You’re ready to sell…
Selling a property means you’ll be making a number of important decisions. Hiring a skilled real estate professional to work on your behalf is invaluable. Their expertise ensures you understand each and every step of this complex process.
It’s a good idea to interview several real estate professionals before you hire one. This way, you’ll establish open communication and a good working relationship from the start.
One of the first decisions you need to make is the listing price. Meaning, what price you want to sell your house for.
Your real estate professional will help by providing a current market evaluation. This evaluation compares recent housing sale prices in your neighbourhood – making it easier for you decide on an appropriate listing price.
Once you select a real estate professional and brokerage to work with, you will 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 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. Written service agreements are mandatory for residential real estate client relationships.
Written service agreements document the specifics of the services to be provided, along with the relationship between you and your real estate professional. These specifics include:
- The nature of the services provided
- Responsibilities of parties
- Collection and use of confidential information
- Amount or method of calculating the remuneration (payment) to the real estate professional
- Duration of the agreement
- Provisions for termination of the agreement.
To help in the marketing of your property, you will need a current Real Property Report. This document provides verification of municipal compliance to a potential buyer. Condo owners also need to gather the applicable condo documents. If you’re unfamiliar with these documents, talk to your real estate professional or lawyer for further information.
When you sell a property, you need to decide what items you are taking and what you are leaving behind. Attached goods are 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.
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 a mortgage brokerage professional, you’ll be asked to sign a mortgage verification form. This grants them permission to verify your mortgage terms and conditions.
Purchase contracts developed by the industry set out terms and conditions of a real estate transaction. Buyers and sellers can modify the standard form agreement to reflect transaction requirements.
When presented with a purchase contract (offer to purchase) from a buyer, you may accept, reject or counter the offer. If you counter the offer, the negotiations continue until both parties agree to the terms, or the offer expires.
Your real estate professional must communicate the progress of the negotiation with you, but can’t accept or make offers on your behalf unless you give them written authorization to do so.
You should also be aware that, in general:
- Offers or counter offers may be withdrawn at any time before acceptance.
- Withdrawal or acceptance of an offer or counter offer is only effective when the situation is communicated to the other party, or to the other party’s real estate professional.
- When an offer or counter offer has been accepted there is a binding contract between buyer and seller, even if it may be subject to certain conditions having to be satisfied.
Be familiar with the clauses you’re including in any counter offer. Ensure you ask your real estate professional and/or legal representative appropriate and applicable questions.
Your real estate professional 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. As the seller, you determine the process to be followed in the event of multiple offers. You and your real estate professional 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 real estate professional explain your options in a multiple offer situation.
Alberta real estate professionals complete comprehensive education before becoming licensed and continue to take mandatory professional development courses throughout their professional career. They are also licensed and regulated by the Real Estate Council of Alberta.
Real estate professionals are required to discuss the different types of relationships available to you. Depending on the one you choose, their legal obligations and yours will vary:
- Designated Agency is when the agency relationship exists between you as the client and a designated real estate professional (or professionals) from a particular brokerage – not with the brokerage itself. The real estate professional (or professionals) you choose is your designated agent from that brokerage.
- Customer Relationship – a consumer can choose to represent themselves in a purchase or sale when a real estate professional represents the other party. The real estate professional has an obligation to act honestly with the customer, and with reasonable care and skill, but won\u2019t owe the customer any fiduciary duties.
- Transaction Brokerage – allows an agent to work with both the seller and buyer in the same transaction, while treating both clients in an even-handed, objective and impartial manner.
Your real estate professional must also review, complete and give you a copy of the Consumer Relationships Guide. This guide highlights basic information about what you can expect and the responsibilities surrounding each relationship type. It provides information to help you choose a relationship that works best for you.
Your service agreement has to include the amount or method of calculating the remuneration paid to your real estate professional and the conditions for payment. The amount of commission between you and a real estate professional is negotiable between the parties.
Commission can be calculated as a:
- Percentage of the sale price (for real estate).
- Flat fee or schedule of flat fees.
- Fee for service.
- Any combination of the above.
Commission payments are made to the brokerage, which then pays the real estate professional that worked with you.
Real estate, mortgage brokering and real estate appraisal are services, so Goods and Services Tax (GST) is applicable.
Sellers cannot conceal defects or mislead buyers about the condition of their property and they must be honest when answering questions. You must disclose all material latent defects to potential buyers, whether you’re selling the property yourself or through a real estate professional.
A latent defect or hidden defect is a property fault that wouldn’t have been discovered through a reasonably thorough pre-sale home inspection. 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.
The following is a brief list of defects:
- Defects that render a property dangerous or potentially dangerous to the occupants.
- Defects that render a property unfit for habitation.
- Defects that render a property unfit for the purpose which the buyer is acquiring it, at least where the buyer has made this purpose know to his/her real estate professional or the seller’s real estate professional.
and may include:
- Defects that would involve a great expense to remedy.
- Local authority and similar notices received by the seller that prejudicially affect a property.
- Lack of appropriate municipal building and other permits for a property.
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.
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 should 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.
Buyers commonly insert conditions to meet their needs. For example:
- Obtaining satisfactory financing.
- Satisfactory inspection reports for the condition of the property.
- Sale of the buyer’s current home.
- Third party approval of transaction (e.g. parent, employer).
- Confirmation of tenancy information.
- Confirmation of renovation costs
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 real estate professional. 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.
You will need a real estate 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.