How to Sell A House in Canada - A Complete Step by Step Guide
Wondering how to sell a house in Canada? Read these tips. Selling and buying property in Canada is a legal act of transferring rights to the property from the seller to the buyer.
Transferring of rights is recorded in the appropriate municipal authority of the district, where a house or an apartment is sold. If the property you sell includes land on which the house is located, then the land rights are transferred too.
In Ontario, registration of property is carried out by the Real Property Registration Branch of the Ministry of Consumer and Business Services (www.cbs.gov.on.ca), also known as the Land Registry Office.
How to sell a house in Canada - the simplified version:
- The seller finds a buyer for the property.
- Once a buyer is found, the seller negotiates the deal, including the price, and then execute a contract of sale.
- After signing the contract of sale, the seller must comply with all conditions of the contract, make all necessary payments, then arrange the act of transferring rights to the property at the Land Registry Office.
Although in Canada you can sell a house yourself, without resorting to the services of specialists, the vast majority of sellers prefer to do this with an agent. Therefore, we will discuss here how to sell a house with a real estate agent.
How to sell a house in Canada: Step 1 - Choosing a real estate agent
The first important step is to choose an agent whom you can entrust the sale of your property. What qualities should you look for when choosing an agent? It should be a creative professional with the ability to think outside the box, who will attract many potential buyers to your house.
The second quality of an agent should be integrity. Some real estate agents just put information about your home or apartment in the MLS database, and wait for interested buyers to start ringing.
This is not enough, they need to work on advertising your property. Also, the agent must be willing to meet with potential buyers at a convenient time for them to host an Open House, make a presentation of your property, and so on.
How to sell a house in Canada: Step 2 - Signing a contract with a real estate agent
Relationship with an agent on selling a property is defined by a contract called Listing Agreement. You sign a contract not with an agent but with the brokerage, where the agent works. This gives you additional guarantees, as each brokerage is an official body whose activities are regulated and monitored.
The contract is for sale of a specific real estate, and it specifies the conditions under which it is sold. In particular, it specifies the commission of agents of the seller and the buyer; provides a detailed description of the house, to the extent of including all drapes and chandeliers, and so on.
The contract is signed for a fixed term, usually for several months. The maximum allowed period is 6 months, but it may be extended by mutual agreement of the parties. After expiration of the contract the parties are free from their obligations.
How to sell a house in Canada: Step 3 - Determining the Listing Price
Determining listing price is the most difficult part of selling a house and the most important element of the entire sales strategy. The correct definition of the listing price is the starting point to a successful sale of the property. And the wrong definition of this parameter can be a major cause of failure.
In most cases, sellers of real estate overestimate the value of the property. This is understandable, because in addition to the total market value of their property, there is also a personal value. Besides, everyone wants to get a maximum benefit from the sale of their property, which is also understandable.
However, few sellers are able to cope with the emotions and approach the definition of listing price with cold mind, by assessing the state of the market and the value of their property.
What is the solution? Find a good agent who will conduct a detailed market analysis to determine the market value of your property and advise you what price would be for your property.
Do not forget that as soon as information about your property goes in MLS, it will be recorded and stored in the history of your property forever. It's like a credit history or a criminal record. All errors or incorrect tactical moves will stay in these records for ever.
Here is an example. Originally a house was put up for sale at an inflated price. The house was in the market for 120 days and wasn't sold. Then, either it was removed altogether from sale, or the price was lowered.
For any agent of a buyer who has access to the sales history of any property in MLS, it will be a signal that something is wrong with the house, since it is not sold. As a result, in order to persuade customers to buy, the seller will be forced to lower the price below its market value. That is the seller, who originally inflated the price, can ultimately loose.
Therefore it's important to approach determining the sales price based on calculation, not on personal feelings. An experienced agent can help you in determine the correct initial price, and help you sell your property without delay, and without significant reduction in price. Moreover, an agent will tell you what to do to maximize the value of your property with minimal additional effort and expenses on your part.
How to sell a house in Canada: Step 4 - Preparing your property for sale
It's best to start preparing your property for sale after you talk to a real estate. He or she will recommend you what repairs need to be done and how best to decorate the living areas and the outside space.
You have to remember that the first impression that your house or apartment makes on a potential buyer is the most important. It is therefore necessary to thoroughly wash it up and make some cosmetic repairs in your house or apartment so it looks good.
The issue of serious repairs or a radical upgrade of your home or apartment should be approached with caution. It is possible that an investment will not help you sell your property faster, and will not raise its price so that you would win from it.
There are lots of nuances to consider, and most importantly - you do not know who will buy your property, what their tastes and needs are, and whether they want to do their own changes to the house.
Therefore it is best to consult with an agent before you decide to do major repairs. The agent will give you his expert opinion, how much work is needed to how to prepare your house for sale, and will recommend specialists who can do this work.
He can recommend you specialists who can decorate your home before the sale (so called "staging"). Remember that if you invest money in the repairs and decorations, this should pay off - that is increase the value of your property and expedite the sale.
It's therefore very important to deal with an agent who understands this and is able to help increase the market value of your home real estate with minimum investment.
How to sell a house in Canada: Step 5 - Preparation of promotional materials and development of sales strategies
As long as no one knows that you are selling your property, nobody would buy it. Therefore, one of the main objectives of selling real estate is an active advertising campaign. Real estate is a commodity as everything else, and you need to use the same approach.
How to sell a house in Canada - Preparing Promotional Materials:
- Determine the range of potential buyers. You need to decide what social group would be interested in buying your house. For example, a large family or a middle-aged people with good income will not be interested in buying a small apartment in a condominium.
- It is more likely to attract young professionals and immigrant newcomers who have the funds to purchase low-cost housing. You should take into consideration such as the area where the property is sold, composition of the population, living space and land area, and so on.
- Create an exit strategy for finding potential buyers. Different social groups use different sources, and to you need to find the best way to convey information to your target audience.
- Prepare promotional materials. Sending the message to potential buyers about selling a house is only half the battle. You should get the message through to them, and most importantly, impress them.
Therefore it is important to prepare promotional materials properly - they should be visually appealing, well structured, informative, and concise. Promotional materials should be directed to your target audience and emphasize that your house offers them what they need.
How to sell a house in Canada: Step 4 - Finding buyers
Once your real estate receives the right to do sell your house or apartment, he begins to search for customers. At this point, you will need to prepare your house for sale, develop a strategy of finding customers, and develop marketing materials.
It's important to remember that potential buyers are especially interested in property which just has appeared on the market. Most agents begin their morning with browsing and noting new additions to the MLS database.
If a property is listed on sale for a long time, it is raises a lot of questions, the first being "what's wrong with it?" The delay may be caused by improperly set selling price, or by poor presentation or promotional materials. It is important to conduct an advertising campaign from the very beginning.
However, advertising campaigns does not guarantee that the property will be sold. Presentation, especially during events such as Open House, is very important too. Whether or not people who visited your house will consider buying it, depends on the first impression your house makes.
Another important factor is how many people visited your home during Open House, and whether your agent will be ale to create an atmosphere of an auction, to make multiple buyers bidding on your house.
How to Sell a house in Canada - Step 7: Negotiations with the buyer
Once you find a potential buyer, you start the process of negotiations.
First, the buyer prepares an Offer. It is prepared in the form of Agreement of Purchase and Sale, in which the buyer puts the price at which he would like to buy the property, and specifies the conditions.
You can accept the offer, reject it entirely, or to continue negotiating the price and conditions.
If you decide to continue negotiating and to offer the buyer other conditions, you enter them into the Agreement of Purchase and Sale and pass to the buyer the counter offer. Then comes his turn to decide what to accept and what - not to accept.
The buyer can either agree with your updated terms and price, or abandon the idea of buying, or he may adjust the contract and offer new terms.
This can last until the parties agree to terms or, in the worst case scenario, reject the transaction. Therefore the agents involved in the negotiation with the buyer and seller has to find conditions acceptable for both parties.
How to sell a house in Canada: Step 8 - Transaction
Once the parties agree to terms, they conclude a transaction. Acceptance of the Offer is entered into the contract with the exact date and time, up to a minute, and is signed by the party that accepted the terms in their final form. At this stage, usually the buyer makes a downpayment.
The period the date of contract until the formal transfer of rights ranges from 60 to 90 days (up to closing the deal - closing date), and is determined by mutual agreement between the seller and the buyer. During this time, the seller and the buyer must meet the conditions agreed, carry out the necessary checks and prepare legal papers.
The following conditions are usually included in the contract to protect the interests of the buyer:
- Conducting a technical inspection. As a rule, if the results do not suit the buyer, he may cancel the transaction, or request either a price reduction or elimination of deficiencies.
- Getting a mortgage loan to purchase the house. If the buyer fails to obtain a loan from a bank or a financial institution, he has the right to cancel the transaction.
- Sale of property by the buyer. This is a fairly common situation, since often people who already have a house, buy another house, and before you they can buy it, they need to sell what they own.
- There may be other conditions that give the buyer the opportunity to cancel the transaction. They are included in the Agreement of Purchase and Sale at the insistence of the buyer, and it is very important at the stage of negotiations to try to reduce these terms to a minimum. After each meeting each condition specified in the contract, the buyer must provide a proof or send a waiver.
In addition to the conditions specified in the contract between the buyer and the seller, it's also required to prepare legal documents for the transfer of ownership. These questions are settled by lawyers engaged by the buyer and the seller.
The Agreement of Purchase and Sale is drafted by the buyer's agent. The lawyers prepare papers for registration of transfer of property from one owner to another.
Their task is to verify compliance with everything that was stated by the seller, checking facts, compliance with legislation, absence of other claimants to the property, debt, and so on. When selling a house in Canada, the lawyers must conduct a detailed legal inspection of the property so the buyer has no problems.
Once all the conditions of the contract are met, on the closing date, the lawyers of the parties register the transaction in the Land Registry Office and issue a Deed - an agreement that transfers ownership. After registration of the Deed, the buyer becomes the owner of the property and the seller receives the amount of money specified in the contract.
On How to Sell a House in Canada I used materials written by Helen Riabinin, Sales Representative, Century 21 St.Andrew's Realty Inc. for Russian Toronto.
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