You’re ready to sell. Now what?
Selling a property means you’ll be making a number of important decisions. Hiring a skilled industry member to work on your behalf is invaluable. Their expertise ensures you understand each and every step of this complex process.
Educated and Regulated
Industry members complete extensive education before becoming licensed and continue to take courses throughout their professional career. They are also licensed and regulated by the Real Estate Council of Alberta.
What’s your price
One of the first decisions you need to make is the listing price. Meaning, what price you’ll ask for your house?
I can help by providing a current market evaluation. This evaluation compares recent housing sale prices in your neighborhood - making it easier for you to choose a fair & equitable listing price that makes sense.
Industry members are required to discuss the different types of relationships available to you. Depending on the one you chose, their legal obligations and yours will vary:
Industry members are required to discuss these relationships with you, and their obligations to you vary based on the one you choose.
They must also review, complete and give you a copy of the Agency Relationships Guide before signing any relationship agreement. The guide highlights basic information about what you can expect and the responsibilities surrounding each relationship type. It provides information to assist you in choosing a relationship that works best for you.
Written Service Agreements
Once you select an industry member and brokerage to work with, you’ll likely be asked to enter into a written service agreement. This agreement is a contract between a brokerage or designated agent and a client. It says you, as the client, agree to hire or engage the service of the brokerage or designated agent to act on your behalf in a real estate transaction. In return, the brokerage or designated agent agrees to provide you the services specified in the contract and to fulfill various obligations.
In common law brokerages, individual industry members registered with that real estate brokerage enter into service agreements on behalf of the brokerage and represent the brokerage in the delivery of the agreed upon services.
As the seller, it’s important to know that a service agreement is really a seller/brokerage agreement – more commonly known as a listing agreement. Written service agreements are preferred, because they document specifics of your service arrangement, along with the relationship between you and your industry member. These specifics include:
Your service agreement should also include the amount or method of calculating the remuneration paid to your industry member and the conditions for payment. Keep in mind that the amount of commission between you and your industry member may be negotiable.
Commission payments are made to the brokerage, who then pays the industry member that worked with you.
Remember: Real estate, mortgage brokering and real estate appraisal are services, so Goods and Services Tax (GST) are applicable.
Gathering your Documents
To facilitate the marketing of your property, a current Real Property Report is necessary. This document provides a buyer verification of municipal compliance. Condominium owners also need to gather applicable documents. If you’re unfamiliar with these documents, contact your industry member or lawyer for further information.
Disclosures – Material Latent Defects
A latent defect is a fault in the property that could not have been discovered by a reasonably thorough home inspection before the sale. A material defect is any property defect that could affect a buyer’s decision to purchase or affect the property’s value - like a cracked foundation. Sellers must disclose material latent defects.
The following is a brief list of defects:
and may include:
As a seller, you can’t conceal defects or mislead buyers about the condition of your property, and when answering questions you must be honest. Whether you sell the property yourself or through an industry member, it's your responsibility to disclose any material latent defects to potential buyers.
When you sell a property, you need to decide what items you're taking and what you're leaving behind. Attached goods are considered affixed to the property, like curtain rods or water softeners. Anything attached to the property stays, unless otherwise agreed to by the buyer and seller. Attached items you plan on taking must be identified in the purchase contract as exclusions.
There may be unattached items you're leaving with the property that may become marketing features – like appliances and window coverings. Their inclusion or exclusion in the purchase contract can be negotiated.
You'll also need to know if any goods are leased or under a long-term contractual arrangement (e.g. alarm systems). Ensure the purchase contract reflects your intention regarding these items. It’s important to discuss your intentions to include or exclude items prior to selling your property with your industry member.
Your listing agreement (service agreement) with an industry member will likely include details about property inclusions and exclusions and property defects.
In Alberta, spouses that aren’t listed on title may have a right to make decisions about selling the property. This is called Dower Rights and is derived from the Dower Act. The untitled spouse must consent to a sale, in writing, in order for the sale to proceed. See your lawyer for further information if you believe this applies to you.
Beyond the sale price, other financial factors may impact your decisions during the selling process. Before you sell, call your mortgage lender to clarify the terms of your mortgage and to discuss options. When working with an industry member, you’ll be asked to sign a mortgage verification form. This grants them permission to verify your mortgage terms and conditions.
If you have an open mortgage, you’ll probably be able to discharge it without penalty. If you have a closed mortgage, you may have to pay a penalty. You may be able to transfer (port) your mortgage to the home you purchase. You can clarify this with your mortgage lender prior to listing your property.
A buyer may ask to assume your mortgage or borrow the money from you to purchase your property. There are costs and potential liabilities with each option, so it’s critical you understand your particular situation. It’s important you remember payout penalties can be substantial.
Offers & Contracts
Purchase contracts developed by the industry set out terms and conditions of a real estate transaction. This standard form agreement can be modified by buyers and sellers to reflect transaction requirements.
When presented with a purchase contract, you may accept, reject or counter the offer. If you choose to counter the offer, the negotiations continue until both parties agree to the terms, or the offer expires.
If both the buyer and seller are working with industry members, their representatives can’t make or accept an offer on their behalf, unless they've been clearly authorized to do so in writing. However, they must communicate the progress of the negotiation to their respective parties. You should also be aware that, in general:
Being familiar with the clauses ensure you ask your industry member and/or legal representative appropriate and applicable questions. This knowledge is also helpful when you’re a buyer preparing an offer, or when evaluating offers as a seller.
Terms and Conditions
Buyers commonly insert conditions to meet their needs.
Other purchase contract terms include possession date and the inclusion or exclusion of attached goods (affixed to the home, eg. light fixtures, built-ins) and unattached goods (not affixed to the home, eg. furniture).
When presented with conditional offer(s) from prospective buyer(s), discuss the offers’ terms and conditions with your industry member representative. They’ll assist you in understanding what the terms and conditions mean, so you can decide whether you want to accept the conditional offer or make a counter-offer.
Your industry member must communicate all offers to you as they are received. However, there aren’t any rules governing the order in which you respond to multiple offers, and you don’t have to accept the highest offer. You decide which offer, if any, will be accepted, countered, or rejected. You and your industry member are under no obligation to disclose to a buyer that other buyers have also made offers for the home.
Nevertheless, this disclosure may be in your best interest. Have your industry member explain your options in a multiple offer situation. For further information, read the Multiple Offer Information Bulletin.
Contact a Lawyer
You will need to involve a lawyer for title transfer and mortgage discharge. Property title transfers between sellers and buyers must be recorded at Alberta Land Titles to protect the new owners. All documents will be signed in the lawyer’s office before the possession date. Select a lawyer early in the selling process and consult him or her if you have any legal questions. For further information on real estate lawyers, contact the Law Society of Alberta.
For extensive information and advice regarding the selling process contact me for any further details.
Information provided by the Real Estate Council of Alberta