Recently I had a call from a blog reader who thinks a family member has a gauranteed sale agreement with their REALTOR. Of this there should be no confusion.
You either have a Guaranteed Sale agreement or you don’t.
Below are the rules directly out of the Real Estate Act of Alberta as it pertains to all licensed industry members who may provide a Guaranteed Sale agreement. If they are not licensed industry members, builders or investors who prey on people (mostly people selling on their own) then these rules do not apply to them.
If you are getting involved in a Guaranteed Sale agreement their should be no confusion. Please take your time and carefully review what you are getting into. Many brokerages offer them and some have little or no strings attached, while others have more strings then the Edmonton Symphony Orchestra.
Just know what you are getting into and remember if it sounds to good to be true it probably is.
The following excerpt is directly out of the Real Estate Act.
Guaranteed sale agreement
20(1) In this section, “guaranteed sale agreement” means an agreement in writing under which an industry member or another person on behalf of or to the benefit of an industry member undertakes to pay to the seller of real estate within a fixed or determinable period of time a fixed or determinable amount of money in respect of that seller’s real estate.
(2) An industry member who enters into a guaranteed sale agreement or has another person enter into a guaranteed sale agreement on behalf of or to the benefit of that industry member shall maintain a separate trust account in a bank, loan corporation, trust corporation, credit union or treasury branch in which money payable under this section must be deposited.
(3) When a guaranteed sale agreement is entered into by an industry member or other person on behalf of or to the benefit of an industry member, that industry member shall deposit into the trust account maintained under subsection (2) not less than 5% of the total amount that may be payable under the guaranteed sale agreement.
(4) When money is deposited under subsection (3), it must be held in trust for the seller and must be
(a) paid to the seller or to some other person as directed by that seller as part of the total amount payable under the guaranteed sale agreement,
(b) forfeited to the seller if the seller is not paid in accordance with the guaranteed sale agreement, or
(c) returned to the industry member when, pursuant to the terms of the guaranteed sale agreement, there is no longer any money payable to the seller under that guaranteed sale agreement.
(5) Subject to subsection (6), money deposited under subsection (3) must remain on deposit in Alberta until it is paid out under subsection (4). (6) Section 25(4) applies in respect of a trust account under this section.
(7) When a deposit is forfeited under subsection (4)(b),
(a) the forfeiture does not prejudice any action that the seller may have against the industry member or other parties to the guaranteed sale agreement, and
(b) the money forfeited may be applied toward any sum that the seller may be entitled to receive as damages arising out of the non-performance of the guaranteed sale agreement.
(8) When an industry member or other person who enters into a guaranteed sale agreement with a seller purchases the seller’s real estate pursuant to that sale agreement, no commission is payable to that industry member or other person by that seller in respect of that trade
http://www.reca.ca/industry_standards/pdf/real_estate_act.pdf .
[Quote]
(8) When an industry member or other person who enters into a guaranteed sale agreement with a seller purchases the seller’s real estate pursuant to that sale agreement, no commission is payable to that industry member or other person by that seller in respect of that trade
[/QUOTE]
Please correct me if I am wrong, but I read that and does this mean that the buying agency cannot collect a commission? I know that they will factor that into the guaranteed sale price but still would like clarification.
Cheers,
Sean
Sean, you read it wrong. What it says is that if the home doesn’t sell during the listing period, and the industry member (or other person guaranteeing the sale) ends up purchasing the home at the price that was agreed to, then the industry member does not get a commission.
If the home is sold to anyone other than the person guaranteeing the sale (unless that person is excluded from the contract) then the industry member(s) is/are paid the commission agreed to in the listing contract.
Thanks Sara! I read it right but asked my question wrong ;p Guess i meant to ask… If the agency buys the house at the guaranteed price do they also get a commission on top (or off) the sale as well.
But thanks again you cleared it up for me
Cheers
Two questions:
Why would a REALTOR offer a Guaranteed Sales Agreement and offer a price close to market value?
Would that REALTOR work really hard to sell the property for more than the guaranteed amount?
I can see that, as a seller, I may want to test the market, and then finally settle for whatever amount was guaranteed….
But would the agent want to be stuck with a property that’s difficult to move ?
I can see why the Real Estate Act saw the need to regulate this scenario.
Thanks for providing this type of information, Sheldon !
I usually avoid doing business, or even contacting, any firm which does not have
a full contact address and phone number on site. Simple fact is that putting your contact
details on the site fosters authenticity and trust
I’ve never understood making it hard for people to find you.