Selling your home is one of the biggest financial transactions of your life. Perhaps you have heard this statement before and you might even think it is overused. For most people, however, the statement is accurate and applicable. If you are one of these people and you have not sold a home before, you should know several things before the “For Sale” sign goes up on your lawn.
You Know Your Home Best
Before you decide to start the home selling process sit down and make up a list of why you like your home. What are the best features and what attracted you to it in the first place. Are there any things that you do not like? Can they be easily fixed? By doing this you will be able to identify the best features of the place you live in and, perhaps, minimize or eliminate the things that are not attractive about it or do not like about it. This information will come in handy when it comes time to list the property. Buyers often are looking for specific features and letting others know about all of the features that appealed to you may be the ticket to generating interest from others and getting them to view your private sanctuary.
Should You Get a Home Inspection?
Some people believe that getting a home inspection before you sell will help you understand better what you have so that you can fix anything that might be identified by the inspector as requiring repair or replacement. If you have maintained the home well this expense is likely not necessary but it is a good idea to have copies of any major repair bills and, if you did any major renovations, copies of the permits that were required. Remember that most educated buyers will elect to have a home inspection done before they commit to buy. Minor defects found during an inspection may or may not be important to specific buyers so in most cases sellers will likely not elect to undertake getting an inspection of their own home before they put it on the market
Before you List: What is Your Home Worth and What Should it Sell For?
Pricing a home for the market is one of the most important decisions that a seller will have to make. In order to price a home properly you need to know the local real estate market conditions. Some can favour buyers and others can favour sellers. There can also be variations within a specific market based on type of home or location.
Some articles of this nature discuss having an appraisal done on a home. Appraisals are not inexpensive and they may or may not be helpful in establishing a price. Most real estate appraisers will state that an appraisal will provide a Market Value estimate of your property based on recent comparable sales in the area. Note the word estimate. Also consider that it is most likely that the comparable sales used will most likely be statistical references only and that the appraisal will most likely not have visited the other homes and have first-hand knowledge of them. There are three provinces in Canada that require appraisers to be licensed. They are: Alberta; Nova Scotia; and New Brunswick.
Beyond appraisals there are other forms of home value estimates and property valuations that some people use as metrics for home valuations. They include: actual value; insured value; lending value; assessed value; and market value. It is important to know and understand the differences between each so that sellers do not use the wrong metric when pricing a home for sale.
The best way to learn the value of your home is to contact a competent and reputable real estate agent who do business in your area. Those who have expert knowledge of the local market area should be able to provide you with advice on correctly pricing your home for the current market conditions.
Do you need a realtor?
You may decide to market and sell your home by yourself, but remember that selling a home is not like selling a car. There are many additional considerations that go along with selling a home. Unless you are familiar with the many that could come back and bit you if things go wrong during the sale, you should consider having professional help from someone whose business it is to help people buy and sell homes. If you decide to use a realtor, pick someone you trust and whom you are comfortable with.
Should you have a lawyer?
Selling and buying a house is complicated and the potential for disaster is great—one mistake could cost a lot, or result in months or years of stressful litigation. Further, there are many possible types of real estate fraud and to protect yourself you should hire a lawyer. Likewise, you should consult a lawyer before you sign a listing agreement with a realtor to ensure the terms being sought by the realtor are accurate, fair, and legal. An alternative is to obtain the services of a notary. Knowing and understanding what each can and cannot do and how they can help you process the sale and transfer the title of the property is important.
What is a listing contact?
It is the contract between you and your real estate agent with the terms for selling your house. Today, most listing agreements for residential sales are standardized forms from the local real estate board and are multiple listing agreements. A multiple listing agreement means your agent can advertise and show your home to realtors in their own agency plus realtors with other agencies. This allows many potential buyers to learn about your home. While the length of this agreement can be negotiated competent agents will prefer a specific minimum time based on the local market conditions.
Remember that the agent is taking on risk and expense when they agree to list your home. If the home does not sell within the listing period they stand to lose the time and money that they spent on marketing your home. If your house doesn’t sell within the agreed listing period, you can either extend the term of the listing agreement or change agents. Having said this, it is important to listen to the advice of the agent during the listing period. If the house is not either getting enough showings or any offers there is always a reason. Competent agents should be able to tell you why and make recommendations on how to deal with these issues.
What do you pay the agent?
The listing agreement sets the amount of the agent’s pay, or commission. In BC, commissions can and do vary, so it’s a good idea to shop around. Some agencies charge a flat fee. Others charge a percentage. For example, they could charge 7% on the first $100,000 of the sale price, plus 1.5% on the rest. This is not decided by or paid to the listing agent. It is paid to the listing brokerage and shared with the buyer’s brokerage. As well, about a third of it goes back to the government in the form of taxes paid on income that is paid out to the listing and selling brokerages and their agents.
Within each brokerage there are a number of people who are involved in the real estate transaction. They work behind the scene, and they each have to get paid for the work that they do. In addition, the brokerage has to pay many other expenses to run their business. This is done through a share of the overall commission paid to each individual brokerage. At the end of the day the listing agent only gets a share of the overall commission and out of it they have to pay their many ongoing monthly fixed and variable expenses associated with their businesses. Most realtors in BC are independent contractors and they generally have most of the business expenses associated with any other small business.
Think of the real estate commission being paid for real estate services as being analogous to the sale price of a retail product. When you buy a $3,000 sofa from a sales person, that person does not get $3,000. The retailer often has to pay a supplier who may be paying a wholesaler who may be paying a producer for the product. Shipping costs, handling fees and other expenses are charged along the way from the producer to the retailer. There are many people in the retail product chain who effectively take a slice of the sale price and this includes the government who always gets a fairly significant piece through our taxation system. It works the same way in the service industry.
Do you have a mortgage on your home?
If you have a mortgage on your home, you will have to contact the bank, credit union, or other lending institution that holds the mortgage before you sign a listing agreement with a realtor. This is done to find out certain important information, such as:
• How much do you owe on your mortgage?
• Can the buyer assume (meaning take over) the mortgage? If so, will the buyer need to have a certain income to qualify?
• Can you pay off the mortgage? If so, is there a prepayment penalty or any other type of fee associated with paying out your mortgage early? Sometimes a lending institution will waive the penalty if the buyer takes out a new mortgage with them, or if you take out a new mortgage with them. Get the answers to these questions in writing to avoid any unpleasant surprises later on.
What happens after you sign the listing agreement?
If someone offers to buy your home, your agent will bring you an offer to buy it. It is generally written on a standard form provided by the local real estate board. The offer will often be conditional on a number of things. The agent should review each part of the offer with you in detail. The offering price, deposit, included items, possession and completion dates and many other standard and unique terms and conditions need to be reviewed to understand the offer. As well, there are some situations where the offer should also be reviewed by a lawyer. Offers can be countered, accepted or rejected. Just because someone brings you a full price offer does not mean you have to accept it. Here again local market conditions can and do affect offers. These are all of the types of things that your agent should be able to fully discuss and advise you on.
Which things in the house are included in the sale?
When someone buys your house, a real estate contract will have a section on INCLUDED ITEMS and an area for EXCLUDED items. Included items generally includes any buildings, improvements, fixtures, appurtenances and attachments in the standard contract language and it also specifies a number of things specifically such as blinds, awnings, screen doors, etc. The contact also has an area where other specific items can be included or excluded such as the washer, dryer, fridge, and stove, etc. It is important that this section of the contract be as specific as possible to ensure that what is included and not included is clear to both parties to the contract.
What are “subject to” clauses?
Generally, they are conditions that have to be met before the deal to buy your house proceeds and the house is considered sold. Common ones include the buyer getting financing (for example, a mortgage) and the house passing a home inspection. If you get an offer that is subject to the buyer getting financing or any other condition, make sure the buyer has only a short time to remove the condition. Your home may be off the market for the time it takes the buyer to remove the condition, and you will likely want to keep that period short. Having said this the condition removal period can be driven by factors beyond your or the buyer’s control such as how long it will take to obtain and schedule a home inspector during a busy time of the year.
Selling a home in BC is a process that starts with an understanding or your home, motivation and the local real estate market and it often involves a number of different phases and it requires some specific knowledge and skill sets. If you are planning to sell a home in the Comox Valley contact the Brett Cairns real estate team for professional help throughout the entire process.