- How do I sell my house?
Selling your house in Ontario can be a daunting task, where to start is not always so obvious. Here is a step by step checklist that will help prepare you and your home for sale.
1. Understanding the estimated value of your home or property
In today’s market house prices are changing and at a fairly quick pace. It’s important for anyone looking to sell their home to complete a competitive market analysis against other properties. You should be comparing your property directly against similar properties recently sold on the market and consider the current market supply. Understanding how a property is valued is important and will allow you to come up with an appropriate listing price for you home. A professional real estate agent can provide you with some guidance and suggest a selling price range for your property. I highly recommend connecting with a local representative and get an opinion before listing your home. I offer free home evaluations as do many other real estate agents in the Durham Region. However, if you would like to proactively come up with your own listing price, here are some things you should consider.
Three Approaches
Cost Approach – Is focused on the objective value, meaning to value a property based the cost to create and equally desirable property. This approach cannot be applied to a condominium.
- Income Approach – Based on the theory that the value of an investment properties income it is capable of producing. This approach is assuming that the value of the income producing property is linked to it’s potential value. This approach is strictly used for income producing properties only.
- Direct Comparison Approach – Is based on the assumption that an informed buyer would not pay more to purchase a property or house with same practicality. Comparing your property to other recently sold similar properties with making adjustments for differences can assist with creating your listing price. When using this approach there are several factors that impact the value of the property. When valuing your property you should consider the following:
- i. Select comparable properties similar to your property which have sold as recently as possible. Older sales may have occurred under different market conditions and may not provide a reliable result.
- ii. Consider looking for properties recently sold on your same street or within a couple of streets.
- iii. Properties outside of your neighbourhood would not be good properties to use for comparison.
- iv. Make adjustments for appreciation/depreciation, location, lot size and physical characteristics that your property may or may not have like a fire place, properly updated bathroom and kitchen, or double car garage etc.
- v. Certain property renovations provide less additional value than others. Your valuation should take this into consideration, I will touch on this later on.
- vi. Considering conformity to the neighbourhood is important when valuing your property. Building a large mason in a neighbourhood that has small apartment complexes on either size will not have the same desirability as the same house in an estate neighbourhood with 2 acre lots. The same goes for the opposite, if several homes in the area have been renovated and updated and your house is the last house in the neighbourhood awaiting and addition and upgrade, you may be in luck as the other properties will increase your property value!
- vii. General location is another key consideration, every buyer is looking for different requirements for their life style. If you have a property 5 minutes from the downtown area, this could increase your property value if the area is desirable. Many people enjoy the convenience of living close to the amenities they enjoy.
These are just some of the factors you should consider when completing your home evaluation, if you would like a free home evaluation click here and book your free home evaluation today.
2. Understanding your closing costs
This guide outlines some of the typical closing cost when selling real estate. At the closing of a transaction a sell will incur expenses. Typically you will need to be prepared to pay for the following; legal fees, disbursements, or documentation for the buyers lawyer. You may be required to pay for discharging your mortgage which may have an early termination fee associated with your mortgage agreement. Another potential cost will be discharge any liens on the home for example; unpaid municipal taxes. You will be responsible for reimbursing the seller for your portion of the taxes unpaid when you transfer ownership of the home. In addition, you should consider including moving costs, packaging materials and Realtor commissions plus HST.
3. Pre-plan you’re future home
In today’s market it can be extremely difficult to pre-plan your future home. Properties are selling quickly and their is limited availability on the market. It’s important that you have a plan for your future home before selling your existing home. When selling your home you have a several options. Consider the question how will I finance my new home once I sell my existing home? How fast will I need to move from my existing home? What type of house will I be purchasing and when will it be ready for me to moving in?
Having a plan for the questions above will assist you with a smoother transition into your new home. As an example; A buyer purchasing a new construction home may want to request the longest possible closing date for their current home as this may help them meet their completion date for their new home. Construction projects continually run into delays and could cause you to need a interim rental house or a hotel which can be very costly.
Buying a property in a sellers market can also be difficult. You may need to purchase a home after selling your house and carry both mortgages for a period of time. For example; maybe you sold your home for a great price with long closing date and your dream home, the sellers need out ASAP because they are starting a new job in another country. You could consider bridge financing to bridge the gap between when you house closes and owning your new home. This will require a firm sale of your existing property to be eligible and you will incur additional costs. Simply put, it’s import to build your game plan! You don’t want to get stuck out in the cold due to delays and run into costs you cannot afford. Always work with an accountant and/or mortgage specialist for expert advise. Everyone has a different situation and should consider all of their options.
4. Selecting a method to sell your home
For Sale by Owner – Buy yourself a for sale sign, put your phone number on it and start promoting with your own marketing plan! Home owners can sell their own home, what they cannot do is have someone who is not a registered realtor sell their home in Ontario. You could also use a marketing service for a flat fee. Their are several marketing service companies offering their MLS services to home owners. You may find many of these services still suggest you offer a commission to buyer real estate agents so they work on getting clients to your home. This could be a good option for you if your an experience marketer, negotiator and seller. You will certainly still need the services of your lawyer to review any agreement of purchase and sale.
Selling with a Realtor – This could be the easiest and most effective way to sell your home. Working with a Realtor has significant advantages and can take the difficulty out of marketing and selling your real estate. Consider interviewing several real estate agents and ask them how they plan to market your property. Many buyers are traveling to new cities from different areas to purchase their new homes. How will your real estate agent showcase your property to capture this audience to gain additional interest? Review their plans and consider how they plan to market your specific property. Getting your property in front of the most possible buyers could help you gain the most value when selling your home. Consider the network of realtors and the reach of the MLS Listing service. Utilize their experience and assistance when reviewing purchase and sale agreements. A real estate agent can help you navigate the terms and and conditions of the sale and advise on changes to be ensure your needs are met. All realtors have a fiduciary duty to their clients and must act in their best interest. I conduct myself with integrity, honesty and build trust with my clients through providing quality knowledge and service. You shouldn’t settle for anything less!
5. Preparing your home to receive the best value
It’s great that you are thinking about what you should do prior to listing your house. However, I would suggest you consider getting the opinion of a professional before you start making any changes or start spending money on updates that could be better spent elsewhere. The Appraisal Institute of Canada suggests there are 3 ways to measure your return on renovation value.
1. The value of increasing your selling price.
2. The value of enjoying your renovated space.
3. The value of maintaining your property worth.
Within this article the Appraisal Institute of Canada suggests the following 5 renovations top the list for highest return on investment.
1. Kitchen – quality materials and workmanship
2. Bathroom – with quality materials
3. Repainting – Interior/Exterior
4. Updating Decor- Think lighting, floors, countertops or refinishing worn hardwoods.
5. Decluttering – removing excess items
In my opinion decluttering is as important as staging your home property. A prospective buyer should be able to envision themselves living in the home. Check out this link for the article written by the Canadian Appraisal Institute of Canada.
6. The marketing plan
As I’ve mentioned previously mentioned, marketing your property is a very important part to getting the most value for your home. If no one knows your home is for sale, your not likely going to receive any offers and if you do, it might not be for the price you wanted. A marketing plan should be strategic to the type of buyer your trying to bring to view your home, think about the demographics and how to reach these potential buyers. It’s also important to think about how you will reach these buyers quickly and at the same time. The more your home is in demand the higher the price your property will sell for! If their is limited supply in the market you could see even more offers. Consider using many types of marketing like paid search and social advertising, display marketing, multiple listing services, social, mailers and print ads. After all the marketing rule of 7 says it takes and average of seven interactions before they make a purchase. Let talk about how we can make this happen for your home! Click here to book a time.
7. Reviewing Offers
After you have completed all of the items above and you have marketed your property effectively it’s time to decide which offer to accept! Reviewing offers can be confusing and could be stressful if your not sure what all of the terms, conditions and clauses mean. It’s the responsibility of your realtor to explain each and all offers to you and help you understand the pro’s and con’s to each. He or she should be able to advise you of the risks associated with each offer if any. For example: Buyer one provides you an offer at your asking price with no conditions, it’s a firm offer. Buy two provides you and offer of $5,000 over your asking price with the condition of obtaining financing satisfactory to the buyers sold discretion and a condition of satisfactory home inspection. Which offer do you want to choose? Although your realtor cannot make this decision for you, they can help you navigate the risks to each offer and help you make an informed decision.
8. Preparing for Moving day!
You’ve finally accepted the offer on your house and now it’s time to plan your move…..the fun part…well this depends if you hire a moving company or not. In college I worked for small moving company and their was always two different types of moves. The people moving are prepared and packed, well and the ones who didn’t know packing is required! You should consider starting to pack a couple weeks in advance, this job always takes longer than anticipated. You should also consider the cost of moving boxes, they are expensive and you will always need more than you think. I provide free moving box kits to make moving easy for my clients. However, if you want to make your life super easy, you can hire a moving company with packing services. These guys know what they are doing and shrink wrap your couches, bag your mattresses, disassemble your bed frames, tables and wrap your furniture with moving pads. I’m telling you from experience, it’s much faster on moving day if everything is properly packed and ready to go. Oh and don’t put all your books in on 4 cubic foot box, that’s just mean.
Thanks for reading, this guide is provided as a supplement to assist you when working with a professional realtor and your legal counsel. This by no means covers all aspects of selling your property rather provides you with a basic understanding of some key components to consider when selling you home. For help with you selling your home, please contact me at [email protected] or call 289-355-9658. I will be more than happy to help you with your free home evaluation.
