Selling a home
Selling your home is a big decision and the transaction can be complex and challenging. Some helpful information can be found here.
Below you will find all the information needed as a seller to make informed decisions.
Whether you’re moving to accommodate your growing family or looking for a smaller space to be your empty nest, selling your home is a big decision. To help you make smart decisions, it’s important to think with your head and not your heart. The Real Estate Council of Ontario (RECO) shares their tips for being home smart when you’re looking to make the sale.
Don’t be tempted to hire the first real estate professional you meet. Make sure the fit is right, check their references and visit the RECO website to confirm their registration.
UNDERSTAND WHAT YOU’RE SIGNING
Before you sign a listing agreement with the brokerage, ensure you know what it means, how long it will be in effect and what the different clauses mean. Ask questions and seek independent legal advice if you’d like a second opinion.
SHOW THE FACTS
Include all your home’s details in the listing, from the square footage to recent renovations to items that are and aren’t included (water heater, appliances, drapery, etc.).
PLAN YOUR OPEN HOUSE WISELY:
Be proactive. Speak with your real estate professional before the open house to set ground rules and identify ways to protect yourself and your property.
MINIMIZE THE RISK
Remove all valuables and securely store anything with your personal information, like credit card statements and receipts.
KNOW YOUR OPTIONS
When reviewing offers on your home, the details of the offers will remain confidential between you and your real estate professional. You may get multiple offers, and your real estate professional is there to help you make the best choice.
Remember that there are closing costs associated with selling a home: real estate commissions, legal fees, moving expenses, and more.
EXPECT THE UNEXPECTED
Does your closing date on the sale align with when you’ll be moving into your new home? Have a contingency plan in place in case the dates don’t match up.
A registered real estate professional can help you navigate the many steps and decisions involved in the home selling process.
Commissions and fees
Arrangements can vary. Commission and fee arrangements come in three forms:
- A fixed amount
- A percentage of the sale price
- A blend of a fixed amount plus a percentage of the sale price
The most common arrangement is a percentage of the sale price.
Arrangements where the percentage rate decreases as the sale price increases are permitted. For example, a brokerage could set a commission rate of 3% for a sale price up to $250,000 and 2.5% for a sale price over $250,000. However, the percentage rate cannot increase as the price increases – it can only remain fixed or decrease.
In addition, commission rates cannot be based on the difference between the listing price and sale price. For example, the commission arrangement cannot specify a different rate if the property sells for at least 10% over its listing price.
Fees and commissions can vary:
Fees and commission rates are not fixed or approved by the Real Estate Council of Ontario, government authorities, real estate associations or real estate boards. It is the brokerage that determines the fee structure and rate.
While you may be working directly with a broker or salesperson, commissions are payable to the brokerage. If you are asked by an individual to make a direct payment to someone other than the brokerage, contact the brokerage immediately.
Home buyers and sellers have a broad range of choices when they look for a real estate professional. Consider your options and ensure the person you choose will provide the services you need at a fair price. Keep in mind that, as with most things, the cheapest deal is not necessarily the best deal.
Prices and service levels vary, and communicating clearly ahead of time and getting everything in writing can help avoid problems later on. Always read what you are signing and consider seeking legal advice if you do not understand.
Dealing with competing offers
In certain market conditions, consumers may find that more than one buyer is interested in a property.
This is a competing offer situation and creates unique conditions in a real estate transaction. Both sellers and buyers need to consider how to respond when presented with a competing offer situation. Working closely with your real estate broker or salesperson will ensure that you understand the process.
In Ontario, the seller’s real estate broker or salesperson is required to disclose the number of competing offers to all buyers who have submitted a written offer. However, the terms and conditions of each offer are confidential to the seller and their broker or salesperson.
WORKING WITH A REAL ESTATE BROKER OR SALESPERSON
The seller’s real estate broker or salesperson represents the interests of the seller in the transaction. The decisions about how offers are presented and responded to, as well as which offer is accepted, are made by the seller.
The buyer’s real estate broker or salesperson represents the interests of the buyer in the transaction. The buyer makes the final decisions related to their offer, including the important decision of whether or not they want to participate in a competing offer situation.
In some situations, the real estate broker or salesperson will represent the interests of both seller and buyer or multiple buyers. Consumers should seek guidance from their real estate broker or salesperson if this situation arises.
TIPS FOR BUYERS
In a competing offer situation, buyers may be tempted to offer more for the property than they planned to and/or remove conditions from offers that are intended to protect them.
Before participating in a competing offer situation, buyers should consider factors such as:
Offer price: How much can the buyer afford to offer for the property and how much is the property worth? A high offer could enhance the buyer’s chance of success. However, it may not be the best long-term financial decision for the buyer. A competing offer situation does not necessarily mean that a property will sell for more than the asking price. Similarly, an offer that meets or exceeds the asking price will not guarantee that a buyer’s offer is accepted.
Financing: Buyers should be aware that pre-qualifying for a mortgage does not safely eliminate the need for a financing condition in an offer.
Home inspection: In competing offer situations, it can be tempting not to include a clause in an offer that makes it conditional on a home inspection. While your offer might be more acceptable to the seller, you may later learn that there are property defects, required repairs or needed upgrades that you weren’t aware of. In some cases, this can be expensive in the short or long-term. Foregoing a home inspection is a significant risk that a buyer needs to carefully consider.
TIPS FOR SELLERS
A seller facing competing offers has to consider how they want to deal with the situation. The seller can decide to: accept the best offer; negotiate with one buyer and reject all other offers; negotiate with one buyer and advise other buyers that their offers are being set aside while the seller negotiates; or reject all offers.
Even in a competing offer situation, buyers have other options and may choose not to continue to participate. A seller may attempt to negotiate only to find out that it was the best offer the buyer could present. In the meantime, other buyers have found new properties they are interested in.
The seller’s real estate broker or salesperson can provide advice and guidance, ensuring that the obligations and the options available are understood.
Seller property information statements
The Code of Ethics, a regulation under the Real Estate and Business Brokers Act, 2002, contains specific provisions related to the Seller Property Information Statement (SPIS). However, it does not oblige a seller to complete one.
The SPIS will provide information related to defects, renovations and other pertinent property information, based on the seller’s knowledge and experience.
If a broker or salesperson has a seller as client and knows that the seller has completed the SPIS, the broker or salesperson is required to disclose its existence to every buyer interested in the property. They are also required to make the SPIS available to any interested buyer upon request, unless the seller has directed them not to.
Brokers and salespersons are also required to disclose material facts. This means they have an obligation to disclose any fact they are aware of that, with respect to the real estate transaction, that might reasonably affect a person’s decision to buy or sell a property.
Listing/selling representation agreements
Understanding the fine-print.
When you are selling your home, your broker or salesperson will ask you to sign a listing agreement.
The listing agreement is the contract between you and the brokerage that permits them to market and sell your home. These agreements should be in writing in order to protect the interest of all parties.
Contents of Agreements
To protect the interests of all involved, agreements should be in writing. In fact, the Code of Ethics under the Real Estate and Business Brokers Act, 2002, contains a number of provisions specifically related to agreements.
An agreement must indicate the date it will take effect and the date it will expire. The agreement must describe the services that will be provided to you by the brokerage and provide information related to the amount of commission or other fees payable to the brokerage as well as how these amounts will be paid to the brokerage. Consumers should be aware that commissions and other remuneration are not set or fixed by RECO, government authorities, real estate associations or real estate boards.
Before You Sign
Your broker or salesperson wants to provide you with the best service he or she can. To make the most of this relationship, it’s important to clarify your needs and expectations. To avoid misunderstandings later on, it’s important not to make any assumptions.
Discuss all of the services that will be provided. Take the time to clarify the fees and costs related to these services and make sure the written agreement is clear.
You should also take time to ask what the broker or salesperson expects from you and what your obligations are.
Remember that you are entering into a legally binding agreement with the brokerage authorizing the brokerage and the salesperson to represent your interests in the sale of your home. You and the brokerage will be bound by the agreement.
Once all parties have signed the agreement, the brokerage will provide you with a copy.
If you choose not to sign an agreement, the brokerage is still responsible for outlining the services that will be provided to you by the brokerage.
Don’t sign if you don’t understand it
Never sign an agreement unless you are sure you know how long it will be in effect, what geographic area it covers and what the different clauses mean. It’s one of the most important steps you can take to protect yourself.
Take the time to read it thoroughly. Ask questions. Your broker or salesperson can’t provide legal advice, but they are familiar with these agreements and should be able to answer your questions and explain what the clauses mean and what effect they will have.
Feel free to seek legal advice at any time.
RECO often receives calls from consumers about holdover clauses in agreements and what they mean. This is a legal question and you should seek legal advice if you have concerns. Listing representation agreements typically include a “holdover clause”. Generally, it means that within “X” days after the agreement expires (the “holdover period”) if you sell to a buyer that was introduced to you during the term of the agreement, you would be responsible for paying commission to your brokerage. The length of the holdover period is negotiable.
Preparing for an open house
The sale of a home can be a stressful and busy time for any homeowner which is why it is important to work closely with your registered real estate professional if you are planning an open house.
Your best approach is to ask as many questions as possible about what you need to do to prepare as well as making sure you understand what occurs during an open house.
While not exhaustive, below are some examples of questions you might want to ask your registered salesperson*:
- Will your salesperson be present during the open house?
- Will attendees of the open house be asked for identification?
- Will all attendees be escorted throughout the home and will your salesperson limit the number of individuals in your home at any one time to ensure they are personally escorted?
- Will your salesperson check all doors, windows and other access points prior to locking your home at the end of the open house?
- Ask your salesperson for advice on whether you should allow photographs of your home to be taken by buyers or anyone else.
Below are some steps you can take to prepare for an open house:
- Remove small valuables from view.
- Remove medications from all rooms in the home including your medicine cabinet.
- Keep your bills, credit card receipts and bank statements out of view. You may want to store them with your other valuables.
- Take inventory/pictures of your property and what was stored so you will know quickly if anything is missing.
- Consider removing personal photographs that may be on display.
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Muskoka & Kawartha Lakes
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