They also have a very good resource page for both buyers and sellers.
Realtor.ca has a very informative link for sellers that gives good advice for the entire process.
The Real Estate Council Of BC has an overview of the selling process which is a ‘must read’. It will give you a good, condensed, overall understanding of what is going on through the whole process of selling your home and what to expect.
If you are interested in selling a property, please fill out the information form below and we will contact you within 24 hours
INFORMATION ON SELLING A HOME
This is some simple information for the sequential steps involved in selling a home that should be read alongside the home buyers section. Information changes so please call to discuss the present situation.
BEFORE YOU SELL- UNDERSTANDING YOUR HOMES VALUE
There are many factors that determine market value and the direction the market is taking. Supply and demand is of course the driving force.
Some important considerations that determine the housing market is the economy. How is the local job market, what are people earning ? How are the mortgage rates, how much are people able to borrow ? Where are the buyers coming from and where are there resources coming from ? What kind of government interventions are in place ? What are the perceptions out there and what is the media saying ? Value of most things is subjective and one can get lost trying to decide value without using comparatives.
THE COMPARATIVE MARKET ANALYSIS
To find the comparative value of your home we need to look at homes that are similar to yours in all the important areas. Lot size, house size, age, quality of build, location, bathrooms, bedrooms etc….
From here we need to look at a period where the market has been relatively stable– perhaps this means three months back– perhaps it means one year back – so long as the market hasn’t changed. Now we look at what homes sold and for what price. It is helpful to look at how many days they were on the market and what the list prices were compared to what they sold at. This gives information on what the market value of your home is and the direction the market is taking.
It is also helpful to look at those homes that failed to sell. This helps to show the maximum you may want to list your home at.
In BC values are determined in July of the previous year. Properties are rarely visited so they don’t take into account renovation on or inside the property. These reports have a limited value. Please see www.bcassessment.ca for more information.
A seller will sometimes get a marketing appraisal the same way they will get there own home inspection. It gives weight and authority to the price they are asking and goes into more detail then the CMA that a Realtor will make for a home. Buyers of course generally care more about what they think the home is worth or what their own experts tell them so this isn’t a common practice.
A lender will want a financing appraisal but this is simply to be sure they are not making a bad bet. The financing appraisal is generally exactly what the purchase price is.
Realtor’s have access to stats and graphs that show the price increase, decrease and days on market for the different kinds of housing and different areas.
A buyers market is defined as one where there are a great many homes available compared to willing buyers. This has been defined as 12% or less sales made in the last 30 days compared to the number of active listings. Prices will be pushed down as motivated sellers compete to get their home sold.
A buyers market will be marked by homes having longer days on the market, price reductions and accepted sale prices lower then list prices. In a buyers market conditions that might normally cause an offer to be ignored may be considered.
A sellers market is one where there are a great deal of buyers compared to homes available for sale. This has been defined as 20% or more of sales made in the last 30 days compared to the number of active listings. Prices will be pushed up and we may find multiple buyers competing for homes, bidding wars, and homes being sold for over asking prices.
A sellers market is marked by fewer days on market and sale prices higher then list price. In sellers markets offers will have less conditions and will more often be presented with a deposit check (herewith) to show seriousness of offer.
A balanced market is one where market value isn’t moving up or down. This is where there are 12%-20% of sales made compared to total active listings over the last 30 days.
BUY FIRST OR SELL FIRST ?
Most sellers will be buyers as well. If you are selling your home you should have a talk with a mortgage professional to get an idea of what your options are.
In an ideal world one would buy first so that there is no worry about having to find short term housing and moving twice. It is possible to get a Home Equity Line Of Credit (HELOC) for up to 80% of your homes value. This is a low interest loan that you may pay off at any time which may help you secure a second deposit. You are also able to get up to 80% rental offsets through some lenders which means you can qualify for a much larger mortgage load when you own a second property. There are also total worth loans that allow for loans of up to 80% of your net worth including your equity in your property.
Another advantage of buying first is that when you do sell you will be selling an empty home that is easier to present and you don’t have to deal with the hassle of prospective buyers coming through your home.
Many don’t have the cash to make a down payment on a new home and enough income to make two mortgage payments for very long. For many selling first is the only option. If you have to sell first possibly the new owners will allow a rent back option. Otherwise home owners generally need to find short term storage and housing while they buy their new home.
It is possible to make offers with a condition of subject to sale of home or with extended closing periods. It’s best if you have an offer in hand when you make a contingent offer to purchase. It is also often used in conjunction with an escape clause that gives the seller the right to require the buyer to remove conditions within a short period if they receive a better or more certain offer. This strategy is more likely to work if it is a buyers market and the seller is unlikely to get strong offers.
If you have lived in your home for a year and your property has appreciated you should be exempt from paying capital gains in most cases. When you sell an investment home in BC you are taxed on 50% of the net profit from the sale. You should speak with a tax professional to be sure you understand your case.
PREPARING YOUR HOME
To get the highest value for your home it must be presented well. Some rare properties aren’t worth putting any money into because they are so old that their best use is as a rebuild. Most properties however are best shown after being cleaned, fixed, upgraded and de-cluttered.
A popular word in home valuation is curb appeal. That is what is the initial impression from the outside. There are many things that should be gone through: Landscaping, painting, pressure washing, window washing and anything else that can help that all important initial impression.
FIXING AND UPGRADING
A property disclosure statement (PDS) is a standard form that most buyers will demand to see as a condition of their offer. As well a standard condition of any offer is an inspection. The subject to inspection clause can give a buyer wiggle room to back out of a contract in a declining market or when they get cold feet or it can be used to renegotiate price.
Some buyers will get there own home inspection and then address all of the concerns raised and present this to prospective buyers. Even without your own inspection all the major issues should be addressed. Examples would be new flooring, drywall, furnace/HVAC system, upgrading appliances etc….
Many people must live in the home they are selling. In order to present your home well you need to clear out all the personal effects and strip it down to the basic essentials. This better lets the prospective buyer think of how they would dress the room themselves and make it there own. A few pieces per room are good to show buyers how the room could be used.
PRICING YOUR HOME
Once you have upgraded your home and presented it the best light possible you are best able to put a price on your home. How you price your home depends on your situation, on the type of property you have, on the present market and what you believe the market to be doing in the future. Typically think in terms of 5% increments over or under market value.
Do you need to sell your home to take a job in another area ? How much time do you have to wrap up the sale ? In some some cases you may need to price your home to sell quickly. You need to look at what the days on market for your class of property and the prices they are selling at to get an idea of what your pricing strategy should be.
People tend to shop for homes when the weather is warmer and moving isn’t as difficult as when the weather is cold and wet. People with families generally want to do the move after their children have finished up their spring semesters as well. These are factors that mitigate how many available buyers there are.
Typically affordable apartments will have a low days on market count if priced at market value in the lower mainland. There is a large pool of available buyers that often won’t have children. They aren’t much affected by seasonality.
Houses and town houses that have larger price tags have fewer eligible purchasers who are often older then apartment purchasers and will more often have school age children so seasonality will be a factor. They are generally on the market longer then apartments reflecting the smaller pool of buyers available.
Luxury, high price tag housing has much fewer eligible purchasers and one must allow for many days on the market in order to find the right buyer.
PRICING OVER MARKET VALUE
In a rising market a motivated seller might want to only price at market value where a typical seller may want to price a bit over market value when selling properties like affordable apartments that have low days on market.
More expensive condos and houses typically stay on the market a bit longer. A motivated seller may be less inclined to price high if they don’t have a lot of time to make the sale even in a rising market.
If a home has unique features and there are few comparable with similar features then pricing high can be a good strategy. Possibly you will find your perfect buyer who is ok with paying a bit extra for your homes unique features.
Homes that are on the market for too long have a tendency to not get the price the seller wants. Buyers tend to think if it was overlooked for so long there may be something wrong with it. So when the price reduction does come it can still be met with suspicion.
PRICING AT MARKET VALUE
In all markets this can be a good strategy. If the market is rising potentially you can get multiple offers. If the market is falling possibly you will have more days on the market and lose out to sellers who are pricing to sell quickly.
PRICING BELOW MARKET VALUE
If you need to sell quickly or in a falling market this can be a good strategy. If you believe the market will be dropping further then pricing to be on the shortlist of properties that will sell quickly can save you from further losses in the market.
Once a listing price has been established you are ready to start marketing your home. The marketing plan will have been discussed during the listing presentation and your Realtor will have made some contractual promises that are laid out on schedule A of the listing contract. This plan can developed further as needs be.
Access to market your home on the Multiple Listing Service is the most important reason in hiring a Realtor. Your Realtor is a member of a Real Estate Board whose various members pool listings and information on current and past sales and properties. This gives access to everyone’s inventory giving maximum exposure and becomes a valuable research to to provide specifics and correlations between properties.
Postings and changes on MLS may take 24 -36 hours to show up on www.realtor.ca and other online sites depending on how they time their updates. Besides free listing sites there are paid options such as facebook, google, bing and more.
Once your home is decluttered, fixed and polished it should be furnished and decorated so that it presents well. For a wider appeal your home should be neutral- without bright colours and gaudy furniture. It is recommended that new paint be in understated colours and artistic decoration should be simple and conservative.
Furniture should show what the rooms could be used for but should be minimalist. Your home should be like a blank canvas that any buyer could see filling to their taste. Depending on your situation you may want to hire a professional staging company and buy or lease furniture to presenting your home in it’s best light.
There are companies that provide professional photos, measurements, floor plans and brochures. The prices are quite reasonable and depending on what information and photos you already have available this may be some of the best money you’ll spend on marketing your home.
For sale and open house signs direct local traffic to your open houses and to your Realtor. Flyers and door hangers that advertise your home and your open houses can also be a good idea. Your local area is typically where you get your best results.
Open Houses: After a marketing period to create some public awareness open houses will be held. They usually take place on the weekends during the afternoons where the greatest amount of people have free time. The greater amount of people that attend the more likely that other potential buyers will perceive the property as a good potential purchase. When there is a good deal of interest this is where you’ll get the most favourable offers with the least amount of conditions that will allow the deal to fall through. Possibly you will get multiple offers which can help you get the best possible offer for your home.
SentriLocks: Lock boxes can be put outside your home that give access to Greater Vancouver Realtor’s to give private showings to their clients when your showing Realtor may not be available themselves. Buyers often like this service because it gives them more freedom to discuss the house openly with their Realtor.
Private Showings: Sometimes a buyer may want a private showing to discuss details in more depth, or perhaps they may not be able to come to a scheduled showing.
DISCLOSURE OF MATERIAL LATENT DEFECTS
Legally a seller is required to disclose a defect that is not obvious and makes the property potentially dangerous or unfit for habitation. For home owners it is very much “buyer beware”. As Realtors we are required to disclose much more. 1) Unobserveable defects that require great expense to remedy. 2) Any government notice that requires improvements. 3) Any lack of appropriate permits.
Disclosure of Material Latent Defects must be made in writing and prior to any offer for the property.
These requirements make a PDS an important part of any sale or purchase. The Property Disclosure Statement allows for disclosure of the nature of the Material Latent Defects and can be posted on the MLS and shown at open houses.
PDS- PROPERTY DISCLOSURE STATEMENT
The Property Disclosure Statement is a legally binding document. If unsure about any of the questions then the seller must put down unsure rather then a definite yes or no.
A common concern is that by making a fact open the seller may be in the costly position of having to fix the problem. By making the appropriate disclosures one is also in the position of not giving any grounds to be sued. If the seller has issue with any of the questions they should consult a real estate lawyer.
CPS- THE CONTRACT OF PURCHASE AND SALE
Offers are made through the Contract Of Purchase And Sale. The conditions on the contract allow for a more careful examination of the property and for answers to be answered and found. Once the conditions are met then the parties must complete. All contracts for purchase and sale of real estate must be in writing or they are not enforceable.
Usually offers are presented with conditions to make sure the property meets certain specifications and the buyers financing will accept the property.
Conditions will be to the benefit of the buyer, seller or both parties. Generally it is the buyer that makes the conditions so they can make due diligence research on the property so usually the conditions are for the benefit of the buyer. These conditions will be waived or declared fulfilled by written notice before the time limit of each condition or the contract will be terminated (unless they violated a condition). Typically one week is a reasonable amount of time to fulfill conditions and get expert advice in the Greater Vancouver Area.
There is a legal “reasonable efforts” requirement and there are standard clauses that are used to be sure that the contract is enforceable. One cannot simply do nothing to end the deal if the conditions are not subjective.
Conditions may be very subjective and may depend on a buyers state of mind. Many standard clauses depend on a buyer “approving” of something. If a buyer uses a condition like this they will have a great deal of freedom to not remove subjects and the deal ends.
In order to have as smooth of a sale as possible a seller should deal with as many of the homes issues as possible before putting the home on the market. Cleaning, fixing, showing receipts and perhaps doing ones own inspection and being upfront with whatever issues there may be can lessen the problems that come from cold feet and inspection reports.
When competing for a listing sometimes a buyer will put forth an offer without conditions. This can be a risky strategy depending on the situation. Rarely is low rate financing a sure thing and there is good reason to involve experts in going through paper work and inspecting the home.
Typically every CPS (Contract Of Purchase And Sale) contains conditions of…
Subject To Inspection. The seller may provide a PDS (property disclosure statement) however this document is only to the best knowledge of the owner. It is important that the buyer have full information about the property before making the purchase. The home inspection shows improper renovations, structural and safety issues and includes a report that gives estimates on remaining life of all the main components of the home.
This condition is often used to negotiate price reductions for various improvements that are needed or it can be used as a means to back out of a contract .
Subject To Financing: A mortgage per-approveal is important to have however it only a superficial approval. The lender will need to make their decision based on an appraisal of the property and a deeper look at the purchasers financial picture at the time of the purchase. There are many different lenders of course and like all subjects the buyer must make reasonable efforts to find appropriate financing.
Typical reasons financing falls through is a change is financial status like different employment, a negative credit issue like new debt, change in lender guidelines, issues with the property such as age or perceived value.
Subject To Receipt Of Documents: This includes many things such as the Property Disclosure Statement, surveys, title search, warranty info. For strata properties all buyers must be provided with copies of the by laws and financial statements as well as two years minutes of the strata council and meetings as well as the Form B and the Depreciation Report.
Some offers may ask for more time to have a condition fulfilled, perhaps a condition based on sale of the buyers property. If the seller believes that they might receive a better offer while they are waiting for conditions to be fulfilled then they should insert a clause that gives the buyer a short set time to remove all conditions.
Sometimes Realtors will want to present their offer in person and discuss certain aspects of the situation or home directly with the home owner. An Instruction On Offer Presentation form will be gone through prior to listing a home that will lay out how the home owner would like to accept offers.
In order to encourage multiple offers one strategy is to only accept offers after a marketing period and a few days after the first open houses. If there is a multiple offer situation each of the potential buyers will be informed that they are competing and will be asked to make their best offer.
When a seller receives an offer they may accept, ignore or counter. Countering an offer voids the original offer and the potential buyer is under no obligation to act on their first offer if they choose not too. Verbal offers and agreements are legal however they are not enforceable so the details of every offer must be in writing.
The seller may deal with an offer or multiple offer in any way they wish. In order to encourage options there is often a delay after the first marketing period and the first open house to encourage a multiple offer situation. Usually in a multiple offer situation each of the potential buyers will be informed that they are competing and will be asked to make their best offer.
To make offers more presentable some buyers will present offers with bank draft deposits (herewith) to show that their deal is less likely to fall through. They will also make offers without conditions- again meaning that they will be legally responsible to follow through regardless of any other details and credit is unlikely to be a problem.
For the Greater Vancouver Area deposits are generally between 5-10% of the purchase price. They may be made herewith meaning with the offer, within a set period of acceptance of the offer or upon removal of subjects. Once the offer is accepted it is a legally enforceable contract. The deposit is generally made out to the selling brokerage as a stakeholder.
If either party wishes to back out of the contract then they will ask the other party to sign a mutual release form and if the deposit has been already paid it might be returned.
If mutual release isn’t granted then legal advice is sought and the offended party might sue for breach of contract which usually include some amount of damages. If the deposit has already been given then generally this will be kept by the seller on account of damages unless a judge rules that it be returned.
The CPS contract notes the date on which registration will occur and the money and title will change hands. This should be a week day when lenders and lawyers are available to fund and close the deal.
The CPS contract notes the date and time of possession. Possession cannot occur until the title changes hands and the sellers have been paid. Two business days is a reasonable amount of time to be sure that clear title can be granted and possession may take place.
Possibly the seller may want to rent the home back for a period while they purchase their new property. If the property is tenanted there is a sequence of notices that must be gone through to provide vacant possession.
The adjustments date is usually the same date as possession. This is the date the buyer starts paying for property tax, maintenance, utilities, leases etc…
CPS INCLUDED ITEMS
Fixtures are items that are attached to the house or property and are meant to go with the house. These include furnaces, heat pumps, cupboards etc…. Chattels are items that are perhaps only loosely attached such as fridges, washers, dryers and are usually not included in the sale. Some items like wall mounted TV’s are not clearly a fixture or chattel. Care should be taken to be clear on what items are staying or going.
The CPS information page shows the various costs to be covered by the buyer and seller. The buyer pays the costs involved in arranging financing and transferring title. The seller pays the costs of providing clear title.
The buyer must arrange for the property to be insured on the completion date. That is the time that the title changes hands.