Waterview Home or Vacation Retreat–$499,000 (#541)

Click photo for full listing details.

Click photo for full listing details.

Breathtaking views of Georgian Bay and Escarpment Bluffs from this lovely cliff top home or vacation retreat. Enter the large great room and be prepared to be awestruck… large windows facing the million dollar view. Vaulted ceiling, cozy woodstove, hardwood flooring and solid wood doors and trim throughout. The kitchen is oversized with lots of cupboards and a huge center island. Master bedroom with views, walkout to cliff side deck, walk-in closet and 3pc bath. 2 more bedrooms with garden views, a 4pc bath, laundry room.  Attached Garage.

Implications of Renting your Vacation Home or Cottage.

for-rent

Renting your vacation home or cottage is a great way to offset some of the costs, such as mortgage and property taxes.  However, before you decide to rent your property you need to do a bit of research on the implications.

First, there’s wear and tear on your cottage.  Do you want to share your personal space, and personal items with strangers?

InsuranceSecond, how does it affect your insurance?  In some cases insurance companies will not insure you if you are renting your property…or, they will charge you a much higher premium.  In any case, make sure you have the proper insurance, especially for third party liability.  The last thing you want is for someone to hurt themselves on your property and sue you.

Thirdly, is your property in rentable condition?  Have you taken all precautions to protect your personal items?  Have you removed all hazardous goods?  Does your home or cottage and property meet standard safety codes (this will be very important if there is ever an insurance liability claim—don’t get caught short).

TaxFourth, do you fully understand HST implications?  Will the sale of your property in the future be subject to HST?  This is a tricky one because HST rules are so convoluted.  A general rule, but you should always check with an accountant, is that you need to personally use the property equal to or greater than the amount that you rent it out.  If you go through a rental agency, you will have to charge HST, but in order to avoid being subject to HST when you sell, you can not claim any Input Tax Credit.

Here’s the link to the HST guide as it pertains to Vacation Property:  http://www.cra-arc.gc.ca/E/pub/gi/gi-025/gi-025-e.pdf   Good luck!  Once you read this you will probably realize the importance of reviewing with your accountant.

Fifth, do you plan to rent it out yourself or go through a rental agency?  Rental agencies charge high commissions (much higher than Real Estate agents, I might add), but can get you a higher weekly rate.  Be sure you know what services they provide.  Most expect you to arrange for a cleaner between rentals and to have a handy-man  available for any issues that may crop up during any rental period.

Remax.caLastly, (probably not the last thing to think about, but the last I’ll put down in this Blog)…How will renting out your vacation home or cottage affect the sale of your property when you decide to sell?  Generally, as a Real Estate agent, we are only allowed to show rental properties between renters…which is usually only a window of about 4 hours on a Saturday or Sunday.  This is very restrictive and difficult to work around when we have an interested party.

Renting works for many people…just be sure it is right for you!

Watch for my next Blog on….

Lets Talk About Poop!

Don’t forget to send your comments, stories, or ideas, in the comment section below or via email at dimaline@amtelecom.net.

. .

. Kathy Dimaline is a Real Estate Broker for RE/MAX Grey Bruce Realty Inc.  The comments on this Blog are the opinions, only, of Kathy Dimaline and do not constitute any legal advice or legal opinion and does not represent the interests or opinions of RE/MAX Grey Bruce Realty Inc., brokerage.

© Copyright Kathy Dimaline, All Rights Reserved

Demystifying the Buyer Representation Agreement–Commission Clause

Buying

Buyers, when you make the decision to hire a Real Estate professional to work for you to help locate your new home, cottage or property, you likely will be asked to enter into a Buyer Representation Agreement.

In most real estate transactions, in its simplest form, it is the seller that pays the Brokerage the commission.  However, there is a provision for commission in a Buyer Representation Agreement as well…and you should know about it.

ReadingMost Buyer’s don’t even read this clause, yet you could end up paying commission, so, it is important to read and understand the implications.

As a Buyer, you are agreeing that the Brokerage is entitled to be paid a commission of a certain percentage of the sale (usually paid by the seller).  However, the commission clause further states that you, the Buyer, will pay any deficiency between what the seller pays and what the Brokerage receives.

What this means is:  If an agent enters a percentage say of 6% in this clause, and upon the sale to you of the property of your choice the Brokerage is only paid 3% commission from the seller…you could be on the hook to pay the deficiency, in this case 3% (ie of $300,000 that could be $9,000).

Another example is, if you enter into a Buyer Representation agreement with an agent with Brokerage A at 6%, and during the term of that agreement you purchase a property through another agent with Brokerage B, or you purchase a property privately, you could be obligated to pay the full 6% to Brokerage A (ie of $300,000, that could be $18,000).

You need to be diligent with your agent so that you fully understand your obligations.  Ask questions!  Many listings offer different commissions…make sure that you know what kind of commission the brokerage is entitled to on the property that you have chosen and what your commission obligation is (if any) before you sign an offer to purchase.  You may find it in your best interest to renegotiate this Buyer Representation before you sign the offer.

Unless you make very specific commission arrangements (ie on a private sale) with your agent, my solution is:  Have your agent stroke through the commission portion of this clause and include a statement that the Brokerage will be “paid by the seller or the listing brokerage as per the listing agreement”.  This way you will have a comfort level that you will not be paying any commission.

EducateDon’t get caught paying commission without knowing about it…you need to read, understand and negotiate this clause with your agent.  Don’t let it scare you—just be an educated buyer!

I’ll review other clauses of this agreement and other points of this particular clause in future Blogs.

Here’s the clause in its entirety:

BuyerRepCommisson

Read before you leap!

Watch for my next Blog on….

Renting your Vacation Property

Don’t forget to send your comments, stories, or ideas, in the comment section below or via email at dimaline@amtelecom.net.

. .

. Kathy Dimaline is a Real Estate Broker for RE/MAX Grey Bruce Realty Inc.  The comments on this Blog are the opinions, only, of Kathy Dimaline and do not constitute any legal advice or legal opinion and does not represent the interests or opinions of RE/MAX Grey Bruce Realty Inc., brokerage.

© Copyright Kathy Dimaline, All Rights Reserved