Selling your home is one of the biggest financial transactions of your life. You should know several things before the “For Sale” sign goes up on your lawn.
Before you sell: what is your home worth and what should it sell for in today’s market?
One way to find out is to get a professional appraisal. This will give you a value for your home based on what comparable homes in your area have sold for and on what it would cost to replace your home. The charge will vary with the appraiser between $200 and $750.
Another way to learn the value of your home is to contact several reputable real estate agents who do business in your area. They will look at your house and, for no charge, tell you what price they would list the house for and what they’d expect it to sell for. But realtors are not professional appraisers, so there are limits on how you can use their reports.
The supply of homes on the market exceeds demand
|High inventory of homes few buyers compared to availability. Home on the market longer. Price tend to drop in this type of market||Your home may take longer to sell. Less negotiating leverage in terms of selling price.|
The number of buyers wanting homes exceeds the supply or number of homes on the market.
|Smaller inventory of homes. Many buyers; homes will sell quickly. Price usually increase.||You may have more negotiating leverage and obtain a higher selling price for your property.|
The number of homes on the market is equal to the demand or number of buyers.
|Demand equals supply. Homes sell within an acceptable time period. Prices generally are stable.||More relaxed atmosphere. Buyers have a reasonable number of homes to choose from.|
Pricing Your Property
The single most important decision you will make is determining the right asking price for your property. Once you’ve achieved a realistic sale price, you can count on your property being professionally marketed and promoted to bring more buyers to your door. You can also expect to acquire higher margins in the least amount of time.
The Benefits of Pricing Right from The Start
1. Your property sells faster, because it is exposed to more qualified buyers.
2. Your home doesn’t lose its marketability.
3. The closer to market value, the higher the offers.
4. A well-priced property can generate competing offers.
5. Real estate professionals are always on the lookout for potential properties for their clients.
Determining the Value of Your Home
- The market ultimately determines the true value of your property.
- Establish a comprehensive competitive market value for your property.
Getting to Know Your Market
A comparative market analysis is an indicator of what today’s buyers are willing to pay for a home. It compares the market activity of homes similar to yours in your neighborhood. Those that have recently sold represent what buyers are prepared to pay. The homes currently listed for sale represent the price sellers hope to obtain. And those listings that have expired were generally overpriced or poorly marketed.
Our commitment to you is to assure that your home is well represented through our marketing efforts and prepare a comparative market analysis for your home based on the most current market information.
The Result of Overpricing
Many sellers believe that if they price their home high initially, they can lower it later. Often, when a home is priced too high, it experiences little activity. Gradually the price will come down to market value, therefore it has been for sale on the market for too long and prospect buyers will reject the property. On occasion, the price is dropped below market value because the seller runs out of time; the property sells less than it’s worth.
Missing The Perfect Buyer
You may think that interested buyers can always make an offer but if the home is overpriced, potential buyers looking in a lower price range will never see it. Those who can afford a home at your asking price will soon recognize that they can get better value elsewhere.
The Importance of Early Activity
As soon as a home comes on the market, there is a tremendous activity surrounding it. This is a crucial time when real estate professionals and potential buyers take notice. If the home is overpriced, it doesn’t take long for interested parties to lose interest. By the time the price drops, a majority of buyers are lost.
National Exposure through The Multiple Listing Service (MLS®, Realtor.ca)
This is the single most powerful marketing tool in place today to sell homes. Most homes around the country sell through the MLS system. The power of MLS is in cooperation and compensation. It is an efficient tool developed, maintained and paid for by Realtors across Canada.
Should you have a lawyer?
Selling and buying a house is complicated. The potential for disaster is great – one mistake could cost a lot. As well, there are risks in real estate, and when selling or buying, you should be careful. There are many possible types of real estate fraud. To protect yourself, you should use a lawyer, instead of trying to do it yourself. Consult a lawyer before you sign a listing agreement with a realtor.
What is a listing agreement?
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 standard 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. Many agents prefer that the agreement continue for a 3-month term, but you might want to list your home for a shorter time. If your house doesn’t sell within that time, you can always extend the term of the listing agreement or change agents.
What do you pay the agent?
The listing agreement sets the amount of the agent’s pay, or commission. Commissions can vary widely, so it’s a good idea to shop around. Some agents charge a flat fee. Others charge a percentage. For example, they could charge 2.5% – 5%. You pay this commission to your agent, who shares it with the buyer’s agent.
Do you have to pay the commission even if the agent doesn’t sell your house?
Normally, your agent is entitled to a commission when a buyer – who is ready, willing, and able to buy your house – signs an offer to purchase, and you accept it. You may also have to pay the commission if you sell the house yourself while the listing agreement is active, or even after the listing agreement has expired – if the agent had previously shown the house to the buyer or was the effective cause of the sale.
Do you have a mortgage on your house?
If you have a mortgage on your home, you will have to contact the bank or credit union that holds the mortgage – before you sign a listing agreement with a realtor – to find out certain information, such as:
- How much do you owe on your mortgage?
- Can the buyer assume (or 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? 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 is usually written on a standard form provided by the local real estate board. Read all the fine print. Every word is important. You should have your lawyer check the offer before you sign it. Once you and the buyer sign the offer, it is a binding contract of purchase and sale.
Before you sign an offer, discuss with your agent anything in it that you don’t like and write in your own terms instead. It then goes back to the potential buyer as your counteroffer (it’s actually a new offer) and becomes the contract of purchase and sale if the buyer accepts your counteroffer.
What things in the house are included in the sale?
When someone buys your house, all the things that are “fixtures” go along with it, unless you and the buyer agree otherwise. The definition of a fixture can be tricky. But generally, a fixture is anything that’s attached to the house so that its removal would damage the house or require some repair. The bathroom sink is an obvious example. So is the crystal chandelier in the dining room, so if you want to take it with you, make sure the contract with the buyer makes that clear. Better yet, before you put the house up for sale, replace the chandelier with a simple, inexpensive fixture. The washer, dryer, fridge, and stove aren’t fixtures, but you may be able to use them as bargaining tools if the buyer wants them.
What are “subject to” clauses?
They are conditions that have to be met before the deal to buy your house proceeds. Common ones include the buyer getting financing and the house passing an engineering 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, so you want to keep it short.
As well, the “subject to” clause should be very specific. Don’t accept a clause that says just “subject to buyer obtaining satisfactory financing.” If the buyer changes their mind, all they have to do to get out of the deal is to say they couldn’t get satisfactory financing. Instead, put details in the clause about the interest rate, the principal amount, monthly payments and so on, as well as the deadline for when the buyer must remove the clause.
First, get a realistic idea of your home’s market value. Then choose a realtor you trust. Read the fine print of your listing agreement and the offer to purchase very carefully. If you have any doubt, especially about the offer to purchase, have a lawyer check it over before you sign.