Selling Your Home

Introduction
Thinking of selling your home? This is one of the most important decisions you will ever make. There are many things you should consider before the "For Sale" sign goes up on your lawn. Please take some time to read the information that follows.

Appraisal
Your first step is to find out what your home is worth and what it would likely sell for on today's market. One way is to get a professional appraisal of your home. For a fee, the appraiser will give you a valuation of your home based in part on the sale price of comparable homes in your area and the replacement cost of your home. Another way to determine the value of your home is to call a number of real estate agents whose opinion you trust.

Talk to your neighbours or friends who live close to you. Have they bought/sold their home recently? How did the selling/purchase price compare with the listed price. This will at least give you a "ballpark figure" to work with.

Find a Real Estate Agent
There is no legal requirement that a real estate agent must be involved in selling your home and you may try to sell your home yourself. However, selling through an agent exposes your home to a far wider pool of buyers than attempting to sell it yourself. Not to mention the added hassles involved.

Choose several experienced agents who do business in your area. They will inspect your home and, usually for no charge, will give you a letter telling you what price they would list your home for and what price they would expect it to sell it for in the current market. Such a letter in no way obligates the agent to sell your house at the quoted price.

If you decide to use a real estate agent, you should select a reputable person who is familiar with your neighbourhood, your type of home, and whom you feel comfortable and confident working with.

Listing Agreements
The agent will normally request that you sign a written Listing Agreement before they undertake any work on your behalf.

The Listing Agreement is the contract between you and the real estate agent setting out the terms on which you are willing to sell.

Listing Agreement will likely be a standard form provided by your local Real Estate Board. A Listing Agreement must contain an exact expiry date and a description of the property and the parties.

The listing agreement also contains information regarding financing and the specific items to be included in the sale of the house.

Since the agent will offer the property for sale based on the listing agreement, review it carefully to ensure that the information and terms upon which you are willing to sell are accurate. Make sure you fully understand what you are signing. If you have any concerns or questions, contact your lawyer.

The wording of the standard Listing Agreement usually confirms that the real estate agent is acting on your behalf. Therefore, if the agent makes promises or guarantees to a potential purchaser, which the purchaser then relies upon in buying the property, you may be bound with the promises or guarantees given by your agent, whether you expressly agreed to them or not.

A listing agreement is not an offer to sell and there is no requirement that you accept any offer to purchase, even if the offer is on the exact terms set out in the listing agreement. You may, however, be liable for the commission by refusing the offer. There are two usually two types of listing agreements - an exclusive listing agreement and a multiple listing agreement.

An Exclusive Listing Agreement
Under an "exclusive listing agreement", the real estate agent is appointed as your sole representative and no other agent can be appointed as long as the listing agreement is in force. An exclusive listing by its very nature gives your home limited exposure to the market. However, the commission payable to the agent is lower than that which is usually paid under a multiple listing.

A Multiple Listing Agreement
A multiple listing allows your property to be sold by any number of agents. It is listed through the "Multiple Listing Service" thereby exposing it to thousands of potential homebuyers.

Commissions
The listing agreement also contains the terms concerning the amount of commission to be paid to your agent.
The commission rate will vary depending on whether the listing agreement is an exclusive listing agreement or a multiple listing.

The commission is calculated as a percentage of the sale price and not on the amount of time and effort expended by your agent in selling your home. Most agents in Ontario base their commission on the fees suggested by the local Real Estate Board, which are usually six per cent of the sale price of the home for a multiple listing and five per cent of the sale price of the home for an exclusive listing.

However, these are suggested commissions only. They are not set by law and are open to negotiation between you and your listing agent. Generally speaking, the agent will be entitled to a commission when a buyer who is ready, willing and able to buy your home signs an offer to purchase which you accept. Sometimes even if a potential sale falls through, depending upon the nature of listing agreement you signed or the wording used, you may still be liable for the commission. You may also have to pay a commission if you sell the home yourself while the listing agreement is in effect.

Mortgages
If there is a mortgage on your home, one of the first things you must do is to contact the person who holds the mortgage and find out a number of things:
How much is owing?
Is the mortgage assumable by the purchaser and, if so, will the purchaser have to meet any income requirements or otherwise qualify?
Can the mortgage be paid off and, if so, will there be a prepayment penalty or bonus and how much will the penalty or bonus be?

Sometimes a lending institution will waive the penalty if your purchaser takes out a new mortgage with the same institution, or if you take out your new mortgage with them. Regardless, it is worthwhile checking out what kind of arrangements can be made with respect to your mortgage.
If you intend that the purchaser of your house take over the mortgage payments, all the information that you obtain with respect to the mortgage should be included in the listing agreement and made available to prospective purchasers.

Whatever arrangements you make or information you get, try to get it in writing. It is not unheard of for a bank or other lender to give one answer over the telephone and another, later on in writing.

Pavey, Law, Wannop & Witteveen LLP Can Help You
Selling your home is one of the most important decisions you will ever make. Our qualified team of experienced lawyers is committed to ensuring this is a decision you and your family will be satisfied with for years to come. Call our office today at (519) 621-7260 or e-mail us at .

Revision Date: November 1, 1999

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