How To Ready Your Home For Sale
Posted by Mike Boorman on
Most of the time, buying or selling a home will be the largest transaction you will ever take part in.
Despite this, many people spend less time deciding on a new home than they do on a new car.
Why does this happen? Common opinion is that it's because most people are unfamiliar with how real estate transactions work. They don't ask enough questions, over-rely on their agents, and don't learn enough about the process.
The more you know about the selling process for a home, the better informed your final decision will be, and the closer you'll get to your ideal selling price — or dream home if you're a buyer. It can also enable a better relationship between you and your real estate agent.
Finding A Real Estate Agent
Choosing the right agent should be the first step in your selling process. A professional REALTOR® can be a huge asset to your transaction, but it's important to find one you work well with. To find agents you can ask friends and neighbours for word-of-mouth referrals, attend a local open house, contact a real estate agency, or search the internet.
Try interviewing several real estate agents, and consider both their qualifications and your personal needs before making a final decision. Ask about their background, skills, specializations, fees, and commission rates. Don't just default to the agent who gives you the highest selling quote, as some may exagerrate numbers to get your business. Make sure you have confidence in their abilities and experience.
Once you've decided on an agent a listing agreement will be drafted up, outlining your rights in the transaction as well as the REALTOR's® duties and responsibilities. Read it, and don't hesitate to ask questions. You'll want to check for a guarantee of the agent's performance, as well as the right to cancel the agreement. A professional real estate agent should understand your concerns and be happy to provide you with the information you need to finalize the document prior to signing.
In most cases your REALTOR® will receive payment on a commission basis and will only claim their share upon the successful sale of your home. This commission can be either a fixed dollar amount or a percentage of your home's total sale price, and GST is applicable to the fee. There are no fixed real estate commission rates in BC, so the final fee amount will be negotiated between you and your agent. Your agent will also typically share their commission with the brokerage they work for.
Getting Everything In Order
Once you have a real estate agent, you'll want to assess your home's condition, which can greatly affect its selling price.
Go through your house and note any cosmetic and structural defects to your REALTOR®. You are responsible for providing your agent with honest and accurate information regarding the condition of your home, including the roof, heating systems, building age, financing arrangements, and so on. Your agent may also need your authorization for gathering information on details such as outstanding mortgage balances, zoning, and value assessments (as well as registered bylaws, building inspection reports, and other documents for stratas).
Any known defects that are not repaired (leaking basements, water ingress, underground tanks, etc.) must be revealed to potential buyers, even if they aren't currently causing problems. Nearly all real estate transaction contracts include a clause (known as an inspection clause) that states that if a high number of unreported defects are found, the buyer can leave the deal or negotiate the repairs to be made at the seller's expense. Additional problems may crop up if it can be proven that you were aware of the defects and still did not disclose them.
To get your optimum list price, it's best to repair all minor defects and a number of select major defects. At the same time you should be careful not to overspend on repairs, as defects that are openly revealed to the buyer are not included in the clause and many buyers are willing to spend on fixer-uppers. This is especially true when there are few homes on the market. If you're unsure how much is too much, make sure to consult your real estate agent.
Decide On Pricing
Pricing your home for sale can be a balancing act. Pricing too high or too low can hurt your home's chance of selling, as can pressuring potential buyers into a sale.
Ideally your real estate agent will have detailed knowledge of your neighbourhood and trends in the real estate market, and will know how to price your home accordingly. If you need more information on what constitutes a competitive price, you can ask them for a comparitive market analysis of houses recently sold or currently on the market. You can also ask for an estimate of the net cash proceeds you would receive from the sale based on a given asking price and specific financing arrangements.
Before finalizing your home's asking price, you will want to consider other costs that may affect your net profit:
- Your REALTOR's® commission
- Legal fees for the conveyancing process
- Legal fees for discharging an existing mortgage
- Prepayment penalties for early mortgage payout
- Insurance binders, title certificates, site surveys, and other documentation and assessments
- The BC Property Transfer Tax
- Property taxes for the current year
- Fees for any late or unpaid taxes
The type of listing your home is marketed under can also affect the type of commission you pay. An exclusive listing gives your REALTOR's® brokerage exclusive rights to sell your home, so you will pay the agreed commission fee even if you wind up selling your home to a prospect of your own. A multiple listing is registered in the MLS® database and is made known to all local real estate agents, and your agent will have agreed to share a specific amount of the commission with the buyer's agent.
Staging Your Home
With your home priced and on the market, it's time to open it to potential buyers.
Even before your home is listed for sale, getting it ready for viewing is important. In some cases this can require budget spent on extra marketing or conditioning. This is an upfront expense at first, but can result in a much higher selling price and wind up paying for itself in the long run.
Some simple, low-cost steps you can take to prepare your home include:
- Deep cleaning your home, especially carpets and bathrooms.
- Putting away clutter, including in closets and the basement.
- Store personal photos and items out of sight — buyers are more receptive to a home when they can envision it as theirs.
- Matching kitchen accents like cabinet knobs and small appliances.
- Replacing light bulbs and leaky faucets.
- Arranging furniture and other features in attractive displays.
- Mowing the lawn and sweeping the sidewalk, as well as weeding and picking up debris.
- Cleaning all windows (indoors and out).
More expensive upgrades such as landscaping, repainting, or renovations may further boost your asking price, but make sure to confer with your REALTOR® to make sure that the value will be worth the price you pay.
When your house is ready, your REALTOR® will give it exposure through open house tours, advertising, signage, and online listing services such as MLS.ca and brokerage websites. They will help you take professional looking photos and video of your home to show off its best features. You can create further exposure on your own by discussing your home on social media, or starting a blog about your home selling experience.
To keep your home clean and free of distractions during tours, your real estate agent may recommend that you leave your home while a showing is going on. When that happens it's best to make arrangements for pet-sitting and family outings. For unscheduled showings, having a contingency plan such as going to the library for work or homework, having picnic supplies on hand, planning to cook at the houses of friends or family, or going to the gym can save you a lot of stress.
Selling your home can be an intimidating process, but it doesn't have to be. Choosing your REALTOR® well, keeping yourself informed, and maintaining realistic expectations will help ensure a smooth process and a great selling price.