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 There
are a million different reasons why people sell their
homes, but every seller has one thing in common: the
desire to get as much money as possible from their
existing residence as quickly and as hassle-free as
possible. (If your home is your principal residence, you
won't have to pay capital gains tax on any profits from
the sale. If, on the other hand, it is an investment
property, prepare for the tax man!)
Before you begin the selling process,
really evaluate why you're moving. Do you have too few
rooms, or too many? Has your job moved to another city
and you're relocating? Are the neighbours driving you
away? Or are you simply looking for a change? A complete
analysis of your current position will set a good
foundation for your next home hunt.
When is the Best Time to Sell Your
Home?
Everyone seems to have specific ideas on when the right
time is to sell. Some base their theories on the overall
economy, while others will tell you that there are key
buying months that you'll want to capitalize on.
If you're not buying and selling
strategically or for investment, the best time to sell
is really when you feel your existing home will not meet
your future needs. The best reason to purchase a new
home is to take advantage of your family and lifestyle
changes. Do you wish to be closer to a school? Are you
switching jobs? Do you have an aging parent to care for?
In Canada, weather and holidays do
play a factor. Almost no one goes house hunting around
Christmas, and few give up their summer vacations. Of
course, those with school-aged children are less likely
to move during the school year and summer is an ideal
time. In some areas, there is a definite "spring cycle"
-- perhaps it's a bit of spring fever and a wish to
break out of the bonds of winter.
Some gamblers look for winter
bargains and then try to sell their homes during the
spring cycle. But overall, that could be more tension
and aggravation than you wish. And the monetary results
may be disappointing.
Another key factor to consider is the
economy. Are interest rates higher or lower in
comparison to your current mortgage? If they are higher,
you may want to stick with your current home, as your
new mortgage payments could be uncomfortable. If rates
are lower, you might be able to trade up to a more
expensive home without a significant increase in your
monthly mortgage obligation.
What's more, if it's a buyers'
market, you may be in a strong position to purchase a
new home, especially if you have accumulated some equity
in your current property.
Are There Costs Involved in
Selling?
Unfortunately, the answer is yes. Even if you think your
home is perfect, you may have to do some minor repairs
or upgrades to make your home more attractive to
potential purchasers.
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A professional home inspection
may be a condition of the offer. If the inspection
points to problems, your purchaser may ask that you
make the necessary repairs or choose not to close
the deal.
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Closing costs, such as lawyers'
fees or unpaid taxes, will also have to be paid.
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Mortgage discharge fees may be
levied by your lending institution.
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Sales commissions must be paid.
They usually amount to 6% of the selling price.
Buy or sell first?
That's tricky. After all, if you find a purchaser for
your existing home, before you've found a new one, you
may find yourself living out of a suitcase if convenient
closing dates can not be negotiated. On the other hand,
if you find your dream home before you've unloaded your
old one, you may be faced with carrying two mortgages
for a time.
So how do you manage? Easy. Do your
homework and have a good idea about the neighbourhood
and type of home you're looking for. Do an honest
evaluation of your family's needs and budget.
Speak to your RE/MAX agent and start
your new home search as soon as your existing home hits
the market.
If you've found a home, before you've
sold your existing one, use "sale of your existing home"
as a condition on your offer. If you don't sell your
house within a fixed period of time, you can choose not
to go through with the offer. This, however, is a
difficult condition for many vendors to agree upon and
you may find that you have to forgo your price
negotiating power.
Purchasing a home before you sell
could be a risky strategy if you're counting on the
proceeds from the sale.
If you've found a purchaser
before you've found your next home, use "purchase of a
new home" as a condition when you sign back the
agreement. Again, it will only be for a fixed time. Even
if you have not found the ideal next house by the time
the deal closes, you may still wish to proceed with the
offer. As a buyer with a "sold house" you will be in a
better position to negotiate price.
Should
You Go With a Non-Exclusive or Exclusive Listing
Arrangement?
If you enter into this type of arrangement with your
RE/MAX agent, you are giving him or her the exclusive
right to find a purchaser 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 may consider this type of
arrangement in a Sellers' Market during which time there
are more people interested in purchasing a home than
there are homes available.
Understand Market Conditions
The real estate market is in constant flux, not only as
a whole but in particular areas as well. Knowing what is
going on in the overall and local real estate markets
will help you understand how these conditions can affect
the sale of your home. We've designed the following
chart to help give you an overview of the three
significant market positions. When you meet with your
agent, ask about the current state of the market.
1. Buyers' Market:
The supply of homes on the market exceeds demand.
Characteristics: High inventory of
homes. Few buyers compared to availability. Homes
usually stay on the market longer. Prices are stable or
perhaps dropping.
Implications: Buyers spend more time
looking for a home, and when they negotiate, they
usually have more leverage.
2. Sellers' Market:
The number of potential buyers exceeds the supply of
homes on the market.
Characteristics: There is a smaller
inventory of homes with many buyers. Homes sell quickly.
Prices usually increase.
Implications: Prices may be higher or
perhaps climbing. Buying decisions must be made quickly.
Conditional offers may be rejected.
3. Balanced Market:
The number of homes on the market is roughly equal to
the demand.
Characteristics: Demand equals
supply. Sellers accept reasonable offers. Homes sell
within a reasonable time period. Prices generally remain
stable.
Implications: There is less
tension among buyers and sellers. There is a reasonable
number of homes to choose from.
Do You Have All of the Necessary
Documents Handy?
Gather the documents you'll need to sell your home.
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Mortgage documents: you may wish
to meet with your loans officer to discuss
transferring, discharging or paying out your
mortgage. This is a good time to begin negotiations
on the terms of your next mortgage.
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Property survey: be sure to
inform your RE/MAX agent if there have been any
changes to your property that could affect the
accuracy of the survey.
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Your deed or transfer of title
document.
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Tax assessment documents.
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Utility bills.
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Other claims relating
to your home:
- separation agreement or court order
- will or probate documents
- liens
- unpaid judgments against you
- unpaid taxes
- unpaid utilities
- pending litigation
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Pertinent condominium documents
(if you live in this type of home).
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Maintenance history (include
repair receipts).
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Items and information that will make your home more
marketable:
- photographs or videos of your home with the garden
in bloom or your pool open and beautiful
- conceptual ideas for upgrades or renovations that
you have considered
Determine Your Asking Price
Before you put your home up for sale, you must set the
price. And before you can do that, you must know what
the house is worth. That doesn't mean what you paid for
it, or how you upgraded it. Determining worth is simply
finding out what someone would pay for it.
The steps in determining worth are:
1.
Understanding market conditions
2. Getting the details about recent sales in your
neighbourhood
RE/MAX agents have access to all of
this information. Plus, they can objectively see the big
picture and tell you what makes your home unique.
Once you've determined you home's
worth, you and your agent will determine the asking
price. Most often, the price of a home is set slightly
higher than its worth, to give a little "bargaining
space." Of course, if it is set too high, it may deter
prospective buyers.
If you're in a rush to sell your
home, setting the asking price a little lower than what
your home is worth will attract a lot of attention. But
beware, if the price sounds too good to be true, buyers
may be sceptical. They may even offer less than the
asking price anticipating problems with the home down
the road.
You will have a legal
relationship with your agent. When you complete the
listing agreement, you are giving your RE/MAX agent the
authority to put your house on the market for a
specified period. If your house is sold during that
time, you will pay the agreed to commission. What's
more, if the house sells shortly after the specified
period because of your agent's efforts, you are still
obligated to pay the commission.
Should
You Offer Any Additional Items?
You may choose to include your appliances in the sale,
or you may offer a redecorating allowance. You may also
be able to offer creative financing. You may also
consider purchasing a home warranty (covering major
appliances and systems) to make the home more
attractive.
Document Checklist
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Mortgage documents
-
Property survey
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Your deed or transfer of title
document
-
Tax assessment documents
-
Utility bills
-
Other claims relating to your
home
-
Pertinent condominium documents
(if you live in this type of home)
-
Maintenance history (include
repair receipts)
-
Additional sale enhancing items
and information
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