A: Some people believe they can save a considerable amount of money by selling on their own. They look at the average commission on a house and remember stories of friends or relatives who managed to get through the process with seemingly little trouble. It can be done, they say – so why can’t I?
Right now, approximately 1%-2% of Canadian homeowners handle their own sales. But in order to join the ranks of the successful ones, you need to realistically assess exactly what’s involved. The routine parts of the job involve pricing your house accurately, determining whether or not a buyer is qualified, creating and paying for your own advertising, familiarizing yourself with enough basic real estate regulations to understand (and possibly even prepare) a real estate contract, and coordinating the details of a closing. The greatest downsides are the demand on your time, and the possibility that a mistake may cost you the money you’re trying to save.
The best reason for working with real estate brokers is the enormous amount of information they have at their disposal – information that can help make your house sell faster and easier. Professionals know about market trends, houses in your neighbourhood, and the people most likely to buy there. They also know how to reach the largest number of people who may be interested in your house, and are trained in areas like screening potential buyers and negotiating with them. Finally, they’re always “on-call”, and willing to do the things most of us hate: working on the weekends, answering the phone at all hours, and always being polite about it.
A: A Multiple Listing Service, or MLS, makes it easier to reach a large number of prospective buyers and dramatically increase the property’s exposure. This is a realtor’s best resource for finding his buyer a home.
Quite simply, it’s a system under which participating brokers at the Real Estate Board agree to share commission on the sale of houses listed by any one of them. So, for example, if you list your house with one broker and another actually sells it, they split the commission. The advantage to you is clear: more people have an interest in selling your house and your home is exposed to many more buyers since realtors have access to the largest buyer pool available.
A: An entire book could be devoted to answering this question. But to be as concise as possible, a successful sale requires that you concentrate on five considerations: your price, terms, condition, location, and market exposure. Since you can’t control all of them, you may have to overcompensate in one or more areas to offset a competitive disadvantage in another.
A: In a word, realistically. See the section further on about the criteria that professional appraisers use to value a home. Today’s residential real estate market is no place to look for easy profit. That’s not to say you can’t get what your house is “worth”… you just get what it’s worth today! You have to be realistic about its value and price it accordingly. A good place to start is by determining the fair market value.
A: Simply put, the fair market value of a house is the highest price an informed buyer will pay, assuming there is no unusual pressure to complete the purchase. It is usually not the asking price. To get an estimate of fair market value, call me and ask for a free Competitive Market Analysis (CMA) of your house. The analysis will give you a realistic figure based on the most recent and relevant transactions in the local real estate market.
A: Generally speaking, the owner’s asking price – the advertised price of a house when it goes on the market – is set 3-5% above estimated market value. You can assume that some negotiation will be necessary to reach an agreement with a buyer. However, too large a variation in price above market value will result in reduced showings and typically only “bottom fishing” offers.
A: Homes that are overpriced will not sell and will end up becoming stagnant on the market. The longer your house sits on the market, the less interest it will generate. Potential buyers start to ask, “What’s wrong with this house? Why hasn’t it sold?” Reducing the price later does not generate nearly as much new interest as a new listing does, and it contributes to the stigma that there may be something wrong with it. This can also weaken your negotiating position once you do have an offer.
A: Real estate sales agents suggest asking prices based on a variety of information you may not have at your disposal, including recent listing and selling prices of houses in your neighbourhood. If you’re not completely confident in their suggestions, you may want to order an appraisal.
Next, establish clear priorities. If you had to choose, are you more concerned with selling quickly, or getting the most money possible? Do you think the agent’s suggested asking price is reasonable? What would you pay for the house if you were the buyer?
Someone else – a neighbour, friend or relative – may point out advantages or disadvantages about your house that you hadn’t thought about. Third-party views will help you start thinking of your house as a commodity, with positive and negative selling points. Then you should decide on a price that you feel is competitive and consistent with what other houses in your area have sold for.
A: Most buyers also leave room for negotiation when they make an offer. Thus, a certain degree of flexibility is usually called for on the part of both the buyer and the seller. A range of 1-2% above the midpoint of your property’s market value range is often best!
While it is ultimately your decision to accept or reject an offer or present a counter-proposal, a good agent can be of great assistance to you during the negotiating process. In fact, negotiation is one of the most valuable skills an agent can offer you.
As negotiations proceed I will advise you of your options in responding to each offer from the buyer. A cool, rational manner, in what is often a long, emotionally-charged process, will usually net you a significantly higher price.
A: Both. In legal terms, a real estate sales representative (agent or realtor) is an individual trained and licensed to act for other people looking to buy or sell a piece of property. While that definition applies to both broker and sales agent, only the broker (i.e. – RE/MAX Little Oak) is permitted to collect fees and/or commission for such work. Thus, the sales agent – with whom you have most of your day-to-day contact – works on behalf of, and is compensated by, the broker.
A: As soon as you decide to sell it. If you want to get the best price for your house, the key is to give yourself as much time as possible to sell it. More time means more potential buyers will probably see the house. This should result in more offers; it also gives you time to consider more options if the market is slow or initial interest is low.
A: Peak selling seasons vary from year to year in our area and weather sometimes has a lot to do with it. But keep in mind that there are also more houses on the market during the prime seasons, so you’ll have more competition. So while there is seasonality in the real estate market, it’s better to time your sale based on your needs and not market predictions.
Q: What about market conditions - price trends, interest rates, and the economy in general? Should they have any bearing on when I list?
A: Probably NOT. Even if you’re under no pressure to sell, waiting for better market conditions is not likely to increase your profit potential. Real estate industry analysts don’t foresee a return to the “boom” market of earlier years any time soon; they’re also likely to tell you it’s possible to sell you house in any kind of market, provided it’s effectively marketed. Again, it’s better to time your sale based on your needs and not market predictions.
A: Average listing times vary from 30 to 180 days, according to market conditions in a particular neighbourhood, type of property and price range; and of course, price, terms, condition, location, and exposure play an even greater role. Selling in any market is easier if you keep time on your side. Most professionals will tell you that allowing yourself at least three to four months of listing time will put you in a position to get a better return from their marketing efforts.
A: If you don’t have to sell in order to buy a new home, renting your existing property may be one option to think about. Consider the advantages and disadvantages. If you’re being transferred, you may be able to obtain a short-term rental in your new location while you’re becoming familiar with the new area. Either way, we can usually help by advising you how much you can expect to pay for rent in the new neighbourhood, or what you need to charge for rent to cover your mortgage payments and other costs you’ll entail as a landlord.
A: First of all, you are best advised, in a buyer’s market, to sell your property first with a long closing… enough time to be able to find another home on the market (after yours is sold firm) without being rushed about it! That time is usually 90 – 120 days. Since the average closing time is 60 days, you will then have 30 – 60 days to find your new home and close in the normal time period.
A: Besides commission, the most important matter you negotiate at the time of listing your house with a broker is the duration of the listing contract. Terms vary, but listing agreements are seldom for less than three months or greater than one year.
So what if you find yourself dissatisfied midway through your contract? While the listing contract is legally binding, a few brokers offer homeowners an “out” if they are unhappy with the service they are receiving. Adam Wahed offers an “Easy Exit” guarantee whenever listing a property. If you are not satisfied for any reason, at any time, your property can be taken off the market immediately.
A: Unless your house is nearly new, chances are you’ll want to do some work to get it ready to market. The type and amount of work depends largely on the price you’re asking, the time you have to sell, and of course, the present condition of the house.
If you’re in a hurry to sell, do the “little things” that make your house look better from the outside and show better inside. Several specific ideas for making low-cost improvements follow.
A: “Curb appeal” is the common real estate term for everything prospective buyers can see from the street that might make them want to turn in and take a look. Improving curb appeal is critical to generating traffic. While it does take time, it needn’t be difficult or expensive, provided you keep two key words in mind: neat and neutral. Remember, when a family looks at a house, they’re trying to paint a picture of what it would be like as their home. You want to give them as clean a canvas as possible.
A: Try to make it easy for prospective buyers to imagine your house as their home. Clear as much from your walls, shelves and countertops as you can. Give your prospects plenty of room to dream. See my Preparing Your Home checklist for more ideas.
A: Certain home improvements are useful to almost everyone and have been proven to add value or speed to the sale of houses. These include building a deck or patio, basement finishing, some kitchen remodeling (updating colours on cabinets, countertops, appliances, panels, etc.), and new floor and/or wall coverings, especially in bathrooms. However, professional renovators have found that, no matter how much you improve any given house, you’re unlikely to sell it for more than 15% above the median price of the other houses in your neighbourhood, whether you do $1,000 worth of work or $50,000. That’s why you might want to ask your agent’s opinion about the viability of recouping the cost of any major renovation you have in mind before you start the work.
A: You know your talents best. But be warned that it’s not a good idea to engage in larger jobs involving mechanical systems (heating, electrical, plumbing, etc.) or work that must meet local building codes, unless you’re licensed to do so. Your efforts could make you responsible for more than you realize if something you worked on goes wrong after you sell.
A: In certain situations. If the purchaser’s building inspection reveals major problems with your house’s structure or mechanical systems (heating, electrical, plumbing, etc.), the buyer may wish to negotiate the price downward on the basis of anticipated repair costs. So even though the repairs won’t be made until after the sale, practically speaking, you do pay them.
Sometimes, repairs may be required before the transfer of the title takes place. This is especially true in sales that involve financing that’s insured or guaranteed by the government.
You may have also heard about lawsuits involving vendors who failed to disclose major problems before the sale – like an addition to the house that wasn’t built to code. That’s another good reason to retain a lawyer or agent who knows as much about the condition of your property as you do. It’s also a good idea to get the buyer’s written acknowledgment of any major problems when you accept their offer.
A: Today, people are moving further and more frequently than they used to. The result is that the pool of potential buyers for your house is much larger and spread far wider than ever before, and the competition to reach them is fierce.
Real estate brokers have responded by developing increasingly sophisticated marketing techniques that define likely buyers, where to find them, how to reach them, and how to persuade them to buy one house over another. The fact is, virtually everything we’ve discussed up to this point, from pricing to home improvements, the Competitive Market Analysis to the “For Sale” sign in the yard, is part of a marketing process that’s put into motion when you decide to work with a good broker.
A: You should definitely try to be out of the house during any showings your agent has scheduled. If you do need to be home, don’t “hang around” or follow them through the property. People often feel uncomfortable speaking candidly and asking questions when the current owners are present. You want them to feel as free as possible to picture your house as their “dream home”… to relax, settle in and visualize their own furniture in every room.
A: No. In Canada, all closing details are carried out by the lawyers for the respective parties and their conveyancers.
However, good agents are also extremely helpful in the days immediately prior to the closing. I stay in constant contact with the lawyers and conveyancers, especially in the last couple of weeks before closing, and will inform you of every step.