2013. All of this has negatively impacted investment sentiment.”


Even as the rupee fell, NRIs cashing in on the foreign exchange situation did not show up in sales numbers. The Reserve Bank of India’s actions too, did not help. “Monetary tightening resulting from RBI’s measures to control inflation was the major macro influence on the real estate business in India,” says Shishir Baijal, CMD, Knight Frank India, a real estate consultancy firm.


“High interest rates, spiralling vacancy levels and lower margins arising from inflationary pressures too, led to a slowdown which resulted in reduction of new launches and also delayed project deliveries. 

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3 Tips For Doing Real Estate Deals With Foreign Investors - Law360

3 Tips For Doing Real Estate Deals With Foreign Investors  - Law360 | Dorota & Dyman Associates |

As foreign investment in U.S. real estate continues to increase, experts say foreign investors, sellers and rival bidders alike should be wary of potential tax hurdles, differences in deal-making style and other cultural customs. U.S. gateway markets like New York, Los Angeles and Washington stand out as "safe havens" for cash from less economically stable regions around the world, and the trend of foreign investors picking up trophy properties in these cities continues to grow.


But experts say that each party to such a transaction — the investor, any potential rival bidders and the seller — should carefully consider the unique challenges that arise when parties from different countries do a deal.


Here are three things to look out for when representing foreign investors or those working with them.


Foreign Investors: Prepare for Financing and Tax Trip-Ups


Attorneys representing the foreign investors looking to purchase U.S. property often face the challenge of working with clients who are unfamiliar with U.S. financing and tax structure, experts say.


Tax consequences can vary widely from client to client, based on their tax status in the U.S. and in their own country and on the tax treaties between the two. Foreign individuals not considered U.S. tax residents may be subject to withholding taxes, either as estimates of taxes that they might owe or as flat tax amounts, regardless of a deal's profitability.


In practice, this can mean a foreign investor is subject to tax on interest, leases or dividends, impacting how property ownership is structured, according to Dana Newman, a partner with Pillsbury Winthrop Shaw Pittman LLP.


Getting the money back out of the U.S. after it's invested in a property here without paying a disproportionate amount of sales tax can also be a major hurdle, Newman said.


"The overall issue ( ) is tax planning for a foreign investor to maximize their ability to get profits free of U.S. income taxes," she said.


Financing can be a problem for foreign investors as well, according to Wei Min Tan of New York buy-side condominium brokerage Rutenberg Realty, because U.S. banks lend to them at higher rates and require larger down payments.


"The key is to work with an experienced mortgage broker who has done many foreigner transactions," he said. "Just because a bank offers a foreigner mortgage program doesn't mean all of its bankers are experienced working with foreign buyers, because that's a niche market."


And on some deals, it may be necessary to explain concepts that U.S.-based clients take for granted, such as the fact that a trusted third party, and not a family member, should conduct the deal, and that a deal must be written and signed in order to be binding.


"It's important to explain this to foreign buyers because in many countries verbal agreements are binding," Tan said.


Sellers: Anticipate Differing Needs and Customs


Many of the foreign investors that are currently flocking to the U.S. are attracted to properties with specific characteristics, and they also may not have a traditional way of going about acquiring them.


Because of the tax issues mentioned above, many foreign investors have a strong preference for buying property through acquiring real estate investment trust shares, according to John Sullivan, a partner with DLA Piper.


"If you're a U.S. seller and you want to maximize the potential buyers for your property, if you hold it in a private REIT, you make buying that property more attractive for certain non-U.S. investors," Sullivan said.


This trend ( ) has led to an increase in the number of properties companies will put into private REITs even if there is no immediate benefit to the company, with an eye toward attracting foreign investors in the future, according to Sullivan.


When it comes to making the actual deal, experts say there are also some things that most U.S. investors might do as a matter of course that do not work for many foreign investors, such as setting the deal up through limited liability companies. More typically, non-U.S. investors prefer to use offshore corporations.


"For some non-U.S. investors, [using an LLC] has a very adverse tax result," Sullivan said.


Rival Bidders: Beware Foreign Investors' Pricing Power


The biggest issue for attorneys representing U.S.-based investors looking to compete with foreign investors on major deals — an increasingly common situation — is the disparity in price constraints, experts say.


While many U.S. investors look to purchase a property in an effort to make a quick return, either because they are investing through a fund with a short life or because their investors expect to see the benefit of the deal quickly for other reasons, a great number of the foreign investors currently doing deals in the U.S. are more concerned about stability than yields.


"They're willing to pay a premium, and many times they are the top bidder because they will pay more for a certain type of asset," said Manny Fishman, a shareholder with Buchalter Nemer PLC.


But there are ways to beat out foreign bidders, even if an investor can't offer the same high price.


Having a good track record of closing deals and being able to do so quickly, can put a U.S. investor ahead of a foreign rival, according to Fishman.


"A seller is looking for someone that will close and has a track record of closing, and sometimes the foreign investor is not that person, even with the higher price," he said.



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