Selling a home isn’t something to leave up to chance. Without a REALTOR®, this major transaction could quickly become one of your largest regrets. Realtors are experts at the following:
- Maximizing your advertising budget to get top dollar for your property
- Deciding the best time to sell your home
- Understanding and catering to the buyer’s market
- Seller’s market – when there are many people looking for homes, but there are not many available on the market
- Buyer’s market – when there are many homes for sale, but not many people are buying them
- The time of year can also affect how quickly you can sell and buy a property
- Determining the best price-to-speed ratio for selling your home
- Understanding the seasons
- winter sales tend to be slower, spring sales are tend to be quicker
- If you sell your home at a low price, you’re probably buying at a low price; if you are moving to a larger home, this is advantageous
- If you are downsizing from a bigger home to a smaller space, a realtor can assist by determining the market and when is the best time for a transaction
Buy first or sell first?
Many people are able to time their sale and purchase so they happen on the same “closing date.”
- Sometimes you can time your current home’s sale with the future home’s purchase
- Can make the sale of your home “conditional”
- Can try to extend the “closing period” to have more time to find your next home
- Smart to enlist a REALTOR® for professional services, just like you would hire a mechanic or dentist
- If you find the perfect new home before you sell your current home, you can talk to your mortgage lender about “bridge financing.” This is when your loan company agrees to lend you the down payment for your new property while you are still paying for the mortgage on your current home.
Be financial ready
Be ready to work with the large amount of money involved in your real estate transaction.
Still have a large mortgage? Consider the following:
- “Discharge” your mortgage – use money from your current home’s sale to pay off the mortgage you owe.
- With an “open” mortgage, you can pay the full amount outstanding without penalties.
- With a “closed” mortgage, a penalty will likely apply and depends on some factors including the remaining term of the mortgage
Is your mortgage portable?
A “portable” mortgage means you transfer your current mortgage arrangement to your new home without penalty.
This is advantageous if the interest on your mortgage is lower than existing rates. However, if your new home is more expensive and requires a larger mortgage, you will have to borrow the extra money at current market rates.
Perhaps your mortgage permits the buyer of your home to “assume” your mortgage. This is an attractive selling feature if the interest rate is lower than existing rates.
You could also become a mortgage lender. If the buyer is having trouble arranging their financing, you may consider lending directly to them. This plan is called a “vendor take back” mortgage. It’s often used to move a property in a slow market and it is incredibly complicated to set up. Be sure to consult your lawyer before choosing this option.
If you find the perfect new home before you sell your current home, you can talk to your mortgage lender about “bridge financing.” This is when your loan company agrees to lend you the down payment for your new property while you are still paying for the mortgage on your current home.
Capital Gains Tax
Capital gain refers to how a property increases in value over time due to the housing market.
If the home was your primary residence, you will not have to pay taxes on any capital gain.
However, if you had tenants living in part of your home such as a basement apartment, a capital gains tax will apply to a portion of this income.
The capital gains tax would also apply to a secondary property such as a vacation or investment property.
Seek professional assistance for help in this area. Be aware that GST/HST taxes will apply to hiring a consultant for their services.
Finding the right realtor
We’ve been outlining the many ways a realtor is essential when negotiating a property sale.
How to choose the best one? Shop around, talk to a few, get quotes for their services, and analyze how comfortable you are in trusting him/her with your real estate negotiation.
- You can go back to a realtor you’ve used before.
- You can choose a local contact by writing down names and numbers from “for sale” signs.
- Ask for referrals from family and friends.
- Visit a local real estate office
- Interview candidates. Don’t be afraid to ask questions. It’s important to find the right partner for one of the biggest transactions of your life