What is the difference between me and an ordinary Realtor?
Brokering a Bed and breakfast is different than buying/selling a typical home. First reason is that a buyer is purchasing a house, a business, and most importantly a lifestyle. There’s a lot more involved in assisting the buyer in obtaining the knowledge they need and feel comfortable with for running a bed and breakfast. I end up doing a lot of work via e-mail and on the phone and actually very little showings of real estate -- which is sort of the opposite way of how regular real estate is sold. My knowledge is a combination of real estate, local by-laws affecting bed and breakfasts, tax implications and how to operate/market a bed and breakfast once open.
The question I never know how to answer..
My friend is an agent in my home town, I am thinking of moving to the Niagara Region, he/she is a registrant in Ontario. Should I use her to help me, she needs a break?
All I can say (write) is to copy what was in the latest RECO update course I took -one of the examples seemed to be very appropriate to a couple of experiences I had recently
Trading outside your expertise
Jane is a real estate salesperson who has built up a successful career which is now based mostly on referrals and repeat business. During her time as a registrant, she has dealt exclusively with leasing and selling single family homes in the downtown core of the city she lives in. However, some of her past clients are starting to ask her to help them lease, sell or buy commercial properties. It is tempting especially as the commissions could be much larger than she is used to.
The knowledge and experience required and issues connected to the lease and sale of a business or commercial property are very different to those of selling single family homes. Depending on the commercial property or type of business, these differences extend to:
Analyzing complex leases that may include base, percentage and additional rent;
Analyzing financial statements and franchise agreements;
Understanding office, retail, industrial markets and building designs as well as user/ investor needs and requirements;
Valuation techniques which may use direct capitalization, discounted cash flows, asset valuation;
Capital cost allowance;
Confidentiality agreements; and/or
Preparing, explaining and negotiating commercial agreements and their clauses.
REBBA 2002 Code of Ethics is very clear about a registrant having the necessary knowledge, skill, judgment and competence when providing services to a client. If you do not provide services in this manner or do not advise your client to seek services and advice from someone who has the necessary competence, then you may well be in violation of the REBBA 2002 Code of Ethics including Sections 5, 6 and 8 as outlined below.
It is clear that the salesperson (Jane) in the opening paragraph has no experience in selling or leasing commercial properties. As such, she should decline to list, sell or lease these kinds of properties, but does have other options such as:
Referring the client to a registrant who is experienced in dealing with commercial properties.
Team up with a registrant who specializes in selling and leasing commercial properties in order to gain the necessary experience that will protect herself and her clients.
While this topic has focused on a salesperson who sells residential homes wanting to sell and lease commercial properties, there are many other situations in which a registrant should decline to provide services to a potential or current client because of a lack of knowledge, experience or competency. Such situations may include:
A registrant who only sells single family homes and is now being asked to help in the purchase of a condominium.
A registrant who only sells single family homes in urban subdivisions and is now being asked to help in the purchase of a waterfront cottage.
A registrant who only sells low priced properties and is now being asked to list a multi-million dollar property.
A registrant who is being asked to help a client buy in an area that registrant is not familiar with.
The bottom line is that the registrant must determine whether he or she can provide the necessary competent service to a client. If the registrant cannot, then it is important to avoid any violation of the Act by not proceeding with the service and making alternative arrangements, some of which are suggested above.
Now purchasing a B&B is NOT as complicated as purchasing a company, there however some interesting issues.
In the Niagara Region there are a couple agents that have or did own B&Bs, I am not alone. I am just the only one who has put as much information together as possible to help you make an informed decision. I am sure your friend knows that they do not have the experience and should by all accounts step aside.
The informaition on this web page concerning bed and breakfasts is based on knowledge concerning properties in Niagara on the Lake, Niagara Falls, Niagara Region. No warranties or representation concerning properties for other parts of Canada.