Homes are valuable assets, and most individuals understand that they will pay a commission of some type based upon that value when selling through traditional methods. This is a primary reason many Devon AB homeowners looking to sell find the idea of a ‘for sale by owner' (FSBO) transaction appealing. However, regardless of the route taken, owners will spend some money out-of-pocket and face some risks when selling a home in Canada. Here's the scoop on costs and potential pitfalls.
Time is Money—Sellers Must Evaluate the Value of Theirs
Owners tend to underestimate the immense amount of time it takes to sell or buy a home without a real estate professional. Selling property typically takes more than one or two local ads, as the majority of serious home buyers search real estate multiple listing services, where ads for FSBO homes cannot be included. This means creating great ads, taking photos and putting them online, navigating phone calls from interested parties, showing the home, etc. If these tasks will interfere with work schedules, the cost of an agent to market the home may be well worthwhile.
Paperwork and Legal Errors Can be Costly
There are numerous real estate transaction laws and loads of paperwork to complete, and just one misstep can delay the sale or even result in catastrophic legal consequences. Mistakes in FSBO transactions can invalidate the sale or leave the buyer feeling financially shorthanded. Errors in calculating taxes can become big problems, as well as any type of construed violations of the Fair Housing Act on behalf of the seller.
Sellers should be ready to face a lot of paperwork, and many of these legal documents will have strict timeframes and deadlines that must be enforced for legitimacy of the sale. This will entail financial documents, contingency requirements, legal paperwork, appraisal and assessment documents and final closing paperwork. First-time sellers without legal prowess may find themselves in a bind quickly in FSBO scenarios.
Knowing What to Disclose to Buyers
Most Canadian provinces have some sort of legal requirements concerning disclosing potential problems with the property for sale to potential buyers. However, these laws often dictate that one discloses issues that can be considered a ‘latent defect disclosure,' which would make the structure dangerous to reside within or completely uninhabitable.
Conditions meeting that requirement include mould, severe structural damage, roof damage and leaks, and the presence of asbestos and sometimes lead. Keep in mind, these issues may not be deal breakers, as many buyers may plan to raise the structure and custom-build a home of their design.
A Lawyer is Required to Sell a Home in Canada
In provinces such as Ontario, a lawyer is a necessary contributor to the process of finalizing all home sales, which means sellers will pay up front out-of-pocket for these costs. When handling private sales rather through a real estate agent, lawyers have more work to do and charge more. The positives of this requirement is that a real estate lawyer will do a lot to ensure the legality of the sale and protect the seller's interest.
For example, they help determine closing costs and set up the date for finalization in addition to securing earnest money in a trust until the sale is complete. They will also make sure all the legal steps and actions are taken by both buyers and sellers, including meeting deed and contingency obligations. Those who ultimately opt to hire an agent will likely not work directly with the lawyer, as the agent handles most correspondence. Furthermore, the costs of the agent and lawyer are generally absorbed through proceeds from the sale, rather than directly out-of-pocket.
Before deciding to sell a home without an experienced real estate professional, keep all of these potential downfalls in mind. Then determine whether the 'savings' are actually worth the final payoff.
By Justin Havre