Disclaimer: I am not a realtor nor am I qualified to give any legal or other advice on matters relating to real estate. The following is just a draft of my personal research notes on the subject. Do not take my word for any of it. I recommend that you get professional advice and use your own judgment regarding the sale of real estate in your region.
Interview a minimum of 2 or 3 realtors before choosing one. If you don’t feel comfortable with these, interview more. Feeling pressured or getting inconsistent information? Interview more realtors until you find consistency and feel good about your choice. You are going to be paying many thousands of dollars to someone to sell your property. The realtor should act professionally and be respectful toward you. You should feel like they are earning their fee, not just collecting a fee on a quick sale.
Deal only with your chosen realtor, not assistants, associates or partners. Even though they may have these working for or with them, you are choosing an individual person, not a team. Otherwise, interview and evaluate each member of the team. Personally, I prefer the single point of contact approach. If a problem comes up, I just need to deal with one person and no blaming or finger pointing.
Ask to include a clause to make the contract cancellable at any time. This should not be a problem for a professional realtor who is sure that you will be happy with their service. A realtor that does not agree may be trying to trap you for as long as they can while agents representing buyers chance across your listing.
Three months maximum. If they say that is not enough time and need 6 or 12 months, find someone else. Think about this. If the realtor does not manage to sell your property in 3 months for a valid reason and you have been happy with their efforts, why would you not want to renew for another 3 months with them? However, if you are not happy with the realtor's efforts, why should you need to wait any longer than necessary to replace them with someone who will make waves and get the job done? Keeping the period short will hopefully also motivate the realtor to be active in the marketing your property.
Read and understand 100% of everything you are asked to sign. If what you are asked to sign makes reference to another document that has not been presented to you, ask for a copy and read it. Don’t let anyone rush you into signing a document that you have either not completely read or completely understand and agree with.
If so desire, be sure that the property is being sold “As is”, meaning that you are unwilling to make any changes or repairs before selling. Also, if you so desire, be sure to indicate that you are selling “without legal warranty”. This is to protect you from the buyer (or subsequent buyers) from coming back to you claiming that you sold the property knowing about a problem but without declaring it (even if it is not true). Ensure that this is included in writing from the moment you sign the agreement with the realtor. These are not usually the default terms and conditions of sale.
Should have the property inspected? Ask your realtor. With a property inspection in hand, you can often avoid sales delays. This does not prevent the buyer from having another one done but some buyers won’t bother doing this if one has already been completed. Be warned though that, once you know about issues with your home, you may need to declare these upfront. It is important to note that home inspectors are not required by law to be licensed in Ontario. This means that anyone can do it. If the buyer wants a way out of a sale, they can hire someone or do one themselves and make sure that things come up in the inspection.
NO REALTOR BUYERS! I am sure there are realtors who are honestly looking to buy a property for themselves and I don't have a problem with that. They are often just people like you and me. It is unfortunate that this could also be a scam where you are cheated out many thousands of dollars.
Example of a scam goes something like this:
- Realtor sounds too good to be true and tells you that your home is beautiful and, after looking over your property, it will be an easy sale -- likely sold at a much higher value than other realtor's estimates.
- They mention that they actually have someone currently looking for a home just like yours in this area.
- So you sign up with them. Unfortunately the buyers chose not to buy your home.
- The realtor might then organize an open house.
- Wonderful news! They have a great buyer who submitted an offer, but (s)he is a realtor. All the signs seem right except that they want to do a home inspection. You figure that this is normal and was to be expected of a savvy buyer.
- The potential buyer has a home inspection done which reveals that there are a ton of major and minor problems with the property.
- With this inspection report delivered to you, the scamming realtor may tell you that the buyer has elected to bow out of the deal due to ALL the problem found. They convince you that you will need to significantly reduce the price of the property in order to have any chance at all of selling it. They will claim that their hands are now tied. The pressure is now on you, especially if you already purchased your next home and need the money.
- Note: A good realtor would try to guide you through this turn of events. They would see the inspection report for what it is and and advise you on what you can do to replace it with a factual one.
- Not knowing what to do, you accept the scamming realtor's recommendation.
- The realtor guides you to finalize a sale with a new buyer that they were lucky enough to find for you.
- The buyer gives some extra money to the realtor and thanks them for driving the price down.
- The buyer now turns around and sells your former property at full price for a quick profit.
Tip: Read the report. It may look huge but it may not all be true. It may contain opinions, suspicions and concerns rather than just facts. The numbering in the report may also not be sequential giving the appearance that there are way more issues than there are in reality. Photos can also add many pages to a report to make it look bigger.
Fortunately, there are many good realtors but it takes time and effort on your part to choose one that you feel that you can trust, a realtor with integrity, a reputation for excellent service and a trail of happy customers. If you suspect that you might find yourself in a scam like this, tell the realtor that you decided not to sell your house at their recommended revised price. You want to escape their field of influence as soon as possible. Hopefully, you have the cancellation clause in your agreement with them as well as the shorter agreement duration.
- Insist that the realtor must be present themselves for ALL viewings and inspections. Being your representative is not a job to be delegated. The process of selling your home starts at the time of the agreement and ends when the sale has been completed. If the realtor agrees to this, there should be no need for a lockbox.
- Knows how to deal with bad inspections (get another home inspection).
- Ask what services they provide and how they do it.
- Be available to devote the time required for our needs
- Mediation for disputes
- Provide advice on how to maximize price – What do we need to do to improve the value and pay off (and get more return on investment)? What should be fixed or updated?
- How often will we communicate? Set the expectation – how often, acceptable method (phone, email, text, etc.). The realtor should be providing you with regular updates on their progress.
- Go over and explain every document and agreement that you will need to sign from the moment you hire the realtor to the time you sign over the property to the new owners. This is the realtor’s job – to act and be there for you in your best interest. If what they say and what it says on paper do not seem to be the same, insist on having clarification in writing before you sign a document. Don’t necessarily take the realtor’s word that you are obligated to sign anything. Your signature is an indication of your acknowledgement and agreement. If you don’t sign, you didn’t acknowledge or agree to what it says on paper.
- To review all offers made by qualified buyers and provide you with advice on which offer to consider and which ones to reject.
- Pre-qualify the buyers. You want to only see offers from qualified buyers. You and the realtor will need to agree on what a qualified buyer is IN WRITING, BEFORE you sign an agreement to hire them. For example, a qualified buyer would offer above $LOWEST price, have pre-approved financing, agree to the terms of the sale, have an acceptable buyer-to-debt ratio, etc.
- Availability/Focus: How many current listings do you have? If too few, what is wrong with them? If too many, they won’t have time to focus and do their best work to sell your property.
- The realtor should have experience working with similar types of buildings in the region.
- Recent selling experience: Should be more than 10 properties and they should have more than 2 years of experience – not combined experience with a partner.
- How many homes have you sold in this area? What do they know about this area? Don’t give them a chance to do research. Either they already have experience with this area or they don’t.
- What is your percentage of sales out of your total number of listings? Should be 95% or more. What percentage of listings have fallen through? It should be less than 5%.
- What is your sale-to-list price ratio? They should be getting their clients about 95% to 105% of their asking price.
- What are the addresses of the last 3 homes you sold? If they don’t want to give this information to you, the unknown reason might be something to worry about.
- Do you have references that I can contact? Should be able to provide 1 (ok) to 3 (best). Call them and talk to them about their experience. Find out if it reflects the realtor’s claims.
- Conflict of interest: How many times have you represented both the buyer and seller? It may lower your realtor fees but this is NOT GOOD as it could very well also end up lowering your final selling price.
- Negotiation: Will you lower your commission? Listen to their reaction. Nobody likes paying more than they need to. However, if the realtor is worth their value, it can be well worth it. So, if they just agree to lower their commission, this could indicate that they are likely to do this with buyers and not get you the most for your property. It is good if they just say no but it is best if they justify their rate and try to stick to it.
Realtor’s Marketing Strategy
The realtor should be able to explain to you why you should hire them instead of someone else. This may include but is not limited to the following:
- Provide an estimated timeframe to sell.
- Demonstrate knowledge about the area – ex: Trends, future development, zoning laws, local activities, schools, transportation, family services, and personal interests.
- Tell you how they arrive at the suggested selling price.
- Describe who they think the buyer will be.
- Tell you what selling features they will use to enhance your house.
- Describe their marketing plan. What is included in their marketing plan?
- Will they have an open house? When? How often will they have an open house and when if the house does not sell after the first one? How will they advertise this event?
- What marketing channels will you use to reach interested buyers? Every realtor will post on MLS (realtor.ca), and Facebook, and put a sign on your front lawn. That is nothing that makes them stand out.
- Tell you if they will do professional photos, videos, virtual tour, brochures, and staging – and when will they be doing this. Note that they may do just some of these and also have other things in mind. You should feel like the effort is appropriate. We may think that they should do everything but some things may not be needed in your case in order to achieve the goal of selling your property at your price.
- Explain “Buyer-to-debt income ratio” and what it should be.
- Agree on the sale price of the property.
- What you should fix. There are things that you may want to do to ensure that home inspections go well or that may significantly increase the value of your home. Of course, there are also things that are not worth fixing as they will either not affect the selling price of your home, may impede the sale of your home or may cost you way more than it will increase the value of your home.
Things That You May Need in Order to Sell Your Home
- Deed to the property.
- Recent land survey.
- List of known issues.
- Property tax receipts.
- Renovation contracts.
- Transferable warranties.
- Mortgage documents/deeds.
- What will be included with the property and what will not.
- Whether there are any leans on your property.
- Copies of all of the keys for the house including codes and remotes (e.g. garage door opener).
Known Property Issues
You will need to declare a list of known issues for your property. Do not go searching for them if you don’t already know about them!
Things That May Be Worth Fixing
Your realtor will give you advice on what could or should be done. For example, you may be asked to declutter and tidy your home, address and get rid of bad smells, fumigate infestations, paint, etc. Of course, you are not obligated to do anything. You could just walk out with the house exactly as is and hand over the keys. However, things like this may make it harder to sell your home and you may indeed need to consider reducing your asking price if the reasons are justified.
Here are just a few of the things that could possibly have a big impact on the sale of your home. Your realtor may be able to give you more applicable advice:
- Electrical problems
- Foundation issues
- Hot water heater
- Kitchen Cabinet knobs
- Kitchen Appliances
Hope you found something helpful in all of this. Feel free to ignore anything that does not make sense to you.
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