SELLING A PROPERTY – TIPS
Real Estate Sale
Following these simple tips will very likely save you time, hassles, and money down the road:
- First Steps in a Real Estate Sale
- The Mortgage
- The Listing Agreement
- Dual Agency
- Don’t Sign Anything Until You Speak With Your Lawyer
- Where Does the Money Go?
- When Do You Get Your Money?
- Before Closing
First Steps in a Real Estate Sale
There are a number of first steps to consider before you put your property up for sale, including:
- Real Property Report: You should have or can order a Real Property Report (RPR), with evidence of Municipal Compliance, for your property, which shows the current location of any buildings, and all additions and improvements on the property. If your RPR is not current, it’s vital that you get an updated one. RPRs are not typically required for condo sales, but there are some exceptions, so give us a call and we’ll let you know if your transaction requires a RPR.
- Check Title: It’s always a good idea to check title before you sell, to ensure you have no unpleasant surprises down the road, such as liens against the property, or other encumbrances you knew nothing about. It’s always better to be prepared, and deal with any potential issue up front, than to end up having to resolve a dispute midway through a real estate transaction.
- Check Zoning: Again, it’s always a good idea to check that your property complies with current municipal zoning bylaws and requirements. Any prudent buyer will look into this in any event, so it’s better to be prepared up front.
- Choose an Experienced Realtor: An experienced and knowledgeable realtor can prove invaluable when it comes to preparations you may need to make to ensure your property draws top dollar on the market, and to advise you when you receive an offer.
- Choose an Experienced Real Estate Lawyer: There is simply no substitute for a knowledgeable and experienced real estate lawyer, and we would be honoured to assist you in this regard, since real estate is the bulk of what we do. We assist with hundreds of transactions every year, and know what to look for to avoid potential pitfalls and problems.
Having assisted thousands of people with their real estate transactions, we know how valuable it is to consider these steps before you put your property up for sale … that way you can sell your property with confidence and trust that you’re protected against any future legal or other issues.
It’s advisable to consult with a lawyer to know if you should allow a prospective buyer to assume your mortgage. In Alberta, a buyer may be able to assume your mortgage without qualifying. With a CMHC mortgage however, you may still be liable for the mortgage if the buyer fails to meet the obligations associated with the mortgage. We can advise whether it would be wise to let your mortgage be assumed, or if the best practice in your particular case is to discharge the mortgage and let the buyer obtain new financing.
Always remember that most mortgages demand an extremely high payout penalty for selling or refinancing your property before the term is expired. So be aware of your rights and responsibilities, and seek advice if you’re not certain.
The Listing Agreement
Before you sign a listing agreement with a realtor, shop around and consider the length of the agreement. A typical listing period is 90 days, but there may be reasons for reducing (or extending) that period in your particular case. The listing agreement also sets out the conditions of the commission you will pay on the sale. If another realtor represents the buyer, that person will receive part of the total commission agreed upon in the listing agreement.
Realtors in Alberta are allowed to be dual agents, so you may be asked to agree to this when signing a listing agreement for your property. Many sellers do not fully understand the implications of having an agent represent both parties to a real estate transaction (the seller and the buyer), and merely sign the “dual agency acknowledgement” without further inquiry.
While every circumstance is unique, we generally advise against this. Having your own realtor ensures that your best interests are vigorously represented when you are presented with an offer.
The Real Estate Sales Agreement
When a buyer shows serious interest in your property, you will be presented with an “offer to purchase” on a standard “Real Estate Purchase Contract” form.
General Provisions …
This form contains all the standard provisions of a purchase contract, and you are free to accept, reject, or counter the offer as part of a negotiation process. Seek advice and guidance from your realtor at this point to ensure you’re getting the best value for your money in the current market, but know that once both parties have accepted and signed this document, it becomes a valid and binding legal contract.
It’s critical that you understand all the terms and conditions in your offer to purchase before you sign, to avoid potential issues down the road. For example, are both parties clear about exactly which items will stay with the property you’re buying and which items you wish to take away? Don’t make assumptions! Talk to your realtor and make certain that you understand all the terms and conditions you’re accepting in the contract.
Terms and Conditions to Protect …
The buyer is likely to include a number of conditions in the purchase offer which have to be met in order for the deal to close. Some of these conditions may include:
- Selling the buyer’s home
- Home inspection
- Repairing or replacing an existing defect in your property
There is a period between the signing of the offer to purchase and the conditional removal dates during which your hands may be tied. Depending on the conditions of the offer, you may not be permitted to negotiate with other buyers during this time, and may simply have to wait until all conditions are removed, or until the deal falls through – whichever comes first. If at all possible, we advise that you try to keep this period reasonably short – typically within two to three weeks.
If the purchase is subject to financing, work with your realtor to find out if the buyer is able to get the required financing. Don’t just assume this to be the case! Your realtor can help you know if the buyer has been pre-approved for financing or not – in some circumstances, this may affect your response to the offer.
Sale of Buyer’s Home …
If the purchase is subject to the sale of the buyer’s home, again, work with your realtor to ensure that you have provisions in the purchase agreement enabling you to entertain other offers during this time, under certain conditions.
Don’t Sign Anything … Before Speaking With Your Lawyer
Many people overlook this step and only speak with a lawyer after they have signed an offer to purchase. At that point, however, it’s a legal contract, binding on both parties (after all conditions are removed), and there may be terms of the contract that could cause you problems if you don’t clearly understand their implications prior to signing.
While realtors typically prepare a purchase contract, they may not be familiar with all the legal implications of certain provisions in your particular case, so it’s wise to seek expert legal advice before you sign to avoid problems that are difficult or impossible to fix after signing.
If for whatever reason you can’t speak with a lawyer before signing, then advise your realtor to make the sale conditional upon your lawyer’s approval – another layer of security to protect your interests.
Where Does the Money Go?
As part of our professional services, we will prepare a detailed calculation sheet reflecting a reconciliation of all funds relating to your sale, including:
- Legal fees and disbursements
- Property tax adjustments
- Commission paid to realtor(s)
- Mortgage payout
- Funds to be disbursed to you upon closing
When Do You Get Your Money?
You will get your funds after the proceeds of the sale are received by your lawyer’s office, and any mortgages have been paid out – generally within a few days after the sale proceeds are received. It is typical for your funds to be released on the day of closing but, in some cases, you may experience some delay due to things like a Land Title issue or buyer’s financing.
Once you have a firm agreement in place, with all conditions removed, you should consider the following:
- Arrange to cancel your utilities.
- Ensure your home or property will be in the same condition at closing as it was on the date the purchase agreement was signed.
- Don’t cancel your property insurance until the deal is finalized and you’ve received your funds.
- Don’t give the buyer a key, since your lawyer typically approves a release of keys through your realtor on the transaction closing date.
Please feel free to contact us if you have any questions that aren’t answered on our site, or to schedule an appointment. We’re always happy to chat with you about any of your legal needs.
- Phone: (587) 272-2050
- E-mail: email@example.com