Difference between revisions of "Selling Your Home"

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{{Dial-A-Law Blurb}}
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{{REVIEWEDPLS | reviewer = [https://www.ganapathico.com/our-team/nathan-ganapathi/ Nathan Ganapathi] and [https://www.ganapathico.com/our-team/anna-kurt/ Anna Kurt], Ganapathi Law Group|date= October 2017}} {{Dial-A-Law TOC|expanded = home}}
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Selling a home is the biggest financial decision most people make. Learn what to consider before putting up the “For Sale” sign, and the steps involved in selling your home.
  
{{Dial-A-Law TOC|expanded = housing}}
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==Key things to consider==
Selling your home is one of the biggest financial transactions of your life. You should know several things before the “For Sale” sign goes up on your lawn.
 
  
==Before you sell: what is your home worth and what should it sell for in today’s market?==
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===You can go it alone or hire a real estate agent===  
One way to find out is to get a professional appraisal. This will give you a value for your home based on what comparable homes in your area have sold for and what it would cost to replace your home. The charge will vary with the appraiser, but is often between $200 and $750.
+
You can sell your own home yourself. Many do. The costs of hiring a real estate agent can be substantial (as the seller typically absorbs the cost on the sale of a home).
  
Another way to learn the value of your home is to contact several reputable real estate agents who do business in your area. They will look at your house and, for no charge, tell you what price they would list the house for and what they’d expect it to sell for. Remember that realtors are not professional appraisers and it is often advisable to seek a professional appraiser’s opinion instead where greater certainty is desired. This, however, will require that you pay the appraiser a fee.
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But there are advantages to working with a '''real estate agent'''. Agents are keenly aware of market trends and can help you get the best possible price for your home. They are connected to networks of potential buyers you would have a hard time reaching on your own. And they can help you navigate a complex process, advising on questions such as:
  
==Do you need a realtor?==
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* What facts must you disclose?
You may decide to market and sell your home by yourself, though most people prefer to have a professional do the job. If you decide to use a realtor, pick someone you trust and who you are comfortable with.
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* What paperwork is required?
 +
* What about the existing mortgage?
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* Who ensures you will get your money?
  
==Should you have a lawyer?==
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{| class="wikitable"
Selling and buying a house is complicated and the potential for disaster is great—one mistake could cost a lot, or result in months or years of stressful litigation. Further, there are many possible types of real estate fraud and to protect yourself you should hire a lawyer. Likewise, you should consult a lawyer before you sign a listing agreement with a realtor to ensure the terms being sought by the realtor are accurate, fair, and legal.
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|align="left"|'''Tip'''
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[https://www.canlii.org/en/bc/laws/stat/sbc-2004-c-42/latest/sbc-2004-c-42.html Under the law in BC], real estate agents must be licensed. [https://www.recbc.ca/about/licensee-search.html You can use the licensee search from the Real Estate Council of BC] to see if an agent is currently licensed.
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|}
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===In signing a listing agreement===
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If you hire a real estate agent, you will be asked to sign a '''listing agreement'''. This is a contract between you and your real estate agent, setting out the terms for selling your home.
  
==What is a listing agreement?==
+
Most real estate agents use a '''multiple listing agreement'''. This means your agent can advertise and show your home to agents from other real estate agencies (and not just their own). In this way, many potential buyers can learn about your home.
It is the contract between you and your real estate agent with the terms for selling your house. Today, most listing agreements for residential sales are standardized forms from the local real estate board and are multiple listing agreements. A multiple listing agreement means your agent can advertise and show your home to realtors in their own agency plus realtors with other agencies. This allows many potential buyers to learn about your home. Many agents prefer that the agreement continue for a 3-month term, but you can also choose to list your home for a shorter period if you desire. If your house doesn’t sell within that time, you can either extend the term of the listing agreement or change agents.
 
  
==What do you pay the agent?==
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Most listing agreements are standardized forms from the local real estate board. The agent may not have a lot of room to negotiate terms. But there are a few terms to pay particular attention to:
The listing agreement sets the amount of the agent’s pay, or commission. In BC, commissions can vary widely, so it’s a good idea to shop around. Some agents charge a flat fee. Others charge a percentage. For example, they could charge 7% on the first $100,000 of the sale price, plus 2.5% on the rest. In this case, if your home sells for $400,000, the commission would be $14,500. You pay this commission to your agent, who shares it with the buyer’s agent.
 
  
==Do you have to pay the commission even if the agent doesn’t sell your house?==
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* '''Who the agent is representing'''. A real estate agent can be hired as an agent for the seller, as an agent for the buyer, or (as we explain shortly, in very limited circumstances) as an agent for both the seller and the buyer.
Normally, your agent is entitled to a commission when a buyer—who is ready, willing, and able to buy your house—signs an offer to purchase, and you accept it. Sometimes, even if the transaction falls through, depending on the listing agreement, you may still have to pay a commission. You may also have to pay the commission if you sell the house yourself while the listing agreement is active, or even after the listing agreement has expired–if the agent had previously shown the house to the buyer or was the effective cause of the sale. For these reasons, it is helpful to consult a lawyer during the process of selling your home.
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* '''The length of the agreement'''. Many agents prefer that the listing agreement continue for three months, but you can choose to list your home for a shorter period. If your home doesn’t sell within that time, you can either extend the term of the listing agreement or change agents.
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* '''The agent’s pay'''. The listing agreement sets the amount of the agent’s pay, or commission. In BC, commissions can be a flat fee or a percentage of the sale price of the home. We explain these two options shortly.
  
==Do you have a mortgage on your house?==
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====The real estate agent’s duties depend on who they are acting for====
If you have a mortgage on your home, you will have to contact the bank, credit union, or other lending institution that holds the mortgage before you sign a listing agreement with a realtor. This is done to find out certain important information, such as:
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All real estate agents must act honestly and with reasonable care and skill in performing their work. They also have other duties that depend on who they are acting for.
*How much do you owe on your mortgage?
 
*Can the buyer assume (meaning take over) the mortgage? If so, will the buyer need to have a certain income to qualify?
 
*Can you pay off the mortgage? If so, is there a prepayment penalty? Sometimes a lending institution will waive the penalty if the buyer takes out a new mortgage with them, or if you take out a new mortgage with them.
 
  
Get the answers to these questions in writing to avoid any unpleasant surprises later on.
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A real estate agent can be hired as an agent for the seller, as an agent for the buyer, or (in very limited circumstances) as an agent for both the seller '''and''' the buyer. Under the law, an agent has to explain how these options change their duties to you.
  
==What happens after you sign the listing agreement?==
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When an agent is acting only for you, as your '''sole agent''' in selling your home, the agent has these duties:
If someone offers to buy your home, your agent will bring you an offer to buy. It is usually written on a standard form provided by the local real estate board. Read all the fine print. Every word is important. You should have your lawyer check the offer before you sign it. Once you and the buyer sign the offer, it is a binding contract of purchase and sale.
 
  
Before you sign an offer, discuss with your agent anything in it that you don’t like and write in your own terms instead. It then goes back to the potential buyer as your counteroffer (considered to be a new offer altogether) and becomes the contract of purchase and sale if the buyer accepts.
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* a duty of undivided loyalty to you
 +
* a duty to keep your confidences
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* a duty to obey all your lawful instructions
 +
* a duty to account for all the money and property you place in their hands while acting for you
  
==Which things in the house are included in the sale?==
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[https://www.recbc.ca/licensee/rules.html Under the rules in BC], real estate agents in the province can not practice '''dual agency'''. This means they can not act for both a buyer and a seller in the same transaction, or for two buyers who have conflicting interests. The sole exception to this rule is for property in a remote location that is under-served by real estate agents and it is “impracticable” for the parties to be represented by separate real estate agents.
When someone buys your house, all the things that are “fixtures” go along with it, unless you and the buyer agree otherwise. The defining a fixture can be difficult: generally, a fixture is anything that’s attached to the house to the point where its removal would damage the house or require repair. The bathroom sink is an obvious example, as is the crystal chandelier in the dining room. As objects like chandeliers are sometimes items that home owners are interested in taking with them following the sale of their home, it is important that these fixtures are explicitly excluded from the contract of purchase and sale. Better yet, before you put the house up for sale, replace the chandelier with a simple, inexpensive replacement. The washer, dryer, fridge, and stove aren’t fixtures, but you may be able to use them as bargaining tools if the buyer wants them.
 
  
==What are “subject to” clauses?==
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Before practicing dual agency under this exception, a real estate agent must make a disclosure to both parties to the transaction. The disclosure must inform them of the duties and responsibilities of the agent to the clients, and the risks associated with a dual agency relationship.
They are conditions that have to be met before the deal to buy your house proceeds. Common ones include the buyer getting financing (for example, a mortgage) and the house passing an engineering inspection. If you get an offer that is subject to the buyer getting financing or any other condition, make sure the buyer has only a short time to remove the condition. Your home may be off the market for the time it takes the buyer to remove the condition, and you will likely want to keep that period short.
 
  
As well, the “subject to” clause should be specific. Don’t accept a general clause, such as “subject to buyer obtaining satisfactory financing.” If the buyer changes his or her mind, all the buyer has to do to get out of the deal is to say he or she couldn’t get satisfactory financing. Instead, put details in the clause about the interest rate, the principal amount, monthly payments and so on, as well as the deadline for when the buyer must remove the clause. Again, a lawyer who practices real estate law can be helpful in this process.
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====The agent typically gets paid after the sale of your home====
 +
In BC, a real estate agent’s pay (or '''commission''') can be a flat fee or a percentage of the sale price of the home.
  
==Summary==
+
A common approach is for an agent to charge 7% on the first $100,000 of the sale price, plus 2.5% on the rest. For example, if your home sells for $400,000, the commission under this approach would be $14,500:
First, get a realistic idea of your home’s market value, then choose a realtor you trust. Read the fine print of your listing agreement and the offer to purchase carefully. If you have any doubt, especially about the offer to purchase, have a lawyer check it over before you sign.
 
  
==More information==
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'''Portion of price Commission'''<br>
For more information on house mortgages and financing, check script [[Mortgages and Financing a House Purchase (Script 408)|408]], called “Mortgages and Financing a House Purchase”. For more information about the contract of purchase and sale, check script [[Buying a House (Script 406)|406]], called “Buying a House”.
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7% of $100,000 = $7,000<br>
 +
2.5% of $300,000 = $7,500<br>
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''Total commission = $14,500<br>''
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As the seller, you pay this commission to your agent. Your agent then shares it with the buyer’s agent. The commission is typically deducted from the sale proceeds of the home at the time the sale is completed.
  
As well, read the booklet called “[http://www.recbc.ca/consumer/sellinghome.html Selling a Home in BC Information Booklet]” prepared by the Real Estate Council of British Columbia. For a free copy, call 604.683.9664 in Vancouver or toll-free 1.877.683.9664 elsewhere in BC. Or go to their website at [http://www.recbc.ca www.recbc.ca] and click on “Consumer Info” and then “Publications”.
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===If you have a mortgage on your home===
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If you have a '''mortgage''' on your home, you will need to deal with the mortgage in some way in selling your home.
  
 +
One option to explore is whether a buyer can '''assume''' (meaning take over) the mortgage. If a buyer can assume the mortgage, this can save you money, avoiding the costs of paying out the mortgage on the sale.
  
[updated April 2015]
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Another option is paying off the mortgage when you sell your home. Many mortgages have restrictions on paying out the mortgage early. Some have a '''prepayment penalty''', such as three months worth of mortgage payments. Sometimes a lender will waive the prepayment penalty if the buyer takes out a new mortgage with them, or if you take out a new mortgage with them when you buy a new home.
  
{{REVIEWED | reviewer = Jack Montpellier}}
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To find out if your mortgage can be assumed or includes a prepayment penalty, check your mortgage contract. Or check with your lender.
----
 
  
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For more on mortgages, [[Mortgages and Financing a Home Purchase|see our information on mortgages and financing a home purchase]].
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===If you get an offer to purchase===
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{{PLSStorybox
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| image = [[File:Jasmin.jpeg|link=]]
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| text = “After our kids left for university, we decided to downsize. We got four offers on our home at the first open house. I had no idea there was so much to consider. Between the subject to clauses, the offer prices, the closing dates — it was dizzying. And that was before we even figured out the financing part of it."<br>
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- Jasmin, Surrey''
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}}
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If someone offers to buy your home, they will present an '''offer to purchase'''. This is a contract setting out the terms of the sale of your home. It is usually written on a standard form provided by the local real estate board. Once you and the buyer sign the offer, it is a binding contract of purchase and sale.
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Your real estate agent is under an obligation to bring all written offers to you for your consideration. If several offers are brought to you at once, you are under no obligation to accept any one offer over another.
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If there is anything you don’t like in an offer (including the price or the completion date), you can write in your own terms instead. This becomes your '''counteroffer'''. This is considered to be a new offer altogether. It becomes a binding contract of purchase and sale if the buyer accepts. If the buyer doesn’t accept your counteroffer, there is no agreement.
 +
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===If the offer includes a subject to clause===
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'''Subject to clauses''' are conditions that must be met before a sale proceeds. Common subject to clauses a buyer may include in their offer are:
 +
 +
* subject to the buyer getting financing (for example, a mortgage)
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* subject to the buyer getting a property inspection
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* subject to the buyer selling their home
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If you get an offer with a subject to clause, make sure the buyer has only a short time to remove the condition. Your home may be off the market for the time it takes the buyer to remove the condition, and you will likely want to keep that period short.
 +
 +
As well, the subject to clause should be specific. Don’t accept a general clause, such as “subject to buyer obtaining satisfactory financing.” If the buyer changes their mind, all the buyer has to do to get out of the deal is to say they couldn’t get satisfactory financing. Instead, put details in the clause about the financing — the interest rate and principal amount the buyer is seeking to finance — as well as a deadline for when the buyer must remove the clause. A lawyer who practises real estate law can be helpful in this process.
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===You must disclose any defects to a buyer===
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As a seller, you must disclose any '''material latent defects''' about your home to a buyer. A material latent defect means a defect that cannot be discerned through a reasonable inspection of the property. This includes a defect that makes the home:
 +
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* dangerous or potentially dangerous to the occupants,
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* unfit for habitation, or
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* unfit for the purpose for which the buyer is acquiring it, if the buyer has made this purpose known to the seller.
 +
 +
Common examples of material latent defects include:
 +
 +
* the basement leaks when it rains
 +
* structural damage to the property
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* underground storage tanks are located on the property
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* problems with the potability or quantity of drinking water
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* damage caused by the illegal use of the property (for example, a marijuana grow operation)
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Failure to disclose material latent defects can result in future problems, including legal issues if the new owner discovers problems that you were aware of and did not disclose.
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===What things in the home are included in the sale===
 +
When someone buys your home, all the '''fixtures''' go along with it, unless you and the buyer agree otherwise. Defining a fixture can be difficult: generally, a fixture is anything that’s attached to the home to the point where removing it would damage the home or require repair. The bathroom sink is an obvious example. As objects like chandeliers are sometimes items that homeowners are interested in taking with them after the sale of their home, it is important these fixtures are explicitly excluded from the contract of purchase and sale. Better yet, before you put the home up for sale, replace the chandelier with a simple, inexpensive replacement.
 +
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{| class="wikitable"
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|align="left"|'''Tip'''
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The appliances — such as your washer, dryer, fridge and stove — aren’t fixtures. They aren’t included in the sale unless you and the buyer agree otherwise. You may be able to use them as bargaining tools if the buyer wants them.
 +
|}
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===On the completion date===
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The contract of purchase and sale will state the '''completion date''' for the sale. On that day, legal ownership will transfer from you to the new owner in exchange for the purchase price of the home.
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It is the normal practice for the buyer’s lawyer or notary public to prepare the documents needed to transfer the legal ownership. You, as the seller, may want to engage a lawyer or notary to act for you. Among other things, they can protect your interests by:
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* checking the documents prepared by the buyer’s lawyer and explaining them to you
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* ensuring your old mortgage has been properly discharged, if this is required
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* ensuring you have no further obligation regarding your old mortgage if it is being assumed by the buyer
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* confirming all payments for which you are responsible have been made
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* arranging for you to sign the transfer documents
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==The process to sell your home==
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===Step 1. Get a valuation of your home===
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You will want to know what your home is worth and what it should sell for in today’s market. One way to find out is to get a professional '''appraisal'''. This will give you a value for your home based on what comparable homes in your area have sold for and what it would cost to replace your home. The charge will vary with the appraiser, but is often between $200 and $750.
 +
 +
Another way to learn the value of your home is to contact some '''real estate agents''' who work in your area. They will look at your home and, for no charge, tell you what price they would list the home for and what they’d expect it to sell for. Keep in mind that realtors are not professional appraisers. You may decide to pay for the greater certainty of a professional appraiser’s opinion.
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===Step 2. Find out the details of your mortgage===
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If you have a mortgage on your home, find out:
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* how much is owing on the mortgage
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* whether the buyer can assume the mortgage (as we explained above)
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* if the mortgage includes a prepayment penalty (also explained above)
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To find out these details, check your mortgage agreement and statements. Or check with your lender. If the mortgage can be assumed, ask your lender if the buyer will need a certain income to qualify.
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===Step 3. Decide if you are hiring a real estate agent===
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Decide if you are going to sell your home yourself or hire a real estate agent.
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If you decide to use a realtor, pick someone you trust and are comfortable with. Word-of-mouth is a good way to find a realtor you can work with. Ask friends, neighbours and work colleagues who have recently bought or sold a home who they worked with and how that experience went. The internet is a good way to locate realtors who specialize in properties and regions that may be of interest to you.
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{| class="wikitable"
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|align="left"|'''Tip'''
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[http://online.recbc.ca/licensee-search You can use the licensee search from the Real Estate Council of BC] to see if an agent is currently licensed.
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|}
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===Step 4. Sign the listing agreement===
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If you hire a real estate agent, you will be asked to sign a '''listing agreement'''. We explain what to watch for above, under “What you should know.”
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The agent will provide you with a copy of the agreement. Keep it for future reference.
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===Step 5. Consider any offer to purchase===
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If you get an offer to purchase, review it carefully. Be sure you understand the effect of any '''subject to clauses''' (explained above).
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{| class="wikitable"
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|align="left"|'''Tip'''
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You may want to have a lawyer check the offer before you sign it. A lawyer can alert you to problem areas or signs of real estate fraud.
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|}
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===Step 6. Complete the sale===
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Sign the documents, receive your money and turn over your keys. Your home is sold!
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==Common questions==
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===Do I have to pay a commission even if the real estate agent doesn’t sell my home?===
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Normally, your real estate agent is entitled to be paid their commission when a buyer signs an offer to purchase, and you accept it. The buyer is someone who is “ready, willing and able to buy your home.” If the transaction later falls through, that doesn’t necessarily affect the agent’s right to be paid. The terms of the listing agreement will be key.
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If you sell the home yourself while the listing agreement is active, you may have to pay the commission. Check the terms of the listing agreement.
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You may even have to pay the commision is the home sells after the listing agreement has expired — if the agent had previously shown the home to the buyer or was the “effective cause of the sale.”
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{| class="wikitable"
 +
|align="left"|'''Tip'''
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A lawyer can help you avoid situations where you have to pay a commission even where the realtor doesn’t sell your home.
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|}
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===Do I have to pay capital gains tax?===
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If your home is your principal residence, you don’t have to pay tax on any profit ('''capital gain''') you make when you sell it. This is called the principal residence tax exemption on capital gains.
 +
 +
If at any time during the period you owned the home, it was not your principal residence, you might not be able to benefit from this tax exemption. A lawyer can advise on whether the principal residence tax exemption applies to you.
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==Who can help==
 +
 +
===With more information===
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The '''Real Estate Council of BC''', the body that licenses real estate agents in the province, offers a guide on “Selling a Home in British Columbia.”
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* [https://www.recbc.ca/sellinghome.html Visit website]
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Latest revision as of 21:31, 6 October 2020

This information applies to British Columbia, Canada. Last reviewed for legal accuracy by Nathan Ganapathi and Anna Kurt, Ganapathi Law Group in October 2017.

Selling a home is the biggest financial decision most people make. Learn what to consider before putting up the “For Sale” sign, and the steps involved in selling your home.

Key things to consider[edit]

You can go it alone or hire a real estate agent[edit]

You can sell your own home yourself. Many do. The costs of hiring a real estate agent can be substantial (as the seller typically absorbs the cost on the sale of a home).

But there are advantages to working with a real estate agent. Agents are keenly aware of market trends and can help you get the best possible price for your home. They are connected to networks of potential buyers you would have a hard time reaching on your own. And they can help you navigate a complex process, advising on questions such as:

  • What facts must you disclose?
  • What paperwork is required?
  • What about the existing mortgage?
  • Who ensures you will get your money?
Tip

Under the law in BC, real estate agents must be licensed. You can use the licensee search from the Real Estate Council of BC to see if an agent is currently licensed.

In signing a listing agreement[edit]

If you hire a real estate agent, you will be asked to sign a listing agreement. This is a contract between you and your real estate agent, setting out the terms for selling your home.

Most real estate agents use a multiple listing agreement. This means your agent can advertise and show your home to agents from other real estate agencies (and not just their own). In this way, many potential buyers can learn about your home.

Most listing agreements are standardized forms from the local real estate board. The agent may not have a lot of room to negotiate terms. But there are a few terms to pay particular attention to:

  • Who the agent is representing. A real estate agent can be hired as an agent for the seller, as an agent for the buyer, or (as we explain shortly, in very limited circumstances) as an agent for both the seller and the buyer.
  • The length of the agreement. Many agents prefer that the listing agreement continue for three months, but you can choose to list your home for a shorter period. If your home doesn’t sell within that time, you can either extend the term of the listing agreement or change agents.
  • The agent’s pay. The listing agreement sets the amount of the agent’s pay, or commission. In BC, commissions can be a flat fee or a percentage of the sale price of the home. We explain these two options shortly.

The real estate agent’s duties depend on who they are acting for[edit]

All real estate agents must act honestly and with reasonable care and skill in performing their work. They also have other duties that depend on who they are acting for.

A real estate agent can be hired as an agent for the seller, as an agent for the buyer, or (in very limited circumstances) as an agent for both the seller and the buyer. Under the law, an agent has to explain how these options change their duties to you.

When an agent is acting only for you, as your sole agent in selling your home, the agent has these duties:

  • a duty of undivided loyalty to you
  • a duty to keep your confidences
  • a duty to obey all your lawful instructions
  • a duty to account for all the money and property you place in their hands while acting for you

Under the rules in BC, real estate agents in the province can not practice dual agency. This means they can not act for both a buyer and a seller in the same transaction, or for two buyers who have conflicting interests. The sole exception to this rule is for property in a remote location that is under-served by real estate agents and it is “impracticable” for the parties to be represented by separate real estate agents.

Before practicing dual agency under this exception, a real estate agent must make a disclosure to both parties to the transaction. The disclosure must inform them of the duties and responsibilities of the agent to the clients, and the risks associated with a dual agency relationship.

The agent typically gets paid after the sale of your home[edit]

In BC, a real estate agent’s pay (or commission) can be a flat fee or a percentage of the sale price of the home.

A common approach is for an agent to charge 7% on the first $100,000 of the sale price, plus 2.5% on the rest. For example, if your home sells for $400,000, the commission under this approach would be $14,500:

Portion of price Commission
7% of $100,000 = $7,000
2.5% of $300,000 = $7,500
Total commission = $14,500
As the seller, you pay this commission to your agent. Your agent then shares it with the buyer’s agent. The commission is typically deducted from the sale proceeds of the home at the time the sale is completed.

If you have a mortgage on your home[edit]

If you have a mortgage on your home, you will need to deal with the mortgage in some way in selling your home.

One option to explore is whether a buyer can assume (meaning take over) the mortgage. If a buyer can assume the mortgage, this can save you money, avoiding the costs of paying out the mortgage on the sale.

Another option is paying off the mortgage when you sell your home. Many mortgages have restrictions on paying out the mortgage early. Some have a prepayment penalty, such as three months worth of mortgage payments. Sometimes a lender will waive the prepayment penalty if the buyer takes out a new mortgage with them, or if you take out a new mortgage with them when you buy a new home.

To find out if your mortgage can be assumed or includes a prepayment penalty, check your mortgage contract. Or check with your lender.

For more on mortgages, see our information on mortgages and financing a home purchase.

If you get an offer to purchase[edit]

If someone offers to buy your home, they will present an offer to purchase. This is a contract setting out the terms of the sale of your home. It is usually written on a standard form provided by the local real estate board. Once you and the buyer sign the offer, it is a binding contract of purchase and sale.

Your real estate agent is under an obligation to bring all written offers to you for your consideration. If several offers are brought to you at once, you are under no obligation to accept any one offer over another.

If there is anything you don’t like in an offer (including the price or the completion date), you can write in your own terms instead. This becomes your counteroffer. This is considered to be a new offer altogether. It becomes a binding contract of purchase and sale if the buyer accepts. If the buyer doesn’t accept your counteroffer, there is no agreement.

If the offer includes a subject to clause[edit]

Subject to clauses are conditions that must be met before a sale proceeds. Common subject to clauses a buyer may include in their offer are:

  • subject to the buyer getting financing (for example, a mortgage)
  • subject to the buyer getting a property inspection
  • subject to the buyer selling their home

If you get an offer with a subject to clause, make sure the buyer has only a short time to remove the condition. Your home may be off the market for the time it takes the buyer to remove the condition, and you will likely want to keep that period short.

As well, the subject to clause should be specific. Don’t accept a general clause, such as “subject to buyer obtaining satisfactory financing.” If the buyer changes their mind, all the buyer has to do to get out of the deal is to say they couldn’t get satisfactory financing. Instead, put details in the clause about the financing — the interest rate and principal amount the buyer is seeking to finance — as well as a deadline for when the buyer must remove the clause. A lawyer who practises real estate law can be helpful in this process.

You must disclose any defects to a buyer[edit]

As a seller, you must disclose any material latent defects about your home to a buyer. A material latent defect means a defect that cannot be discerned through a reasonable inspection of the property. This includes a defect that makes the home:

  • dangerous or potentially dangerous to the occupants,
  • unfit for habitation, or
  • unfit for the purpose for which the buyer is acquiring it, if the buyer has made this purpose known to the seller.

Common examples of material latent defects include:

  • the basement leaks when it rains
  • structural damage to the property
  • underground storage tanks are located on the property
  • problems with the potability or quantity of drinking water
  • damage caused by the illegal use of the property (for example, a marijuana grow operation)

Failure to disclose material latent defects can result in future problems, including legal issues if the new owner discovers problems that you were aware of and did not disclose.

What things in the home are included in the sale[edit]

When someone buys your home, all the fixtures go along with it, unless you and the buyer agree otherwise. Defining a fixture can be difficult: generally, a fixture is anything that’s attached to the home to the point where removing it would damage the home or require repair. The bathroom sink is an obvious example. As objects like chandeliers are sometimes items that homeowners are interested in taking with them after the sale of their home, it is important these fixtures are explicitly excluded from the contract of purchase and sale. Better yet, before you put the home up for sale, replace the chandelier with a simple, inexpensive replacement.

Tip

The appliances — such as your washer, dryer, fridge and stove — aren’t fixtures. They aren’t included in the sale unless you and the buyer agree otherwise. You may be able to use them as bargaining tools if the buyer wants them.

On the completion date[edit]

The contract of purchase and sale will state the completion date for the sale. On that day, legal ownership will transfer from you to the new owner in exchange for the purchase price of the home.

It is the normal practice for the buyer’s lawyer or notary public to prepare the documents needed to transfer the legal ownership. You, as the seller, may want to engage a lawyer or notary to act for you. Among other things, they can protect your interests by:

  • checking the documents prepared by the buyer’s lawyer and explaining them to you
  • ensuring your old mortgage has been properly discharged, if this is required
  • ensuring you have no further obligation regarding your old mortgage if it is being assumed by the buyer
  • confirming all payments for which you are responsible have been made
  • arranging for you to sign the transfer documents

The process to sell your home[edit]

Step 1. Get a valuation of your home[edit]

You will want to know what your home is worth and what it should sell for in today’s market. One way to find out is to get a professional appraisal. This will give you a value for your home based on what comparable homes in your area have sold for and what it would cost to replace your home. The charge will vary with the appraiser, but is often between $200 and $750.

Another way to learn the value of your home is to contact some real estate agents who work in your area. They will look at your home and, for no charge, tell you what price they would list the home for and what they’d expect it to sell for. Keep in mind that realtors are not professional appraisers. You may decide to pay for the greater certainty of a professional appraiser’s opinion.

Step 2. Find out the details of your mortgage[edit]

If you have a mortgage on your home, find out:

  • how much is owing on the mortgage
  • whether the buyer can assume the mortgage (as we explained above)
  • if the mortgage includes a prepayment penalty (also explained above)

To find out these details, check your mortgage agreement and statements. Or check with your lender. If the mortgage can be assumed, ask your lender if the buyer will need a certain income to qualify.

Step 3. Decide if you are hiring a real estate agent[edit]

Decide if you are going to sell your home yourself or hire a real estate agent.

If you decide to use a realtor, pick someone you trust and are comfortable with. Word-of-mouth is a good way to find a realtor you can work with. Ask friends, neighbours and work colleagues who have recently bought or sold a home who they worked with and how that experience went. The internet is a good way to locate realtors who specialize in properties and regions that may be of interest to you.

Tip

You can use the licensee search from the Real Estate Council of BC to see if an agent is currently licensed.

Step 4. Sign the listing agreement[edit]

If you hire a real estate agent, you will be asked to sign a listing agreement. We explain what to watch for above, under “What you should know.”

The agent will provide you with a copy of the agreement. Keep it for future reference.

Step 5. Consider any offer to purchase[edit]

If you get an offer to purchase, review it carefully. Be sure you understand the effect of any subject to clauses (explained above).

Tip

You may want to have a lawyer check the offer before you sign it. A lawyer can alert you to problem areas or signs of real estate fraud.

Step 6. Complete the sale[edit]

Sign the documents, receive your money and turn over your keys. Your home is sold!

Common questions[edit]

Do I have to pay a commission even if the real estate agent doesn’t sell my home?[edit]

Normally, your real estate agent is entitled to be paid their commission when a buyer signs an offer to purchase, and you accept it. The buyer is someone who is “ready, willing and able to buy your home.” If the transaction later falls through, that doesn’t necessarily affect the agent’s right to be paid. The terms of the listing agreement will be key.

If you sell the home yourself while the listing agreement is active, you may have to pay the commission. Check the terms of the listing agreement.

You may even have to pay the commision is the home sells after the listing agreement has expired — if the agent had previously shown the home to the buyer or was the “effective cause of the sale.”

Tip

A lawyer can help you avoid situations where you have to pay a commission even where the realtor doesn’t sell your home.

Do I have to pay capital gains tax?[edit]

If your home is your principal residence, you don’t have to pay tax on any profit (capital gain) you make when you sell it. This is called the principal residence tax exemption on capital gains.

If at any time during the period you owned the home, it was not your principal residence, you might not be able to benefit from this tax exemption. A lawyer can advise on whether the principal residence tax exemption applies to you.

Who can help[edit]

With more information[edit]

The Real Estate Council of BC, the body that licenses real estate agents in the province, offers a guide on “Selling a Home in British Columbia.”

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