Decide when to sell.
In real estate, timing influences your home’s selling price.
Working with a REALTOR® can help make timing work for you.
- A buyer’s versus a seller’s market? When lots of people are looking for homes but not many are for sale, it’s a ‘seller’s market’, because the seller has something everybody wants. When there are lots of homes for sale and not many people buying them, it’s called a ‘buyer’s market’ because buyers have more power of choice.
- How quickly do you need to sell your home? In a seller’s market, top price and a fast sale can go hand-in-hand. In a buyer’s market, more sellers are competing for your potential buyer. If you have to sell right now, consider lowering your asking price a bit to speed up the sale. A REALTOR® can help you figure out the right price-to-speed ratio.
- Do home sales get frostbite? It’s true. Winter sales tend to be slower, and spring sales are more brisk. Regardless, there are always people looking to buy, and seasonality is only one of many factors to consider.
- What if you’re also buying a home? If you sell your existing home for a ‘low’ price, you’re probably also buying at a low price. If you are upgrading to a larger home, this actually works to your advantage. If you’re downsizing from a bigger home to a smaller home or a condo, you need to pay a bit more attention to the market.
- To buy first or sell first? The eternal question. Many people are able to time their sale and purchase so they happen on the same “closing date”. As a buyer, you can make your offer “conditional” on the sale of your existing home to make sure you’re not left paying for two homes. As a seller, you can try to extend the “closing period” to give yourself more time to find your next home. A REALTOR® can provide advice and counsel during these kind of negotiations.
- What if you find your new dream home before you’ve started to sell your old one? Talk to your existing mortgage lender about “Bridge Financing”. This is when your lender (the bank) agrees to lend you the down payment for your new dream home, while you still cover the mortgage on your existing property.
Prepare your finances
Before the offers start rolling in, you should prepare for the massive amounts of money that will pass through your hands.
- Still have a way to go paying off your mortgage? Here are some things to consider. “Discharging” your mortgage Many people use the proceeds from the sale of their home to “discharge” or pay off their mortgage. If you have what is known as an “open” mortgage, you can pay it all off without any penalties. If you have a “closed” mortgage, be prepared to pay a penalty. The penalty amount will depend on a number of factors, including how much time is left on the term of the mortgage.
- If you’re buying a new home, is your mortgage “portable”? A “portable” mortgage means you can take your mortgage money with you and buy a new home, without penalty. This can be a real bonus if the interest rate on your mortgage is lower than existing rates! If your new home is more expensive, and requires more mortgage, you’ll have to borrow the extra money at the current market rate. Maybe the buyer is “assuming” your mortgage may have a feature that allows the new buyer to take over your mortgage. If the interest rate is lower than existing rates, this can be a very enticing selling feature for your home.
- Become a mortgage lender yourself? If your buyer is having trouble arranging all the money to buy your property, you may consider lending directly to them. This is called a “Vendor Take Back” mortgage, and it’s often used by sellers to help move a property in a slower market. This is an incredibly complicated financial dealing, and you must talk with your REALTOR®, financial advisor and lawyer before choosing this route.
- If you find your new dream home before you’ve started to sell your old one. Talk to your existing mortgage lender. You may be able to arrange “Bridge Financing”. This is when your lender (the bank) is confident your existing home will sell quickly, and they agree to lend you the down payment for your new dream home.
- Capital gains tax. If the home was your primary residence, you will not have to pay taxes on any capital gain (the increase in the value of your home). If you had tenants living in part of your home, such as the basement, you will pay capital gains tax on a portion of your profits. You may also owe capital gains tax if you’re selling a vacation or investment property. Talk with an accountant to find out what you’ll have to pay.
- GST for professional services. Your lawyer and REALTOR® are providing services that are subject to GST/HST.3. Find a REALTOR® who is right for you
Which REALTOR® is best for you?
There are many reasons why a REALTOR® is essential when selling your home, but which REALTOR® is best for you? Don’t simply go with the first REALTOR® who suggests the highest asking price. Ask around, talk to a few, and you’ll soon find the one that’s right for you.
- The REALTOR® who helped you buy your current house is a good start. Sticking with a REALTOR® you know just makes sense. If your REALTOR® did a good job helping you buy your home, he or she is probably a good candidate for helping you sell it.
- Think locally Jot down the names and numbers of REALTORS® on “For Sale” signs. Ask your local friends or nearby family to recommend a REALTOR®. Visit one of the local real estate offices who know your area.
- Interviewing candidates. Don’t be afraid to ask questions. Finding the right REALTOR® is about a partnership so screen a few before deciding. Make sure you feel comfortable with him or her and that they show a genuine interest in helping you.