Difference between revisions of "Selling Your Home"

'''Selling a home''' is the biggest financial decision most people make. Learn what to consider before putting up the “For Sale” sign, and the steps involved in selling your home.  

You can sell your own home yourself. Many do. The costs of hiring a real estate agent can be substantial (as the seller typically absorbs the cost on the sale of a home).  

But there are advantages to working with a '''real estate agent'''. Agents are keenly aware of market trends and can help you get the best possible price for your home. They are connected to networks of potential buyers you would have a hard time reaching on your own. And they can help you navigate a complex process, advising on questions such as:

*What facts must you disclose?  

*What paperwork is required?  

*What about the existing mortgage?

*Who ensures you will get your money?

Under the [http://canlii.ca/t/84n1 law in BC], real estate agents must be licensed. You can use the [http://online.recbc.ca/licensee-search licensee search] from the Real Estate Council of BC to see if an agent is currently licensed.

===What to consider in signing a “listing agreement”===

If you hire a real estate agent, you will be asked to sign a “'''listing agreement'''”. This is a contract between you and your real estate agent, setting out the terms for selling your home.  

Most real estate agents use a '''multiple listing agreement'''. This means your agent can advertise and show your home to agents from other real estate agencies (and not just their own). In this way, many potential buyers can learn about your home.  

====The real estate agent’s duties depend on who they are acting for====  

Under the [https://www.recbc.ca/licensee/rules.html rules in BC], real estate agents in the province can not practice '''dual agency'''. This means they can not act for both a buyer and a seller in the same transaction, or for two buyers who have conflicting interests. The sole exception to this rule is for property in a remote location that is under-served by real estate agents and it is “impracticable” for the parties to be represented by separate real estate agents. 

Before practicing dual agency under this exception, a real estate agent must make a disclosure to both parties to the transaction. The disclosure must inform them of the duties and responsibilities of the agent to the clients, and the risks associated with a dual agency relationship.  

In BC, a real estate agent’s pay (or '''commission''') can be a flat fee or a percentage of the sale price of the home.

If you have a '''mortgage''' on your home, you will need to deal with the mortgage in some way in selling your home.  

One option to explore is whether a buyer can “'''assume'''” (meaning take over) the mortgage. If a buyer can assume the mortgage, this can save you money, avoiding the costs of paying out the mortgage on the sale.

Another option is paying off the mortgage when you sell your home. Many mortgages have restrictions on paying out the mortgage early. Some have a “prepayment penalty”, such as three months worth of mortgage payments.  

Sometimes a lender will waive the prepayment penalty if the buyer takes out a new mortgage with them, or if you take out a new mortgage with them when you buy a new home.

 

For more on mortgages, see our information on [[Mortgages and Financing a Home Purchase (No. 408)|mortgages and financing a home purchase (no. 408)]].

''After our kids left for university, we decided to downsize. We got four offers on our home at the first open house. I had no idea there was so much to consider. Between the “subject to” clauses, the offer prices, the closing dates — it was dizzying. And that was before we even figured out the financing part of it.''

If there is anything you don’t like in an offer (including the price or the “completion date”), you can write in your own terms instead. This becomes your '''counteroffer'''. This is considered to be a new offer altogether. It becomes a binding contract of purchase and sale if the buyer accepts. If the buyer doesn’t accept your counteroffer, there is no agreement.

*subject to the buyer getting financing (for example, a mortgage)  

*subject to the buyer getting a property inspection

*subject to the buyer selling their home

If you get an offer with a “subject to” clause, 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.

As well, the “subject to” clause should be specific. Don’t accept a general clause, such as “subject to buyer obtaining satisfactory financing”. If the buyer changes their mind, all the buyer has 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 financing — the interest rate and principal amount the buyer is seeking to finance — as well as a deadline for when the buyer must remove the clause. A lawyer who practises real estate law can be helpful in this process.  

As a seller, you must disclose any “'''material latent defects'''” about your home to a buyer. A material latent defect means a defect that cannot be discerned through a reasonable inspection of the property. This includes a defect that makes the home:

*dangerous or potentially dangerous to the occupants,

*unfit for habitation, or  

*unfit for the purpose for which the buyer is acquiring it, if the buyer has made this purpose known to the seller.

Common examples of material latent defects include:  

*the basement leaks when it rains

*structural damage to the property

*underground storage tanks are located on the property

*problems with the potability or quantity of drinking water  

*damage caused by the illegal use of the property (for example, a marijuana grow operation)  

When someone buys your home, all the '''fixtures''' go along with it, unless you and the buyer agree otherwise. Defining a fixture can be difficult: generally, a fixture is anything that’s attached to the home to the point where removing it would damage the home or require repair. The bathroom sink is an obvious example. As objects like chandeliers are sometimes items that homeowners are interested in taking with them after the sale of their home, it is important these fixtures are explicitly excluded from the contract of purchase and sale. Better yet, before you put the home up for sale, replace the chandelier with a simple, inexpensive replacement.  

===On the “completion date”===

The contract of purchase and sale will state the “'''completion date'''” for the sale. On that day, legal ownership will transfer from you to the new owner in exchange for the purchase price of the home.

*checking the documents prepared by the buyer’s lawyer and explaining them to you

*ensuring your old mortgage has been properly discharged, if this is required

*ensuring you have no further obligation regarding your old mortgage if it is being assumed by the buyer

*confirming all payments for which you are responsible have been made

*arranging for you to sign the transfer documents

You will want to know what your home is 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 what it would cost to replace your home. The charge will vary with the appraiser, but is often between $200 and $750.

If you have a mortgage on your home, find out:  

*how much is owing on the mortgage

*whether the buyer can assume the mortgage (as we explained above)  

*if the mortgage includes a prepayment penalty (also explained above)  

Decide if you are going to sell your home yourself or hire a real estate agent.  

If you decide to use a realtor, pick someone you trust and are comfortable with. Word-of-mouth is a good way to find a realtor you can work with. Ask friends, neighbours and work colleagues who have recently bought or sold a home who they worked with and how that experience went. The internet is a good way to locate realtors who specialize in properties and regions that may be of interest to you.  

You can use the [http://online.recbc.ca/licensee-search licensee search] from the Real Estate Council of BC to see if an agent is currently licensed.

If you hire a real estate agent, you will be asked to sign a “listing agreement”. We explain what to watch for above, under “Understand your legal rights”.  

If you get an offer to purchase, review it carefully. Be sure you understand the effect of any “subject to” clauses (explained above).  

Normally, your real estate agent is entitled to be paid their commission when a buyer signs an offer to purchase, and you accept it. The buyer is someone who is “ready, willing and able to buy your home”. If the transaction later falls through, that doesn’t necessarily affect the agent’s right to be paid. The terms of the listing agreement will be key.

You may even have to pay the commision is the home sells after the listing agreement has expired — if the agent had previously shown the home to the buyer or was the “effective cause of the sale”.  

If at any time during the period you owned the home, it was ''not'' your principal residence, you might not be able to benefit from this tax exemption. A lawyer can advise on whether the principal residence tax exemption applies to you.

==Get help==

The '''Real Estate Council''' of BC, the body that licenses real estate agents in the province, offers a guide on “Selling a Home in British Columbia”.

:Web: [https://www.recbc.ca/sellinghome.html recbc.ca]