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You get paid when the deal closes. In almost all cases your fee is paid from equity in the seller’s home. A seller who has no home equity certainly complicates things and can leave you wondering how you will get paid.
The only way to avoid working with a client who can’t pay you is to validate their home equity. This validation will occur at different points in time depending on whether you are representing a buyer or a seller.
When representing the seller, you hope that this information will be uncovered at the interview stage – however in some cases it is not. This is why you can run a search on any new property you list to validate both the list value that the seller has in mind and also view registered mortgages. This can give you an idea as to whether or not there is sufficient equity to pay you.
If it turns out that there is a question as to whether there is sufficient equity to cover fees, you are in a position before you accept the listing and begin incurring expense to market it, to speak to your client about the outcome of the search. They may then acknowledge that there is an issue or prove that there is some new information that you are unaware of that overcomes the challenge.
When representing a buyer who is interested in a property, at the offer stage or even before the offer, you should run the same search mentioned in the seller scenario to validate value and registered mortgages.
If it turns out that there is a question as to whether there is sufficient equity to cover fees, you can contact the real estate sales professional on the other side to make financial arrangements for your fee to be paid on closing.
In either scenario – if it turns out that there is no equity to cover fees, the buyer or seller is going to have to come up with the money to pay you. Because you don’t get paid until the deal closes, this leaves you very vulnerable because each deal represents time and expense. Taking the steps to do some of your own due diligence will greatly mitigate instances of identifying clients who can’t pay you before it is too late.
Don’t get stuck without a paycheque come closing day. GeoWarehouse has the tools to help you validate homeowner information before a deal even gets off the ground. Visit us online today at www.geowarehouse.ca.