Courtesy of Re/Max Canada
Buy or sell first?
Deciding whether to buy or sell first can be tricky. If your agent finds a buyer for your existing home, before you’ve found a new one, you may find yourself living out of a suitcase if convenient closing dates cannot be negotiated. If you find your dream home before you sell your old one, you may be forced to carry two mortgages at the same time.
To manage the buying and selling process speak to your agent and start your new home search as soon as your existing home hits the market.
Your agent can assist you whether you’ve already bought your next home or if you’re still looking. The use of clauses in the Purchase and Sale agreement such as, “sale of your existing home” or “purchase of a new home” can be added as conditions to agreements to ensure that you are not without a place to live. Using the “sale of your existing home” can affect your negotiating power as it is a difficult decision for many sellers to agree on.
There are many reasons why people choose to sell their homes, but every seller has one thing in common: to sell their home for the highest amount possible, in the shortest amount of time.
When you are ready to sell your home, take inventory of the reasons why you are choosing to sell. These factors will help play into looking for your new home, as well as give ideas for staging and small upgrades.
When should you sell?
Everyone wants to take advantage of the housing market when it comes to selling your home. Unless you are buying and selling strategically for investment, the best time to sell is when your existing home does not meet your current or future needs.
A key factor to consider is the economy. The economic health of a country affects many factors related to real estate. Mortgage rates are often influenced by the state of the economy. A higher interest rate may encourage you to stay with your current home as the increase in mortgage payments may change your financial situation. A lower interest rate may mean that you can upgrade to a larger home with a minimal impact to your current mortgage.
Keep in mind that holidays and weather may impact the sale of your home. Winter holidays and the peak summer season keep many potential buyers busy and not looking for homes. Buyers with school-aged children often choose to move during the summer to minimize the challenges with changing schools in the middle of the year.
Costs involved with selling
There are costs involved with selling your home. Some minor repairs and upgrades can make your home more attractive to potential buyers.
Here are some costs involved with selling your home:
- A professional home inspection
- Closing costs (lawyers’ fees or unpaid taxes)
- Mortgage discharge fees may be levied by your lending institution
- Sales commissions
- Staging based on recommendations from your agent
Choosing the Right Agent
Choosing your agent will connect you with a knowledgeable professional who is well versed in all aspects of real estate.
An agent who is an expert in your neighbourhood is the ideal candidate to assist in your home sale. An expert in your neighbourhood will be able to answer questions from potential buyers about the area, giving them an excellent idea of what your home’s location has to offer. Interview agents, and ensure that you are comfortable with their knowledge of your area.
Exclusive and Non-Exclusive Listing Arrangements
An exclusive listing arrangement means that you are granting your agent exclusive access to find a buyer for your home.
With this type of agreement, no other agent will bring potential buyers to your home, because only the listing agent is entitled to the commission. You can arrange an agreement with your agent to have your listing posted to the MLS after an agreed period of time. You may consider this type of arrangement in a seller’s market, where there are more people interested in purchasing a home than there are homes available.
A non-exclusive listing arrangement means that your listing will be posted to the MLS system and other real estate agents have the ability to bring potential buyers to your home. The advantage of this type of arrangement is the exposure of your home. Your listing will be syndicated to various websites, allowing potential buyers and agents to consider your home. Non-exclusive listings are the most common type of agreements in the Canadian real estate market.
Local market conditions can affect the sale of your home. Understanding the current real estate trend can assist you in making decisions while selling your home. There are three market states:
There are more homes on the market than there are buyers.
In this type of market buyers will spend more time looking for homes. There are more homes on the market, giving the small number of potential buyers more to choose from. The prices of homes can be stable or perhaps dropping. Seller’s will find that buyers have stronger leverage when negotiating.
There are more buyers than there are homes for sale.
With fewer homes on the market and more buyers, homes sell quickly in a seller’s market. Prices of homes are likely to increase, and there are more likely to be multiple offers on a home. Multiple offers give the sellers negotiating power, and conditional offers may be rejected.
There are the same about of homes for sale and buyers.
There is equal competition between buyers and sellers. This means that there are reasonable offers given by buyers, and homes sell within a reasonable time. With less tension between buyer and seller the prices of homes remain stable.
Your Asking Price
Before you put your home up for sale, you must first know what your house is worth. To determine your asking price you must consider comparable sales in your area and the current market condition.
An agent can gather information about sales in your neighbourhood, and based on that information they can assist you in determining an asking price that will accurately reflect the market and comparable listings.
Depending on the agreed upon strategy with your agent, your listing price may be slightly higher than the value of your home, however this allows for some negotiating space between you and potential buyers. If you are in a rush to sell your home, setting the price slightly lower than what your home is worth will attract attention. Some buyers may be concerned if the price is too good to be true.
Congratulations! The closing of your home means that you’ll be busy packing up your belongings and ensuring that you have all your arrangements made to move into your new home. Anything you agreed to sell in the offer you accepted must be left behind in the same condition at the time of sale.
Once the agreement is signed you and the purchaser are under legal obligation to close. If you decided not to sell your home, the purchaser has the right to sue.
If the purchaser decides to walk away from the deal, you can claim the purchaser’s deposit or sue for damages.
Chances are you’ve already bought your new home, or are in the process of looking for one
Ready to List
Your agent will draft a listing agreement with the details of your home. This will give you a comprehensive insight into your home for prospective buyers. Room sizes and the age of the home are just some details required to list your home. With this information your agent can list your home, and depending on your listing agreement your agent will post this information to various websites, such as; the Multiple Listing Service.
Condition of Your Home
With a critical eye, examine you home inside and out. Determine if there are any small repairs or underlying problems that you are aware of. Any small repairs that you are able to complete will help negotiate with buyers. If there are any major repairs, like a leaky basement, you will want to bring them to the attention of your agent.
Kitchen and Bathroom
Put extra emphasis on your kitchen and bathroom. Replace moldy shower curtains and clean mold and mildew off of bathroom tiles. Caulk if necessary. Repair leaky faucets and replace cracked toilet seats. Ensure that the toilet flushes properly. Make certain that the drains are unclogged. Everything should sparkle — faucets, floors, counters, mirrors. What can be cleaned should be!
In the kitchen, clean the stove and refrigerator organize the cupboards and wash the floor. Make certain your appliances work. Wipe the walls, touch-up paint or re-stick wall paper if necessary. Clean the sink and ensure that it drains properly and the faucet doesn’t leak. (When your home is shown, make sure there are no dirty dishes in the sink and don’t forget to take out garbage!)
Floors and Stairs
Check your floors and stairs for anything that needs to be repaired or replaced. You are able to remove and replace damaged tiles individually, and there are plenty of DIY fixes available at your local hardware store.
Doors and Windows
Exterior windows and doors quickly get a weathered look from exposure to the Canadian climate. Consider repainting any surfaces that appear faded or damaged. Also, review your interior window trim to see if a quick coat of paint can resolve any scuffs and smudges.
If your basement is finished, tidy it in the same manner as the rest of your home. An unfinished basement is an opportunity for you to showcase the potential your home has to a potential buyer. If you currently use your basement as a storage area, organize any clutter and store boxes neatly to best showcase your home.
An organized and clean home will appear larger. Ensure that clutter is not just hidden, but organized is the best approach. Buyers will look in drawers, cabinets and closets. Hiding the clutter in those places will make them seem smaller and overcrowded.
What your Agent Will Do For You
Before photographs are taken of your home your agent may give an impartial analysis of you home. This will include a detail on how your home relates to “competing” homes on the market while considering current design and trends that attract buyers.
To assist in selling your home your agent will market your home using a variety of tools. The Multiple Listing Service is the primary tool for all real estate agents. This service allows for your home to be marketed on a wide number of sites. The MLS® allows all buyers to view your listings, as well as other agents who are trying to match buyers with homes. Your agent may also choose to supplement internet marketing with classic newspaper advertising, and of course a For Sale sign outside your home.
Your agent may arrange an open house to showcase your home on a single day. This allows for multiple potential buyers to view your home in a short period of time. Your agent will act as their guide through the home while informing them about the neighbourhood, and attributes of your home.
Potential buyers can arrange a viewing with their buyer agent. The buyer agent will arrange a time with your agent, who will confirm the time with you. These kinds of arrangements may give you a little time to tidy your home. Keep in mind you can always reschedule and suggest a better time to have your agent show your home.
Discuss with your agent your minimum conditions, acceptable closing dates, and the lowest price you’ll accept from a potential buyer. Let your agent know of any additional items that you are willing to offer as leveraging power. With this information your agent can work with the potential buyer’s agent to create an offer that will be acceptable to you.
The Seller’s Viewpoint
Buyers interested in your home will submit an offer to your agent through their agent. Your agent will review the offer with you to ensure that you understand all the conditions. Before you accept or sign back the offer, you may wish to clarify the offer with your agent and if you have any further concerns you can have the agreement reviewed by a lawyer.
Your offer will contain:
- The names of the potential purchaser
- Your name
- A description of the property
- The conditions they wish to attach to the purchase
- Closing date
- Home inspection
- An irrevocable date
- Possible mortgage details
Remember that the offer you receive will also include funds that you are to pay for such as your lawyer, real estate agent commission, the balance of your mortgage and outstanding taxes. Some utilities and taxes will have been prepaid, meaning you’ll have some additional funds.
Here’s what your lawyer will do to assist you in making the sale of you home hassle-free:
- Review the purchase agreement
- Prepare transfer of title documents and inform the purchaser’s lawyer
- Review mortgage transactions
- Close the transaction
- Pay the appropriate commissions
- Pay outstanding claims against the property
- Arrange for the mortgage to be paid (if necessary)
- Forward the balance of the money from the sale to you
- A complete statement reporting all transactions
Evaluating the Offer
Decide on the lowest acceptable price before you receive the first offer. When you receive the offer you will be able to take into consideration the price, as well as the other terms that the purchaser is requesting. Carefully look over all terms and conditions with your agent to ensure that the offer is understood. Any questions about the proposed offer can be clarified through your agent.
Accepting the Offer
Once you’re satisfied with the terms and conditions of the offer, you can accept it. The purchaser will pay a deposit to solidify the agreement. The deposit will be held and when the deal is closed it will be applied to the commission owed.