The idea of putting a home on the market can sometimes feel overwhelming, especially for a first-time seller. There is so much to do and so much paperwork to contend with. You start to hear unfamiliar terms pop up, like listing agreements, contingencies, and the MLS. What does it all mean and where do you start?
We’ve put together this guide to answer some of the common questions a first-time seller might have.
Should you use a real estate agent?
Legally, you don’t need an agent, but a licensed professional will make every step of the process much easier. If you decide to go it alone, you’ll have to do all of the showing, marketing and negotiating required to sell your home. Home showings alone are a lot of work, and you often need to be available at a moments’ notice.
And unless you’re a highly-skilled salesperson, you will likely sell your home for far less than it’s worth. An agent will also help you navigate the legalities of the transaction, protecting you from lawsuits or from the deal falling through because of a paperwork error.
Still wondering if you should work with an agent or how to find the right one? Here are some other informative posts to help you decide:
- For Sale By Owner: Should You Sell Your Home Without an Agent?
- How To Find the Right Real Estate Agent
What is a Listing Agreement?
If you decide to work with an agent, the next step is to discuss what is involved and to get everything in writing. This document is called a listing agreement and its purpose is to protect both you and your agent. A real estate agent must have this signed document before they can begin showing or advertising your home.
The terms of a listing agreement may vary, but will always include:
- The effective date and expiry date
- The compensation owed to the agent and brokerage
- What price the property will be listed at
- Authorization to co-operate with other brokers
- Authorization to release information about offers received on the property
Listing agreements are standard contracts in real estate, and nothing can start until you sign. However, you have the right to take your time and make sure you understand the document. A good agent will happily answer your questions without pressuring you.
How Real Estate Commissions Work
One of the misconceptions about selling a house is that you can make more money without an agent because there’s no commission to pay. However, the opposite is usually true and you will end up with more profits because of an agent. There are many ways a professional agent can maximize the value of your sale.
First of all, they have the sales and negotiating skills to build up the value of your house. They have several avenues to market your home that are only available to agents, like personal networks and targeted marketing.
In addition, they know the market in your area and can guide you on what renovations to make that will provide the most return on your investment. Some renovations pay off tremendously, others have no impact.
On average, an agent can negotiate as much as 20% more than an inexperienced owner selling alone.
What is the MLS?
MLS stands for Multiple Listing Service, and it is a huge database of properties for sale all over the country. You can upload pictures and describe the home, but you have to be brief, as you’re only allowed 512 characters. In the fast-paced seller’s market of the past few years, registering on the MLS was often all you needed to find a buyer for your home.
As the market begins to balance out, it’s well-advised to expand your outreach through networking, social media, and other targeted advertising.
Offers
It won’t take long after listing your home to attract interested buyers. What happens next? After your home is on the market for a specific amount of time, you set what’s called a “presentation date,” which is when you begin accepting offers.
You might start to hear the term “bully offer.” This is when a buyer tries to jump the line and submits a preemptive offer before your official presentation date.
Some offers may have contingencies, better known as conditions, that must be met before the sale proceeds. In the strong seller’s market we are experiencing right now, many buyers are dropping most of these conditions in the hopes of securing the property.
As the bids come in, your agent will help you sort through them to determine which one, if any, is in your best interest. You are under no obligation to accept any offer. You can reject them outright, or send back a counteroffer. Remember, the best offer isn’t always the highest bid. It may be the one with the fewest conditions, or where the buyer’s financing is assured.
Want to know more about what types of offers to expect? We have several posts devoted to the topic!
Closing Contracts and Costs
After your house sells, there are legal contracts to negotiate and closing costs, such as land transfer taxes, title insurance, and lawyer fees. The exact amount will vary, but closing costs in Ontario typically range from 4%-7% of the total sale price.
Who pays, the buyer or the seller?
The costs are often split equally, but the agreement of who pays what is usually spelled out in the offer. Right now, sellers are at a tremendous advantage in the market, and buyers are often agreeing to most of the closing costs.
Are you ready to sell? Here are some simple ways to prepare your home for maximum impact.
- Five Things You Can Do Right Now to Prepare Your Home for Sale
- Seven Small Improvements to Make Before Showing Your Home
- Light Your Way to a Faster Sale
Do you want more details about the process of selling your home? You can book a free, no-obligation meeting with us here. We are happy to answer any questions you may have!
Meet The Erica Reddy Team
Find out how our specialized skill sets and extensive Toronto market expertise empower your real estate venture.
