#1 PREPARING TO SELL
Selling a home isn't something to leave up to chance. Without a REALTOR®, this major transaction could quickly become one of your largest regrets. Realtors are experts at the following:
- Maximizing your advertising budget to get top dollar for your property
- Deciding the best time to sell your home
- Understanding and catering to the buyer’s market
- Seller's market – when there are many people looking for homes, but there are not many available on the market
- Buyer's market – when there are many homes for sale, but not many people are buying them
- The time of year can also affect how quickly you can sell and buy a property
- Determining the best price-to-speed ratio for selling your home
- Understanding the seasons
- winter sales tend to be slower, spring sales are tend to be quicker
- If you sell your home at a low price, you’re probably buying at a low price; if you are moving to a larger home, this is advantageous
- If you are downsizing from a bigger home to a smaller space, a realtor can assist by determining the market and when is the best time for a transaction
Buy First Or Sell First?
Many people are able to time their sale and purchase so they happen on the same "closing date."
- Sometimes you can time your current home's sale with the future home's purchase
- Can make the sale of your home "conditional"
- Can try to extend the "closing period" to have more time to find your next home
- Smart to enlist a REALTOR® for professional services, just like you would hire a mechanic or dentist
- If you find the perfect new home before you sell your current home, you can talk to your mortgage lender about “bridge financing.” This is when your loan company agrees to lend you the down payment for your new property while you are still paying for the mortgage on your current home.
Be Financial Ready
Be ready to work with the large amount of money involved in your real estate transaction.
Still Have A Large Mortgage? Consider The Following:
- “Discharge” your mortgage – use money from your current home’s sale to pay off the mortgage you owe.
- With an “open” mortgage, you can pay the full amount outstanding without penalties.
- With a “closed” mortgage, a penalty will likely apply and depends on some factors including the remaining term of the mortgage
Is Your Mortgage Portable?
A “portable” mortgage means you transfer your current mortgage arrangement to your new home without penalty.
This is advantageous if the interest on your mortgage is lower than existing rates. However, if your new home is more expensive and requires a larger mortgage, you will have to borrow the extra money at current market rates.
Perhaps your mortgage permits the buyer of your home to “assume” your mortgage. This is an attractive selling feature if the interest rate is lower than existing rates.
You could also become a mortgage lender. If the buyer is having trouble arranging their financing, you may consider lending directly to them. This plan is called a “vendor take back” mortgage. It’s often used to move a property in a slow market and it is incredibly complicated to set up. Be sure to consult your lawyer before choosing this option.
If you find the perfect new home before you sell your current home, you can talk to your mortgage lender about “bridge financing.” This is when your loan company agrees to lend you the down payment for your new property while you are still paying for the mortgage on your current home.
Capital Gains Tax
Capital gain refers to how a property increases in value over time due to the housing market.
If the home was your primary residence, you will not have to pay taxes on any capital gain.
However, if you had tenants living in part of your home such as a basement apartment, a capital gains tax will apply to a portion of this income.
The capital gains tax would also apply to a secondary property such as a vacation or investment property.
Seek professional assistance for help in this area. Be aware that GST/HST taxes will apply to hiring a consultant for their services.
Finding The Right Realtor
We’ve been outlining the many ways a realtor is essential when negotiating a property sale.
How to choose the best one? Shop around, talk to a few, get quotes for their services, and analyze how comfortable you are in trusting him/her with your real estate negotiation.
- You can go back to a realtor you’ve used before.
- You can choose a local contact by writing down names and numbers from “for sale” signs.
- Ask for referrals from family and friends.
- Visit a local real estate office
- Interview candidates. Don’t be afraid to ask questions. It’s important to find the right partner for one of the biggest transactions of your life.
#2 LISTING YOUR HOME
Determine Your Home’s Selling Price
- Asking the right price attracts many potential buyers who may compete with multiple offers to consider. This gets you the maximum return for your home.
A Realtor Can Help You Set The Right Price.
- Setting a price too low means you lose money in the transaction
- Setting a price too high means buyers will not consider making an offer which could leave your house on the market for too long
- When you lower the price, people assume you are under pressure to sell, and lower their offers even further.
A Realtor Knows And Considers The Ever-Changing Factors Involved With Home Buying.
- Larger families could be looking for more room
- A new large business is setting up shop nearby
- Interest rates may be at an attractive rate
REALTORS® Can Determine Your Home’s Value In The Current Housing Market
- They do extensive research
- They use a real estate board’s MLS system to compare your home to similar homes
- They help you be prepared for the interest and activity that happens when your home goes up for sale
Sign A Listing Agreement
- This is a legal agreement for your realtor to represent you and the transact the sale of your home on your behalf
- It defines your relationship with your relator and the extent of his/her authority
- It provides detailed information about your home
- It forms the basis for drafting offers on your home
Highlights Of The Listing Agreement
- Authority – the legal relationship between you and your realtor and the time limit in which to sell your home
- Exclusive listing – means only your realtor can find a buyer for your home
- Multiple listing – allows your home to be placed on a MLS system on the internet
- Price – you have the final say, but consider your realtor’s advice carefully
Determine Your Home’s Asking Price
Real estate commission
- Could be a flat fee or a percentage of the final sale price
- Is the agreed compensation between you and your broker
- Includes an itemized description of your property
- Dwelling’s age
- Construction style
- Number and size of rooms
- Other selling features (newly renovated kitchen)
- legal information (lot number, land survey, zoning code, etc.)
- Financial information
- Minimum deposit required
- Low-interest rate mortgage that can be assume
- Completion date – how long you need to move out once the house is sold
- How your home will be shown – your realtor can make the viewing appointments on your behalf. Be sure to add specific instructions for these visits as needed.
What Is Included In The House Price?
- Chattels – moveable items like washers, dryers, microwaves, and window blinds
- Not always included, but can be a part of the deal at the seller’s discretion
- Fixtures – permanent improvements like central air conditioning, upgraded lighting, wall-to-wall carpets. Fixtures are assume to be included with the house unless the seller makes a note otherwise.
#3 MARKETING YOUR HOME
Prepare Your Home For Sale
Attack the chores list. By presenting your home at its best, you can attract big offers.
Let your realtor point out things you may not notice and which may detract from your home. Be sure to address all the little imperfections that could give a potential buyer a reason to walk away. Print out a copy of our Is Your Home Ready? – a checklist for a thorough tour of your home.
Get Rid Of Clutter
The house will feel bigger and more inviting.
- Clear out closets
- Remove bulky, unused furniture
- Purge your belongings – toss, donate, or sell unwanted and unused items
Cleaning is the most cost effective way to attract buyers. Sparkling floors, windows, walls, doors, and baseboards go a long way to impress visitors.
Be extra tidy in bathrooms and the kitchen. Once it’s clean, keep it clean. Be prepared for the last minute visitors.
Repair as much as you can. Leaky faucets, ceiling cracks, and torn screens detract from your home’s value.
Depersonalize Your Home
Take away your personal memorabilia:
- Family portraits
- Anything that is too much about you
Removing your influence makes it easier for buyers to envision themselves living in this space.
Neutralize strong colours and wild wallpaper. Painting your home in neutral colours will enhance a room’s size and make it look more inviting. Besides cleaning, painting is the next most cost-effective way to increase your home’s appeal.
Add Some Beautifying Touches
You don’t have to spend a fortune, but consider affordable touches:
- Replace old, tattered curtains
- Replace focal pictures with mirrors for a more spacious feel
- New houseplants are attractive
- Trim and prune your outside space
- Plant new flowers
Don’t get carried away, though. Ask whether your improvement project will make your home more desirable and whether the improvement costs will increase its value.
Let Your Realtor Market Your Home
- They are experts
- They have a variety of tools and methods to showcase your property to potential buyers
The “For Sale” Sign
This sign continues to be one of the most effective ways to advertise your home for sale.
Your realtor may choose a variety of the following:
- Newspaper classified ads
- Ads in real estate publications
- Property listings on cable TV
- Neighborhood mailers
The Power Of The Internet
If you decide to list your home on an MLS system, you can also advertise it on www.realtor.ca – Canada’s most popular research tool for residential real estate.
Over 85% of Canadians start their home search on the internet.
Realtors are also expert networkers and are part of an extensive community of professionals helping sellers and buyers to connect.
Have An Open House For Realtors
This is an efficient way to attract realtors to see your home and keep it in mind for their potential buyers.
Have An Open House For Everybody
Many buyers want to get a feel for the neighborhood before they commit to working with a realtor. Open houses for the public allow passersby to visit your house and decide if it’s a potential space for their next home.
Lock Away Valuables
Most people are honest and courteous, but don’t invite temptation. Lock away jewelry, cameras, and other small valuables. You can also ask your realtor to record each visitor’s name and phone number for added security.
Attend To Any Hazards
Look for trip hazards, broken equipment or furniture. Avoid cooking foods with strong aromas. Nobody wants a house with odours.
The Best Way To Help:
- Don’t be there; people can’t envision living in your space if you are present
- Use a “lock box” so that your realtor has access to your home. A "lock box" is a small, secure box that's affixed to your front doorknob. It's a mini safe with a key to your house inside.
- Be patient. Hopefully, you will get the great offer soon.
#4 CLOSING THE SALE
Add A Lawyer To Your Team
- s/he can handle the legal documents involved
- shop around for someone with experience
- ask about their fees
- get an estimate of the legal costs involved
You May Already Have An Estate Lawyer
The most logical candidate is the lawyer you hired when you bought your home. S/he is already familiar with the property and could easily draft the required documents.
Other Ways To Find A Lawyer
Ask people you trust for recommendations – friends, family, business associates.
REALTORS® can give you the names of several lawyers so you know your home will be in the right hands.
Your lawyer should help you review important documents you have to sign and answer any of your questions about these papers. Know exactly to what you are agreeing.
Receive An Offer
You’ve been working hard towards this point. Now you get to see how much your efforts are paying off.
Your Realtor Can Walk You Through The Process
Your realtor will present every offer that is submitted for your review. The buyer’s realtor may be present, too. However, the buyer will probably not be there, so you can review and respond to the offer without any awkward pressure. Stay calm, whether good or bad, and stay focused on what you want to do next.
Discuss The Offer
You may ask your realtor for advice regarding the offer. Maybe it’s time to celebrate, or it could be time to plan a counter offer. If your partner and family are involved, you can request private time to discuss matters. At this point, you have three options:
- Accept the offer – sold!
- Reject the offer
- “Sign back” the offer – negotiate some more
Reasons Why You Want To “Sign Back”
- You want more money that what was offered
- You want a different closing date
- There are other details with which you’re not satisfied
Points Of Contention:
- Buyer to obtain financing – this means the buyer doesn’t have a mortgage in place yet
- Approval to assume mortgage – you have a great mortgage rate and the buyer want to take over these payments
- Sale of purchaser’s home – they are still trying to sell their home and don’t want to pay for two homes at the same time
- Property inspection – this is becoming standard industry practice, so to refuse this condition could ruin the sale of your home.
Close The Sale
- Before your house is truly sold, your realtor and lawyer have to help you through the final steps known as the “closing.”
- This is where your realtor and lawyer take care of the time-consuming and complicated legal work.
Canada's Money Laundering Reporting Requirements
By the time you accept an offer, your REALTOR® will also advise you of reporting requirements by FINTRAC, the federal agency responsible for administering Canada's Money Laundering and Terrorist Financing legislation and regulations. Your REALTOR® is required by federal law to complete a client identification form, and must ask you as the vendor or seller for verified ID such as a driver's license or passport. You can find out more on the FINTRAC web site at http://www.fintrac-canafe.gc.ca.
Your Closing Checklist:
- Advise your lawyer that an agreement has been signed; make sure your lawyer is ready to close the transaction
- Immediately start satisfying any conditions of the agreement that require action on your part
- Notify your lawyer and lending institution whether the buyer is assuming your mortgage
- Notify the utilities, telephone, and cable companies about transferring or removing service. Often, your lawyer handles the utility transfer.
- Cancel or transfer your homeowner’s insurance
- Contact a moving company to arrange your move on or prior to the closing date.
- Fill out a change of address card at the post office and send out your new address information. Contact the Ministry of Transport about updating your driver's license.
- Notify your realtor immediately if anything about your property or situation changes
Contact With Your Lawyer
- If you plan to pay off your mortgage with proceeds of the sale, your lawyer will obtain a statement from your lender showing your outstanding mortgage balance and any penalties owing to discharge the mortgage
- Before closing, your lawyer will help you sign over the title of your property to the buyer.
- On closing day, your lawyer will receive and distribute the proceeds from the sale, pay off your mortgage and other costs, and give you a cheque for the net proceeds.