Purchasing a home is likely to be the largest investment you make in your lifetime – so when you are ready to sell, it is important for you to understand the process of doing so.
In this blog post, we will discuss the first five things to consider when selling your home:
While hiring a realtor is not a legal requirement to selling a home, the benefits of doing so may outweigh the costs. They are experienced in the field of real estate and may be able to offer insight into how to market a home, are likely to have contacts with potential buyers, and will deal with any negotiations that may arise with respect to the selling price. Given that realtors are provided with a set commission rate, they are incentivized to sell the home at an above-average value.
If the Seller chooses to hire a realtor, they realtor will ask the Seller to sign a Listing Agreement. This is an agreement that establishes the realtor’s commission rate and states the length of time that they have to sell the home. It is recommended that the Seller review this agreement with their lawyer prior to signing. After it is signed, the Seller is contractually bound to the realtor.
When an offer to purchase is made, the realtor will ask the Seller to sign a Purchase and Sale Agreement. It is important that the Seller understand the contents of this agreement prior to signing. Under what terms are they willing to accept the offer to purchase the property? If a conditional offer was imposed, the contract is not binding until the conditions are met. For example, a Buyer may put in an offer to purchase the home on the condition that they receive a mortgage from the bank, on the condition that they are able to sell their own home on a specified date, on the condition that a home inspection is completed prior to the sale, or on the condition that certain repairs are completed prior to the sale. Once the conditions are met, the buyer is bound by the offer to purchase. They will generally put down a small deposit (of five to ten percent of the full value) as an indicator of good faith. If they back out of the transaction, the Seller is generally entitled to keep this deposit, but this should be discussed with a lawyer at the time of the breach of contract.
Keep in mind that once this agreement is signed, it is legally binding and can only be changed through the written consent of both parties involved in the transaction.
It is important to ensure that the Purchase and Sale Agreement adequately reflects what the Seller is able to promise about the property. They must ensure that they change any and all terms that they cannot make a factual assertion to, or that they are not certain of, and initial the terms that they have changed. If the Seller is unsure whether or not the property meets the standard Representations and Warranties as indicated in the agreement, they should discuss title insurance with their realtor and lawyer.
Under the current Alberta Real Estate Contract, the Seller must provide the buyer with an up-to-date Real Property Report (RPR) on the property being sold. If the Seller does not have a current RPR with Municipal Compliance, they should contact a surveyor and obtain this report before selling their home. We suggest using the company, Geodetic Surveys.
What is an RPR? It is a survey of the land that shows the location of all buildings on the property, property boundaries, utility right of ways, any encroachments onto neighboring property, etc. Again, it must be stamped by the local municipality as “Municipal Compliance” to show that the property in question complies with the municipality’s laws. The municipality will not verify the survey if there is a problem with the RPR.
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