Problem Solving: Should I Sell My Home?
Making the decision to sell can be so difficult. It's not just the beautiful memories you treasure but it's your sanctuary, the place where you can relax and unwind. It's emotional, you're attached, and making the decision to sell means change. Still, you consider it because your way of life is evolving and the home you love no longer fits the bill.
Sometimes it's easier to look at things from a purely detached standpoint first, and that's what I am here to help you do.
1 - How much is my home worth today?
While you could poke around on Google, ask some neighbors who may be listed, check out social media to see if there's anything valuable there, or even submit your address to the Home Evaluation Tool below.
The most efficient use of your time and the most accurate way to find out what your home is worth (barring an Appraisal) is to get in touch with a REALTOR® and ask for a Current Market Analysis or CMA for short. I use historical data from the MLS® and factor in the unique elements, components, upgrades, and condition of your home that may be quite different from your neighbors. This will give you a good price range of what buyers are willing to pay for your home in the current market conditions. I provide this service free of charge with no obligations.
2 - Do I have enough equity to sell my home?
Equity is the difference between what you owe on your home and what it is worth today. If you purchased it years ago with a sizeable down payment, have been making regular payments on it, haven't added to your debt by taking out additional loans and/or line of credits that use your home as security, and maintained it well throughout the years you'll likely have a substantial amount of equity (the Benchmark price for a Detached Home in Saskatoon as of October 2021 is $357,100).
If you bought your home at a time when prices were high and it's only been a few years, you may have negative equity which would make it very difficult to afford the costs involved in selling your home.
Your banker will be able to provide you with your mortgage balance, the balance of any other loans attached to the home, and any penalties you may incur should you want to pay out the mortgage. Subtract the balance owing to the bank from the current Market Value of your home (this is not the same as Assessment Value), and you'll have a good idea of what you have left to work with.
3 - How much will it cost to sell my home?
Preparation - If there are repairs that need to be done, this should be estimated and added in to the total cost (see #5 for more information on repairs). Also, if you're thinking you'll need staging it can cost as much as $3000 - $4000.
Legal Fees - Lawyers charge anywhere from $500 - $1000 for legal fees on the sale of a home. With each property sale being unique, the best way to find out an accurate number is to contact a Real Estate Lawyer (I have some excellent professionals I can refer you to) and have that conversation. Here's some lingo for you to help make that conversation easier: Lawyer Fees (paid to the firm for the service they provide); Disbursements: Costs paid by the firm on your behalf; Adjustments: Costs paid by the Vendor (the person on the other side of the transaction); Mortgage Costs: The mortgage and all related expenses; Transactional Amendments: These are adjustments made after the sale became final; Interest Upon Closing: Sometimes things get delayed and interest is incurred as a result.
Real Estate Commissions - While there is no set standard, it is common to see commissions charged on a 3 tier rate of 6% on the 1st 100K/4% on the 2nd 100K/2% on the remainder.
An example for a $450,000 home is:
In the example above, the commissions of $16,650 is divided between both the listing side and the selling side and usually on a 50/50 split. Then, this is further split between the Brokerage and the Agent on each side for the work involved to get your home sold.
Deposit for Another Home - If you are planning on buying another home, you should factor in a 5% down payment and an additional 1.5% for closing costs. Where this can get tricky in a sellers market is if you'd like to synchronize the closing day of the home you sold to the possession day of your new home. Selling your home may not be a problem at all but buying a home in a sellers market makes sellers quite selective about what they are willing to accept in an offer. Offering on a home with the condition of selling your home first isn't going to be favorable to a seller when they have four other offers without that condition. You might consider asking your Mortgage Specialist for a line of credit or a bridge loan to cover the time period between the mortgage on your new home and the payout from the sale of your previous home.
Moving - Often not thought about that much until you are in the thick of it wishing you had booked a mover. Imagine yourself lifting that couch out of your living room, down the stairs, onto the rented truck, up the stairs, and into your new place. Consider your friendships and how much beer it will take to convince them! Lol Then call a mover for a quote. They can be expensive, but it might be the best money you'll spend after all the work you've done to get to that point.
4 - How much time will it take to sell my home?
There are a lot of factors that come into play when trying to estimate how long it will take to sell your home but the average number of days on the market (DOM) for all Saskatoon Residential listings for October 2021 was 44 days, down from 54 this time last year. The most common reason why a home will sit on the market and not sell is due to it being priced too high.
5 - Should I make repairs?
Try to look at your home from a buyers perspective, keeping in mind that a buyer will not have your emotional attachment, and will look through a very discriminatory lens. Try taking some pictures of your home and seeing how it will look to viewers (don't forget the zoom feature :)) or ask a favorite Real Estate Agent to take you out to look at a few homes so you'll have the opportunity to put yourself in a buyers shoes. Then ask yourself, if you walked in the door and saw the condition of your home, would you be interested? If not, what did you notice and is it worth the time and cost to fix it.
Let's talk a bit about repairs:
Simple and Inexpensive Repairs - Leaky faucets/pipes, a bathroom exhaust fan that's barely working, light fixtures without bulbs, missing eavestroughs, degraded caulking on exterior openings, and water pooling around the foundation are some examples of basic repairs. If left as is, they will reflect poorly on how well the home has been maintained. They should be done before listing.
More Complicated and Pricier Repairs - Wall dings, missing baseboards, windows with broken seals, bright and/or dark paint, unfinished projects are distasteful to a buyer but require a little more work on your part to remedy. Maybe you can do them yourself but don't have the time or the energy to tackle them. If that's the case, you're welcome to give me a call for some referrals or you can check out OMNEE. I'll let them explain what they do but it's like having a Project Manager in an App on your phone, and it's free to use.
Complicated and Expensive Repairs - As for the big ticket items like shingles, siding, windows, furnace, water heater, A/C, electrical panel/old wiring, and plumbing pipes. If you know the current age of those components in your home, you can use the chart below to roughly determine how much time they have left. If they have 50% life expectancy left, or less, then the cost to replace them may be offset by your eventual selling price. That depends on just how old they are or the condition they are in.
It's not often done around here, but you could consider having your own Home Inspection done prior to listing so you'll know what repairs are needed. It's a small price to pay (about $450 for an average home) and can be used as leverage once listed. Give me a call or text at 306-291-8750 if you'd like a referral, and I'll set it up for you.
6 - How should I sell my home?
A Google search will bring up all kinds of options to get your home sold, from cash offer sites to FSBO (For Sale By Owner) sites to discount sites to full service brokerages. I understand the cash offer sites will pay bottom dollar for your home so they can sell it for top dollar and the discount sites upsell more services to you once you've taken the leap. Both seem to be banking on a homeowner's vulnerability, so if this is something you're interested in be sure to do your research. FSBO is an option for those that don't want to pay a commission, but if you are successful selling privately you'll likely sell for a lower price (NAR 2020 study - a typical FSBO sold for $260,000 vs $318,000 agent-assisted) and need to hire a lawyer to finalize the paperwork. One undisputed fact, selling privately is time consuming. Here's a brief list of where some of your time will be spent:
Determine the Fair Market Value of your home.
Prepare your home for sale.
Hire or do your own photography and virtual tour.
Complete a Property Disclosure.
Create Marketing Assets, like flyers and ad copy.
Market your home.
Plan and advertise Open House events.
Host Open House events.
Field calls from potential buyers.
Schedule and Show potential buyers your home.
Screen buyers for financing.
Negotiate the details of the agreement such as, but not limited to: Price, Deposit, Deposit Due Date, Who Holds the Deposit, Inclusions/Exclusions, Financing Approval Confirmation, Conditions, Conditions Removal Date, Price Reductions and/or Concessions, and Possession Date.
Prepare Legal Documents and get necessary signatures.
Schedule and attend the Home Inspection, Appraisal, and anything else required to satisfy the conditions of the offer.
Prepare Legal Documents to finalize the Transaction and get necessary Signatures.
Make arrangements for Possession Day.
In FSBO transactions, the seller assumes all of the responsibilities and legal risks of completing the sale. To those of you still interested in selling your home yourself, let me help you with a Market Evaluation. If you change your mind and decide to list it, I'll be happy to make that happen.
Using a Full Service Brokerage is the most common choice (NAR 2020 study - 93% of sellers used a Real Estate Agent) for home sellers. Here's a short list of some of the tasks involved when listing your home for sale:
Research historical data to determine what Buyers are willing to pay for (and what they're not willing to pay for) homes that are comparable to yours. While I said that quickly, there is a lot of research involved that includes elements such as the location, age, condition, size, # of bedrooms and bathrooms, lot size, finished or unfinished basement, garage, and the list goes on.
Advise you on the current market conditions. An approach in a Seller's Market will not work in a Buyer's Market.
Provide a pricing strategy based on the CMA provided.
Provide a marketing strategy and implement it.
Provide recommendations for preparing your home for sale.
Arrange (and often pay for) professional photography and virtual tours (I do my own virtual tours and have a hosting platform and workflow in place for them).
Put your home on the MLS® (and many other websites, too numerous to mention).
Answer calls, schedule viewings, and provide information to Buyer Agents on your behalf.
Explain those legal documents to you, so you understand what you are signing.
Negotiate with the buying side on your behalf (you are in control).
An office with a Conveyancing Team. Yes, it takes a team to get this done.
Here is a link to a fun and overwhelming list of 184 things Real Estate Agents Do, in case you want to explore that further.
I hope this helps you to make that decision on whether or not your should sell your home. I'm available anytime if you have any questions!
Have a great day,