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- Herausgeber: John Wiley & Sons
- Kategorie: Ratgeber
- Sprache: Englisch
Make your next house sale or purchase a homerun with the latest edition of this celebrated Canadian guide In the Fifth Edition of Buying and Selling a Home For Canadians For Dummies, best-selling authors and real estate experts Douglas Gray and Peter Mitham unpack the good, the bad, and the "I can't believe I didn't think of that" of buying or selling a home in Canada. Buyers will discover the answers to the questions that have kept them up at night, from whether they need an agent to what they should look for in a new home. Sellers will find out how to price their home for maximum value, the real costs associated with real estate sales, and how to list their place. Real estate doesn't have to be intimidating. Gray and Mitham show you how to navigate a home sale or purchase with skill and confidence and have fun doing it. You'll: * Identify unique, regional issues you should consider whether you're buying a condo in Toronto or a two-bedroom in Yellowknife * Discover how to maximize your home's asking price by presenting it in its best light * Learn the tricks of the trade when it comes to finding hidden gems and diamonds in the rough in a seller's market Perfect for first-time home buyers and sellers as well as people who've been around the block a few times, Buying and Selling a Home For Canadians For Dummies is the ultimate guide for Canucks who are looking for expert help throughout this seriously important and exciting process.
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Veröffentlichungsjahr: 2020
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Buying & Selling a Home For Canadians For Dummies®, 5th edition
Published by: John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774, www.wiley.com
Copyright © 2021 by John Wiley & Sons, Inc., Hoboken, New Jersey
Published simultaneously in Canada
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Library of Congress Control Number: 2020947493
ISBN: 978-1-119-71591-7
ISBN 978-1-119-71619-8 (ebk); ISBN 978-1-119-71620-4 (ebk)
Buying & Selling a Home For Canadians For Dummies®
To view this book's Cheat Sheet, simply go to www.dummies.com and search for “Buying & Selling a Home For Canadians For Dummies Cheat Sheet” in the Search box.
Table of Contents
Cover
Title Page
Copyright
Introduction
About This Book
Foolish Assumptions
Icons Used in This Book
Where to Go from Here
Part 1: Getting Started Buying and Selling a Home
Chapter 1: Buying and Selling a Home: Just the Basics
Knowing the Cast of Characters When Buying or Selling
Preparing to Buy a Home
Considering Some Important Questions to Ask When You’re Ready to Buy
Knowing What Happens When You Sell
Answering Some Questions You May Have When Selling
Chapter 2: Introducing the Key Players
Understanding the Real Estate Agent’s Role
Choosing to Go It Alone
Valuing the Appraisal Process
Comprehending How a Lawyer Fits into the Picture
Part 2: Preparing to Buy a Home
Chapter 3: Sizing Up Home Ownership
Recapping the Joys of Ownership
Knowing What’s Right for You
Knowing What You Want
Knowing When the Time Is Right
Chapter 4: Understanding Your Finances
Increasing Your Down Payment
Getting Up Close and Personal with Your Finances
Determining What Size Mortgage You Can Carry
Getting a Head Start with a Preapproved Mortgage
Anticipating the Closing Costs
Remembering Little Extras You May Not Have Considered
Chapter 5: Knowing Your Mortgage Options
Defining Your Financing Goals
Mastering the Lingo: Mortgage Jargon 101
Understanding the Types of Mortgages
Mortgage-a-rama: All the Nifty Options
Playing It Safe: High-Ratio Mortgage Insurance
Covering Your Bases: Life and Illness
Going Mortgage Hunting: What You Need to Do to Get a Mortgage
Questioning Your Lender
Helping Your Lender Help You: Prepare Your Information
Part 3: Discovering Your Perfect Home
Chapter 6: Finding a Home That’s Right for You
Looking Closer at Your Housing Options: Determining the Best Fit
Buying into a Fresh Start
Following a Lead: Resale Houses
Rising Ambitions: Investigating Condos
Living Co-operatively
Home Owning as an Investment
Chapter 7: Shopping for a Home: The Nitty-Gritty
Finding the Right Home for You
Checking Out the ’Hood
Drilling into Opportunities
Getting Up Close with Foreclosures
Taking a Closer Look at Properties
Coming to Grips with Coming up Empty
Getting Fired Up: Recognizing What Powers the House
Stacking Them Up — How the Homes Compare
Chapter 8: This Home Is Great! (Except for … )
Putting Your Emotions Aside
Reality Check: Can You Fix the Home’s Problems?
Catching a Flipped Home
Check It Out: Investigating Your Prospective New Home
Part 4: Getting the House You Want
Chapter 9: Making a Deal on Your New Home
Preparing to Make an Offer
Ready to Purchase: Making an Offer
Chapter 10: Signing On to a New Life
Taking Care of the Paperwork
The Ins and Outs of Inspections
Inspecting a Newly Built Home
Sizing Up an Inspection Report
Checking Out Condo Inspections
You Are the Owner of All You Survey
Chapter 11: Protecting Your Interests: Insurance and Warranties
Insuring Your Home
Finding Out Whether the Property Comes with a Warranty
Preparing for the Preclosing Walk-Through
Chapter 12: Closing Time: Closing Events and Moving Day
Identifying What You Sign
Recognizing What You Pay
Taking Possession on the Possession Date
Making Your Moving Experience One to Remember
Being Organized: The Moving Timeline
Part 5: Preparing to Sell Your Home
Chapter 13: Deciding To Sell (or Stay)
Making the Big Decision
Looking At Your Budget: Your Finances
Considering Your Mortgage When Moving
Knowing the Ups And Downs Of Financing
Timing Your Move
Changing Your Mind about Selling
Considering Estate Sales to Sell Your House
Chapter 14: Setting a Price and Knowing the Cost
Pricing Your House to Sell
Comprehending the Basics of Appraisals for Sellers
Sum Fun: The Math of Selling Your Home
Some Good News about Taxes
Chapter 15: Making Your House Shine
Taking a Closer Look at Inspections for Sellers
Undertaking Home Improvements
Going to Market
Showing (Off) Your Home
Part 6: Sealing the Deal
Chapter 16: Examining Listings and Disclosures
Getting the Lowdown on Listing Contracts
Grasping the Importance of Disclosure Statements
Chapter 17: Understanding the Legal Stuff
Cooking Up a Recipe for a Successful Contract
Reading the Recipe: Basic Contract Know-How
Keeping Condo Owners Covered
Examining Deeds and Titles
Chapter 18: Being Cognisant of Negotiating Tricks and Bargaining Chips
Keeping Your Eye on the Prize: What’s Really Important
Getting an Overview of the Negotiating Process
Contending with Multiple Offers
Dealing with Backup Offers
Part 7: The Part of Tens
Chapter 19: Ten Regional Concerns When Buying a Home
Check Transportation Routes in Cities
Be Cautious about Industrial Sites
Stay Away from Major Roads If You’re Noise-Sensitive (Or Nose-Sensitive)
Be Certain Your Street’s on the Level
Make Sure You’re in a Good School District
Be Sensitive to How Local Climates Can Affect Your Lifestyle
Watch Out for Waterways
Only You Can Avoid Wildfires
Research Services in Rural Areas
Think Twice about Leased Land
Chapter 20: Ten Tips for Condo Buyers
Insist on Seeing and Reading Documentation
Have the Condo Inspected
Use Your Measuring Tape If You Buy New
Get to Know the Board of Directors
Stay Away from High-Rental Developments
Watch Out for Maintenance Fees That Are Too Good to Be True
Ask about the Building’s Commercial Property
Share as Few Walls as Possible, Especially If You Crave Quiet
Own Your Locker and Parking Space
Check for Signs of Aging
Chapter 21: Ten Tips for Home Sellers
Sell When Your Home Is at Its Peak
Prepare Your Home for Sale
Fix the Little Things
Light It Up
Let Your Neighbours Know
Know Where to Advertise
Get Your Documents in Order
Prequalify Buyers
Tighten Security
Send Notifications: My Dear Tenants …
Chapter 22: Ten Ways to Protect Your Investment
Inspect the Exterior
Know Your Surroundings: Landscaping, Yard, and Deck
Maintain Heating and Cooling Systems
Stay Warm: Insulation
Breathe Easy: Ventilation
Sleep Soundly: Home Safety
Keep an Eye on Your Doors and Windows
Cook Up a Storm in a Safe Kitchen
Get Away in a Leak-Free Bathroom
Into the Dark: The Basement and Attic
Glossary
Index
About the Authors
Advertisement Page
Connect with Dummies
End User License Agreement
List of Tables
Chapter 3
TABLE 3-1 Home Priority List
Chapter 4
TABLE 4-1 Monthly Budget Worksheet
Chapter 5
TABLE 5-1 Amortization Payment Comparison
TABLE 5-2 Breakdown of Blended Payments
TABLE 5-3 Mortgage Payment Frequency Comparison
Chapter 7
TABLE 7-1 Home Priority List
TABLE 7-2 Neighbourhood and Location Priorities List
TABLE 7-3 Home Comparisons
Chapter 14
TABLE 14-1 Calculating the Net Proceeds from the Sale
List of Illustrations
Chapter 8
FIGURE 8-1: Rough estimates for home repairs and renovations.
Chapter 14
FIGURE 14-1: Your real estate agent can give you a comparative market analysis ...
Guide
Cover
Title Page
Copyright
Table of Contents
Begin Reading
Glossary
Index
About the Authors
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Introduction
Buying or selling a home is an incredibly enormous undertaking, but at the same time it shouldn’t be the cause of shortness of breath, dizziness, or an extended hospital stay. However, it does involve some of the most important financial decisions you’ll ever make, as chances are your home is the biggest asset you’ll ever own. But it’s not so bad — especially with this book in hand. Armed with information about everything from mortgages to heating systems, you can calmly face the real estate world and see how it works. With this book, you get to know what fixed-rate, open-term mortgages are. You find out just how important a home inspection can be. And most important, you discover what your priorities are, and how to match them with a home — a home of your own.
If you’re considering buying a home, you’ve come to the right place! Self-promotion aside, we tell you what you need to think about before making that huge decision, how to make your choices in a realistic and informed way, and how to avoid unexpected problems, crumbling foundations, and street parking.
If you’re selling, we share all kinds of information about what your buyer expects from you, how to get the most money for your home, and how to manage the details so you don’t overlook anything. If you’re thinking about selling your home yourself, you can find lots of tips to help you out. Selling your home is a long, intense process that many people do as a full-time job; we try to help you see whether you’re really up for that kind of do-it-yourself challenge.
Buying a new home or leaving an old and cherished one involves a lot of decisions and considerations. In this book, we outline them all and help you move on to your new home, wherever that may be.
About This Book
Some of you are buyers, some of you are sellers, and some of you are both at the same time. This new edition of Buying & Selling a Home For Canadians For Dummies builds on the valuable information published in the previous editions, dividing the book into two key parts:
Read the first half if you’re looking to buy a home.
Read the second half if you’re trying to sell one.
Because it’s good to know what’s happening on both sides of the transaction, this handy guide groups a lot of the basic information about buying and selling a home up front in a new Part 1 before getting into the nitty-gritty of either process, and we’ve extensively updated the text throughout with the latest information. We cover diverse topics like assembling the team of key experts who will make sure you hit a home run with your home purchase. We discuss finding the right mortgage for you, shopping for a new home, and selling your property whether you’re trading up, downsizing, or a change in job or life circumstances requires it.
Wherever you start reading, we guarantee you can find information that’s useful and easy to absorb. We do our best to keep it simple, but sometimes you just can’t get around using the A-word (amortization). Consider those moments like a stress test (another concept we discuss in the mortgage chapter).
Foolish Assumptions
When we revised this book, we made the following assumptions about you:
You’re interested in buying or selling a home.
We’re also fairly certain you’re more interested in owning a home than renting it, which means we focus on how you can buy and sell a home for you, your family, your parents, and your children. This book spends very little time on tenants (also known as mortgage helpers) and home-based businesses. You can find other books to help you understand those activities.
You’re fairly close to buying a home and using this book as part of the planning process.
You may even be on the fence about whether you’re ready to be a homeowner. If so, we help you navigate the pros and cons of buying and renting and explain the financial benefits that can be yours from investing in your own home. If you already have a home, this book is a great refresher course on how to handle all the details involved in choosing a new home. If this is your first time on the home-buying market, we take you through all the key decisions to make and the steps to take to get yourself into the right home at the right price.
You’re getting ready to buy a home.
Selling your current home is often an extremely tough decision, and we don’t ignore the fact that you may not feel completely ready to slap a For Sale sign on the front lawn. This book helps you determine whether you’re ready to say good-bye to your present home. If you’ve already decided on moving to a bigger and better (or a smaller and less expensive) home, we take you through the nuts and bolts of getting your home sold. We include pointers on working with a selling agent or handling the sale yourself. Everything from writing your listing, to making your home irresistible to buyers, to negotiating the best-selling conditions is all here.
Icons Used in This Book
As you read through this book, you’ll see a few icons lurking on the left-hand side. Here’s a guide to what they mean:
Extra-helpful information to help you survive in the real estate jungle.
A heads-up about potential problems and pitfalls in your path.
Reminders of important information that you don’t want to lose sight of in your home hunt or purchasing pursuit.
Definitions of terms, technical information, and stuff that you don’t necessarily need to know but may want to anyway.
Where to Go from Here
We introduce you to some of the key people who can help you navigate the purchase and sale process in Chapter 2. After you’ve made your decision to buy or sell a home, make them the next stop on your journey. We discuss the basics here, so now you’re ready to put that knowledge to work and find the home of your dreams! We won’t be far away, of course, if you have questions or need to refresh your memory of things you might have forgotten in the excitement! Or, if you’re not sure where to start, peruse the Table of Contents or index to find a topic that piques your interest.
You can also find a tonne of information online about buying and selling a home that will help keep you informed as you consider your options. In addition, check out www.dummies.com and search for “Buying & Selling a Home For Canadians” for a handy Cheat Sheet with lots of helpful information you can reference as needed. With so many things to remember along the way, it’s sure to be a handy reference for you.
Of course, your final destination is a home of your own. When you reach it, we hope you enjoy it. And when it’s time to move on, may the next one be even better!
Part 1
Getting Started Buying and Selling a Home
IN THIS PART …
Get a handle on the big picture of buying and selling a home, get oriented to the adventure that lies ahead as you scout properties, and then find a buyer when you’re ready to move on.
Find a good team backing you up and locate a real estate agent, appraiser, and lawyer that fits your needs.
Examine the pros and cons of selling your house without the use of an agent.
Chapter 1
Buying and Selling a Home: Just the Basics
IN THIS CHAPTER
Getting to know the experts who can help you buy and sell your home
Buying a home: What you need to know
Recognizing when it’s time to sell your home
Answering some questions when you’re planning to buy and sell
Any deal involving a home, whether it’s buying or selling, is usually a milestone moment in your life. It can be a step into adulthood, the moment you finally move out of our parents’ basement, or perhaps a new phase of your career. People often trade up in the size of their home when they change jobs or have children, and they often trade down to a smaller home when their kids leave and retirement beckons. Some people are nomads or serial renovators and buy several homes over a lifetime; others are small-time investors, trading in homes like other people trade stocks.
This chapter gives you a taste of what’s to come and helps you navigate the wealth of information we have to offer. Consider it your jumping-off point into the world of buying and selling a home. We introduce you to the key players in the game of residential real estate and the steps in the process. We also raise some of the key questions you’ll want to ask yourself when you’re thinking about buying a home or selling the one you have.
Knowing the Cast of Characters When Buying or Selling
Buying a home may not involve a cast of thousands, but it’s not a solo adventure, either. Several key figures are involved in helping you do the deal, and many of the same people also help you sell your property. Even though you’re the one making the decisions, you can count on guidance from experts in the areas of finance, law, and, of course, real estate.
Recognizing who’s important when buying
The obvious goal when you’re buying a home is finding a property that provides you with the amenities that meet your present and future needs at a price that meets your affordability criteria. You want a peach of a deal, not a lemon. That’s where it pays having these people on your side who know how to find what you’re looking for, making your money go further, and giving you peace of mind that your purchase is free of defects and won’t need immediate expensive repairs.
The real estate agent
The real estate agent, also known by the trademarked term Realtor, is a professional with an intimate knowledge of the market and the types of homes available in a certain market. Working with a knowledgeable agent can mean the difference between a short search and a good deal or a long process that ends up being more trouble than it’s worth. We discuss the role of the real estate agent and how to find a good one in Chapter 2.
The lender
Most people require financial help to buy a home. That help usually comes in the form of a loan, known as a mortgage. Having a lender who can provide you with a mortgage that suits your needs is important. Whether you work with a bank, credit union, or mortgage broker, securing a mortgage will be critical to your getting the kind of house you want at a price you can afford. We discuss your options for mortgages, including which source is right for you in Chapter 5.
The appraiser
Most people won’t deal directly with an appraiser when they’re buying a home, but appraisers are the folks who confirm that the price you’re paying is the one you should be paying. The appraiser assesses the fair market value of properties, helping you size up the kind of offer you should make and, more important, letting the lender know whether the home is worth the mortgage you’re asking for. Chapter 2 focuses on the role of the appraiser.
The property inspector
The property inspector is a key to avoiding trouble when buying a home. You may think the home has no issues, but the property inspector may tell quite a different story. That could be the difference between saving a few thousand on the purchase price and paying out tens of thousands on repairs. We discuss property inspections in Chapter 10.
The lawyer
Because a home purchase involves a legally binding contract, you’ll want to have a lawyer review it. A lawyer — or in some provinces, a notary — will also handle conveyancing, ensuring the documents documenting the transfer of title into your name are in good order. A lawyer focused on real estate will ensure the property you’re buying meets the legal description and is free of liens or encumbrances. The lawyer will also help protect you from real estate fraudsters (alas, they exist). Chapter 2 examines the role of a lawyer when buying a home.
Identifying who’s essential when selling
Many of the same experts who assist home buyers in purchasing a home (the possible exception is a lender) also assist home sellers. The experts will represent the property in the best possible light to attract the best offers, enabling the seller to pocket some or reinvest the proceeds in their next dream home. Here are the important people:
The real estate agent
A real estate agent can help take a load off your mind by handling the transaction for you. The agent’s role includes making sure that potential buyers know that your house is for sale, coordinating viewings, and generally making sure you can focus on preparing for the move. The professional assistance a real estate agent offers will help you achieve the best possible market value for the home in the shortest period of time. Chapter 2 looks closer at the agent’s role when selling your property.
The home stager
You may think your home looks awesome, but those mauve curtains aren’t everyone’s cup of tea. A home stager will prep your home for sale, making it look like something from a TV show, helping it live up to the listing description (and price). Even though a home doesn’t need to be staged or furnished with the latest styles to sell, a home stager can help it command a higher price than it would otherwise. We discuss home stagers in Chapter 15.
The appraiser
The appraiser also plays a critical role when selling, because an appraiser’s specialty is in determining the property’s fair market value. An appraisal will help you establish a fair list price for the property and provide documentation that validates the suggested list price. The appraiser can also let you know about market factors that will help you position the property for sale. We discuss the appraiser’s role in selling a home in Chapter 14.
The lawyer
The lawyer, even more than the real estate agent, is critical when selling a home. The lawyer handles conveyancing documents including discharge of the mortgage. If you’re selling your home yourself, without a real estate agent’s help, a lawyer can review the contract documents and ensure that you haven’t exposed yourself to future claims or liabilities. Chapter 2 focuses on the lawyer’s role when selling your house.
Preparing to Buy a Home
Buying a home can take a few days or a few weeks, but the typical process has a few key steps that remain the same, including arranging financing, finding a property, making an offer, and closing the deal. These sections look closer at these processes.
Arranging financing
How much home you can afford depends on how much cash you have for a down payment and how large a mortgage you can obtain. Knowing how much you can put towards a down payment and multiplying the amount five times will indicate the size of conventional mortgage you’ll need.
For example, a down payment of $100,000 would cover 20 percent of a home bought for $500,000. The corresponding conventional mortgage would be $400,000. However, a variety of other factors may mean the lender only approves you for a mortgage of $300,000. By pre-qualifying for a mortgage, you’ll know the price range that will guide your purchasing process. We discuss down payments and preapprovals in Chapter 4.
Finding a home
After you know how much home you can afford, scout the listings to see what’s available and where different homes are located. Work with a real estate agent who knows what you’re looking for; the agent may be able to give you a head start on your dream home. Chapter 7 discusses the ins and outs of shopping for a home.
Making an offer
Have you found a home you seriously love and that fits your budget? If so, it’s time to make an offer. The negotiating process may take a few days, and during this stage you and the seller will hammer out a contract that gets you the home you want at a price that pleases both sides on a timeline that makes everyone happy. We discuss the fine art of making an offer in Chapter 9.
Doing the due diligence
A deal isn’t done just because your offer is accepted. There’s still plenty of work to do, as we discuss in Chapters 10 and 11. You’ll need to make sure that the conditions you’ve put on the offer are satisfied, including a comprehensive property inspection that doesn’t reveal serious issues with the property that may lead you to walk away and obtaining financing. You need to make sure that the property the seller is offering is the property you’re getting and that you won’t face any headaches afterwards. After you’re satisfied that this home is right for you, you can remove the conditions and proceed to close the deal.
Closing the deal
Closing, or completing, the purchase involves a lot of paperwork. Ideally, if your real estate agent, lender, and lawyer are on the same page, it will go smoothly. Sometimes it doesn’t, so make sure the closing date isn’t the same day as the possession date, let alone the moving date. We discuss what’s involved in Chapter 12 and how you can manage the process so that it involves as few hassles as possible.
Considering Some Important Questions to Ask When You’re Ready to Buy
Never feel timid about asking questions, because questions lead to a deeper understanding of the process, your obligations, and the obligations of others. Here are some sample questions to consider as you begin your buying journey.
What is this going to cost me?
In addition to the purchase price, a home purchase comes with plenty of additional costs, including closing costs. Your lender will likely factor them in as part of your mortgage qualification process, but knowing what your costs will be will help you understand what loan amount the lender will be prepared to extend to you.
Closing costs include legal fees, sales taxes, property transfer taxes, and various adjustments that can add significantly to the purchase price. Then you have ongoing costs of ownership, including maintenance fees (charged monthly for condo dwellers), property taxes, home insurance, and of course mortgage costs. A smart buyer will also budget for special levies, extraordinary expenses, and other costs, ideally by setting aside a contingency fund.
In short, there’s plenty of costs beyond the cost of a home. Know what to expect by reading Chapter 4.
This is the right home, but is this the right neighbourhood?
You’re not just buying a home, you’re also buying into a community. We discuss neighbourhood priorities and how to size up neighbourhoods in Chapter 7.
For example, if you have visions of living in a place where everybody knows your name, be sure to talk to the neighbours before you move in. Visit the local park and bike trails and find out what they’re like. Do people greet you on the street, or do they wander around with eyes glued to a screen and ear buds blocking out the world?
Perhaps you don’t crave social interaction, but you love the amenities a community has to offer. What are the shops, restaurants, and so on like, and does the transportation infrastructure allow you to get around, either by car or public transit? Can you live life on your terms, or will you be caught waiting for a bus that comes every half hour at 40 below? (We’ve been there, and we don’t recommend it.)
Don’t forget to factor in the hidden annoyances like the summer music fest that attracts thousands of nonresidents to the local park with music blasting until late at night. What about the regional transit loop at the end of the street with the constant coming and going of diesel buses? Be sure to visit your neighbourhood at all hours to make sure it’s a place you want to live.
What kind of changes can I make?
Your house, your rules, right? Sadly, that’s not always the case. Sometimes, the structure of the home or site conditions prevent you from making the kinds of changes you want to make. You may want to add a guest suite in the basement, for example, but the reality is that there’s not enough headroom for it to be a legal suite. Alternatively, zoning bylaws may prevent you from expanding the home or adding certain uses. Other restrictions may relate to the heritage status of the building, which can seriously hamper your efforts to upgrade the property. Chapter 8 discusses several of the changes you can’t make that might be deal-breakers.
How much should I budget for maintenance?
Because every property is different, depending on age and upkeep, we can’t answer this question for you. A property inspection will give you some tips that will help you draft a budget, however. The inspection report you receive as part of your due diligence will help you understand the condition of the home you’re buying and flag areas of specific concern. You can then begin to budget for the repairs, potentially even asking for a discount off the purchase price if the seller is unwilling to undertake the repairs prior to sale.
The inspection report will guide you in developing a contingency fund you can put towards annual repairs, if not a full-blown renovation or replacement of key items such as the roof, windows, heating systems, and so forth. We discuss the cost of various renovations in Chapter 8, but individual circumstances will vary as will labour costs.
What’s my exit strategy?
Thinking about leaving your home before you’ve even bought it may seem premature. However, nothing lasts forever, so consider how and when you might like to eventually sell your place. Knowing how long you plan to be somewhere, or under what circumstances you’d consider moving, can help you determine how to structure your financing and may allow you to settle for a starter home if you’re planning on moving after three or five years.
Although a home can be a shelter from the storms of the world, some people keep trying to pay a mortgage long after economic shocks strike. Being ready to sell can help you avoid default if, for example, you lose your job and can no longer pay your mortgage. It sometimes pays to cut your losses rather than get so far into arrears that you lose all the equity you built in your home. We discuss the various factors you should take into account when determining the right time to sell in Chapter 13.
Knowing What Happens When You Sell
Selling a home is the flip side of the process of buying a home. If you’re moving to a new home, you’ll quickly discover just how different the process is. You won’t prequalify for a mortgage, but you’ll have to prepare the home to appeal to buyers. These sections give you a quick overview of the process.
Deciding to sell
Several factors play into the decision to sell, as we discuss in Chapter 13. Sometimes you have no choice, as when you change jobs, your family grows, or your financial circumstances change. The decision may be sudden or you may have thought it out. Regardless, after you make the decision to sell, the sales process begins.
Preparing the home
Preparing your home for sale involves two related activities:
You need to prepare to move, in which case it pays to read up in
Chapter 12
on decluttering your home and packing only what you need.
You want to give the home a makeover, addressing any problems and making the cosmetic changes that will boost its curb appeal. This may include minor landscaping, a paint job, and of course a general cleaning.
Chapter 15
offers plenty of tips on how to make your house shine.
Listing the home
Whether you’re working with an agent or selling the home yourself, you’ll need to make sure it gets in front of the right people. A real estate agent has the experience needed to develop a listing that brings in the right buyers, though you can also use sites that allow you to post your own ad. In some cases, an agent will promote your property in exchange for a finder’s fee. We discuss the various options available for listing a property in Chapter 16.
Negotiating the sale contract
When a buyer decides your property meets her needs, she’ll submit an offer. As the seller, you can present a counteroffer that includes your terms for the sale. Or you may accept or reject the buyer’s offer outright. You can also specify a timeline for the sale that meets your needs as part of the negotiating process. Because you’re selling the home, the onus is on the buyer to get you to part with it (unless, of course, you’re a motivated seller). We discuss the negotiating tricks in Chapter 18.
Closing the deal
After you and the buyer have hammered out the sale contract to your mutual satisfaction, and all the conditions of sale have been removed, the stage is set for closing. The buyer will typically have more to do than you at this point, but as the seller you’ll have to pay the listing agent a commission for the hard work she’s put in to selling the property.
You’ll also have various fees associated with the discharge of the mortgage and the paperwork required to complete the transaction. The story’s not over till these fees are paid, and you’ve received the net proceeds from the sale. After they’re in hand, you can move onto your next home purchase or whatever the future holds.
Answering Some Questions You May Have When Selling
“Why are you selling?” is among the most common questions people get asked when a For Sale sign appears on their property. But it also pays to ask yourself these questions to make sure you’re confident that you’re making the right decision.
Does this home meet my needs?
Sometimes you just need to purge years of stuff to realize that you haven’t outgrown your home. Taking a close look at how you’re using your house (or condo) and making some simple changes can convince you a move is unnecessary. Other times, a growing family or a progressive disease such as multiple sclerosis or Parkinson’s requires people to consider an alternative living situation. You may want a larger home or one with rooms all on one level with universal design features that make it safe for you to age in place. Perhaps the kids have moved out and you’re left with more home than you need, and the accumulated equity will be put to better use elsewhere.
Determining whether or not a house meets your needs, a question we discuss in Chapter 13, will be key to deciding whether or not it’s time to sell and whether there’s a better option available.
Will moving be more trouble than it’s worth?
When the time comes to pack, many people are overwhelmed. Or, perhaps the commission they’ll have to pay an agent is daunting. Alternatively, a penalty may be owing for early discharge of the mortgage. Really, is it all worth it?
The questions all factor into the decision to sell, something we discuss in Chapter 13, but being able to pin down some of the answers can help you understand if selling really is worthwhile or just a lot of trouble. If you’re selling to move to a more manageable home, one that suits your lifestyle, or one that will allow you to continue building equity, then no, the move won’t be too much trouble (in retrospect, anyway).
How much will this cost me?
Between commissions, home staging, and mortgage costs, not to mention moving to a new home, selling a home is a considerable expense. We discuss the price of selling in Chapter 14, but don’t forget that the proceeds from the sale will likely cover them.
The final payment you receive when the dust settles will be net of most of those expenses, meaning that the costs won’t hurt you as much as if you paid them straight out of your pocket. Focus on maximizing the proceeds and putting them towards what the future holds.
Are last-minute renovations worth the cost?
Will that $10,000 renovation add $20,000 to the sale price of your home? It all depends on where you’re spending it, and whether or not it’s making up for a major deficiency. Some renovations may be perceived as window dressing, whereas others amount to, ahem, deferred maintenance.
Buyers expect your property will be in good condition, meaning just a few renovations have the wow factor that add significant value to a property. A renovation worth doing is one worth enjoying well before it comes time to sell. Chapter 8 includes a table of common renovations and the value they add to a resale property.
What are the chances I’ll be homeless if I sell?
You won’t end up sleeping rough if you sell your home. Most sales contracts can include a clause that makes the sale contingent on the seller finding a new home or providing for a closing date that coincides with a new purchase.
In a worst-case scenario, arrange for temporary accommodation while you’re waiting to take possession of your new home. Alternatively, you can obtain bridge financing (a short-term loan designed for temporary financing needs) to enable you to buy a new home before the proceeds from the old one’s sale become available. Both options are extra expenses you may not want, but getting the short-term bridge financing is probably better than sleeping in the local park. We discuss the various contingency plans in Chapters 12 and 13.
Chapter 2
Introducing the Key Players
IN THIS CHAPTER
Finding the right agent
Getting to know your appraiser
Locating a good real estate lawyer
Whether you’re buying or selling your first home, moving to a new city or downsizing, more than likely you have plenty of questions. (That’s one of the reasons you’ve picked up this book, right?) The good news is that lots of experienced people besides us can help you. Many of them are the people you’ll need to complete the big deal.
This chapter introduces you to many of the common professionals needed to guide you through the purchase and sale of your home. Picking a good team can pay off, so don’t be afraid to ask a lot of questions and shop around until you find people who can relate to you and help ease your nerves. Some of the key players on your home-buying team include
A real estate agent
An appraiser
A lawyer
A fourth key member of your team is, above all, your lender. A home is one of the biggest purchases you’ll ever make, and you’ll need someone to keep you on the right financial track. Because financing is such a critical part of the process, we devote Chapters 4 and 5 to the topic, including the selection of a lender.
This chapter discusses the opportunities for representing yourself during the purchase or sale of a home, too. Even though this approach has the potential to save you money, make sure you have your ducks in a row or your goose might be cooked!
Understanding the Real Estate Agent’s Role
Lots of real estate agents will want to work with you, so make sure you find one you want to work with when buying or selling your home. You’ll rely on your agent for information about the real estate market, both regional and local, and advice about your specific situation. Your agent deals with both buyers and sellers, negotiates for you, and advises you throughout the process. When you pick an agent to work with, make sure that you’re a good fit, personality-wise.
The following sections explain the difference between the brokerage and the agent, and help you understand the role each play in your real estate dealings. We also give you tips on finding an agent who will help you achieve your goal, whether it’s finding a dream home or selling your old one.
Identifying important agent qualities when buying or selling a house
Buying or selling a house without the right team behind you is a lot like playing hide-and-seek … blindfolded. So, when you decide to work with an agent, here are some of the key qualities to look for:
Knowledge:
Your agent must be familiar with the neighbourhoods you like and the style and price range of house you are looking for. So, if you want to buy a condo in Toronto, you probably won’t want to rely on that agent friend of yours in Ottawa.
Experience:
Your agent should be someone who has worked with clients like you before, who knows how to help you buy the house you want for a fair price, and who can anticipate problems before they come up.
Time:
Your agent must be willing to spend time to give you the support and direction you need … when you need it. If you place a call to your agent and don’t hear back within 24 hours (but preferably much less!), you may not get the service you need.
Contacts:
Your agent should have a list of colleagues and advisers to call in when you need financial advice or assistance, legal work, appraisals, and so on.
Ethics:
The relationship you have with your agent is guided by a code of ethics, available online at
www.crea.ca/realtor-members/realtor-code/
. Reading the code will help you understand what to expect of your agent.
Established broker/office manager:
The managing broker of the office where the agent is based should be a respected and well-connected broker. The broker provides backup to the agent and, if a serious problem arises in the conduct of the sale, can be an indispensable ally for you, too.
Multimedia skills:
Even though your agent may not be the star of a dedicated YouTube channel or have 10,000 followers on Twitter or Instagram, you still want to make sure you’re on the same wavelength when it comes to tech smarts. Your agent should be comfortable with online and multimedia marketing tools and familiar with how to use them to find properties that suit you and market your home to potential buyers.
Sorting out the basics to the broker-agent relationship
We know, you thought the relationships in your life were already complicated. Well, the relationships between you, your agent, and the agent’s broker can be no less confusing. But help is on the way! In this section, we examine the roles and responsibilities of the agent and the agent’s team:
Real estate agent (also sometimes referred to as
salesperson, Realtor representative,
or
sales representative
):
Subcontracted by the broker to work on behalf of the buyer or seller or occasionally both (provided buyer and seller agree; the arrangement is known as dual agency, something we discuss in the next section).
Broker or managing broker/nominee:
Legal agent who works on behalf of the buyer or seller, or both; usually serves as an office manager overseeing daily operations and also reviews all transactions.
When you decide to work with a real estate agent, you’re effectively engaging the services of the agent’s broker as well, regardless of whether you meet that individual. The broker is the person you can turn to if things go terribly, terribly wrong and your agent can’t manage the situation. A skilled broker is able to negotiate bureaucratic roadblocks or procedural questions issues or assist if a transaction spirals into a nasty legal dispute (they’re not common, but they happen).
Some real estate agents also have the qualifications to legally call themselves brokers, but they tend to use the more commonly understood term of agent or even representative. In many provinces, a broker’s (or managing broker’s) licence requires additional training and testing and a licence designation beyond that of a salesperson. With this extra education, an individual can own a brokerage or run an office (be the nominee for the office) and ensure that the salespeople and all the office’s trust accounts adhere to the requirements of the provincial Real Estate Act.
A broker or brokerage company, and by extension a real estate agent, may be a seller’s agent or a buyer’s agent. In some cases, real estate agents working for the same broker will represent both the seller and the buyer in a deal. Although each party has its own real estate agent, because both agents work for the same broker or legal agent, the situation is referred to as dual agency. The agent that you’re working with to find a home may show you a property that is listed with her office. If you buy that property, you’ll have to agree to enter into a limited dual-agency agreement.
Another term you’ll encounter is Realtor. This term is a trademark of the Canadian Real Estate Association (www.crea.ca). Only brokers and real estate agents who are CREA members may use this term to describe themselves professionally. Extensive training and continuing education are required. Realtors are expected to follow a very strict Code of Ethics and Standards of Business Practice, designed to protect your best interests.
Understanding the agency relationship
Real estate agents work within a legal relationship called agency, which gives them a mandate to act on their client’s behalf. The agency relationship exists between you (the principal) and your brokerage, the company under which the individual who is representing you is licensed. The essence of the agency relationship is that the brokerage has the authority to represent you as a buyer or seller in dealings with others. Brokerages and their agents are legally obligated to protect and promote your interest as they would their own.
The rules and regulations governing agency relationships vary a bit from province to province. Ask your local real estate board or your provincial real estate council for specifics. The rules lay down what an agent can do on your behalf and how they relate to other parties to the transaction. Specifically, brokerages and their agents must do the following:
Show undivided loyalty by protecting your negotiating position at all times and disclosing all known facts that may affect or influence your decision with respect to the transaction.
Obey all lawful instructions you provide.
Keep your confidences.
Exercise reasonable care and skill in performing all assigned duties.
Account for all money and property entrusted to them on your behalf.
Because there are two sides to each real estate deal, the buyer’s and the seller’s, it’s important to know how an agent serves each side. Occasionally, one agent will have dual agency, allowing her to represent both the buyer and the seller. The following sections explain these forms of agency in depth.
Seller’s agent
When a real estate agent acts on behalf of a seller (a seller’s agent), the agent owes full loyalty to the seller and must provide all relevant information and take every action to obtain a sale price and conditions of sale satisfactory to the seller. This means that a buyer won’t receive insights into the seller’s motivation, which could have some influence on the final sale price. The agent is legally obligated to disclose any comments the buyer may make about their motivation, such as a willingness to bid above the advertised sale price. The agent does have an obligation to potential buyers, where known issues such as a crack in the foundation or a blockage in the sewer line exist. Expect honest, complete answers to your inquiries, but remember, the agent represents the seller, so it’s up to you to ask the questions if you want to get those honest, complete answers. If you don’t ask direct questions, you won’t necessarily get the direct answers you’re looking for.
Buyer’s agent
Surprise, surprise — a buyer’s agent works in the best interests of buyers. Even though your buyer’s agent’s commission is usually paid out of the seller’s proceeds from the sale, her legal and ethical duties are to you. Your buyer’s agent should keep your personal and financial information confidential. If the sellers let slip that they’re going through a messy divorce and want to sell the house as soon as possible, your buyer’s agent will share this information with you. She’ll also let you know if she finds out that the sellers are willing to accept a lower price to get the deal done (of course, because both agents receive a commission on the sale, they have a vested interest in the price not being discounted too much). Your buyer’s agent will be able to look at comparable properties and advise you on how much is reasonable to offer on the homes you’re considering. A buyer’s agent negotiates a deal to obtain a sale price and conditions of sale satisfactory to the buyer.
If you want to purchase a home that is For Sale by Owner, you may have an agent represent you in the purchase. Just because the seller wants to go it alone doesn’t mean you have to. You may be responsible for paying the agent a standard fee or a commission (if you can’t get the seller to absorb the cost), but having a professional prepare the paperwork, as well as having access to info about comparable properties, may give you huge peace of mind.
Dual agency
If buyer’s agent and the seller’s agent work for the same broker or brokerage company, this is called dual agency. One company is brokering a deal between two parties, and it legally represents both sides. This situation can open up a number of conflict-of-interest concerns.
To head off any problems, the broker is legally obliged to tell you and the seller that she (or her company) is representing both the buyer and the seller. Ask the broker to explain clearly what the implications are for the sale negotiations. You’ll be asked to accept the dual agency situation in writing. If you’re unsure what to do, talk to your lawyer or contact your local real estate board for clarification. Although both agents may work out of different offices and not know each other, if they work for the same company, they must also acknowledge in writing that they’re in a dual agency situation.
Sometimes, agents can act in a capacity of limited dual agency, which requires the agent to deal with both parties impartially, and prevents the agent from disclosing what either party is prepared to pay or accept or the motivation of either party. The agent is also prohibited from disclosing any personal information about the parties without their written permission.
Many provinces have placed significant limits on dual agency because of the potential for a conflict of interest on the part of buyers. Dual agency can be expedient, but it can also leave the buyer (or seller) without a designated advocate in a transaction, which can result in a competitive disadvantage. Be sure to read up on the laws governing dual agency in your province. If in doubt, consult your lawyer.
Suppose you haven’t chosen an agent and you go to an open house and absolutely love the house. What should you do? Remember that the agent holding the open house works for the seller. If you’re confident that the agent can fairly represent you, you can ask her to represent you and enter into a limited dual agency agreement. However, if you aren’t comfortable with the agent or the concept of a dual agency relationship, we suggest you interview agents and choose one to represent you as the buyer. You don’t have to work with the agent holding the open house unless you want to.
Discovering the perfect agent
Picking the perfect real estate agent is partially luck and partially knowing what to look for. If you aren’t sure who would be the right real estate agent for you, ask around. Find out who your family members, neighbours, co-workers, and friends know and trust and ask for that agent’s name. If you’re relocating for work, your employer or the local branch of your favourite bank may be able to recommend some candidates.
