Selling a Home in Vancouver BC How to Start

Sellers

Knowing what your home is worth at the present market. Sign up for a Market Snapshot to see similar homes listed, recently sold, and expired in your neighborhood www.activeandsold.com 

Buyers

Create your own Personal MLS Listings Search, the same system that is available to Realtors. Visit www.yourownmls.ca

Selling or buying a home is the largest transaction most of us ever become involved in. Yet people sometimes take less time over it than they do when buying a new car.

That’s because it’s unfamiliar territory to many of us. We don’t understand the process. We don’t know what questions to ask. We may take things for granted, rely on others when we shouldn’t, and sometimes we wish we had known more about the process.

RECBC can help. We protect the public by impartially setting and enforcing standards of conduct, education, competency, and licensing for real estate professionals in BC.

Getting Started

You can sell your own home without the services of a real estate professional, but selling a home is a complex process.

• What is the best possible price?
• Where do you find a buyer?
• What facts must you disclose?
• What paperwork is required?
• Will the contract be legal and binding?
• How is ownership transferred?
• What about the existing mortgage?
• Can the buyer qualify for a mortgage?
• Who ensures you will get your money?

To answer these questions and assist with many other situations which may arise, you might wish to employ a licensed real estate professional to act as your agent.

Real Estate Professionals

Licensing Requirement

It is important to understand that in British Columbia, the person you hire to assist you to sell your home must be licensed under the provincial Real Estate Services Act.

Responsibilities

In every real estate transaction, there is a seller and a buyer. A real estate professional may be employed as an agent for the seller or as an agent for the buyer.

Early in the first meeting with a real estate professional, they should provide you with full disclosure about the nature of their relationship with you, as a seller. The real estate professional is required by law to provide this information and explain its implications to you.

Your relationship with a real estate professional

In a real estate transaction, the nature of the relationship that is created between the buyer or seller and the real estate brokerage, including the real estate professional, is important.

Sole agency

Where a real estate professional acts only for the buyer or the seller, a sole agency relationship is generally created. The buyer or seller who engages a real estate professional to act as a sole agent is known as the “client”.

There are different types of sole agency relationships. When the brokerage only represents one client in a particular transaction this is referred to as ‘sole’ agency. Another type of sole agency, ‘designated agency’, occurs when the brokerage and the client agree that the brokerage will designate one or more licensees engaged by that brokerage to provide real estate services as sole agent to or on behalf of the client. In a designated agency, the brokerage has contractual duties to the client but it is the designated agent who acts as sole agent on behalf of the client.

As an agent, a real estate professional has certain duties to their clients. In addition to the general obligation to act honestly and with reasonable care and skill in performing all assigned duties, an agent has a duty:

• of undivided loyalty to the client;
• to keep the confidences of the client;
• to obey all lawful instructions of the client; and
• to account for all money and property of the principal placed in the brokerage’s hands while acting for the client.

In the designated agency, the brokerage and the client agree that these duties – other than the duty shared with the designated agents to keep the confidences of the client, and the holding of money on behalf of the client – are the responsibility of the designated agents.

Dual Agency

Real estate agents in BC cannot practice dual agency, which means they cannot act for both a buyer and a seller, or two buyers, in the same transaction. An exemption to the ban has been established for remote locations where it’s simply not feasible for buyers and sellers to be represented by two separate real estate agents. In that situation, the exemption allows dual agency so that consumers at least have access to limited representation.

In those rare cases where a brokerage can act for both the buyer and the seller, with their agreement, the nature of the relationship created by contract is one of dual agency. Before a brokerage may represent both the buyer and the seller, the buyer and seller must consent to such a relationship. Before providing their consent, the buyer and seller should be fully informed regarding the limits that will be placed on the duties and obligations to the buyer and seller.

The designated agency allows two clients who have engaged the same brokerage to have independent representation by their respective designated agents, eliminating the occurrence of ‘in-house’ dual agency where the interests of those clients are in conflict, e.g. they wish to negotiate in relation to the same property.

Where a dual agency relationship has been agreed to, it is not possible for the agent (brokerage or its designated agent) to fulfill all of its duties to both parties. As a result, the duties are limited by contract and the sole agent, whether the brokerage or its designated agents as the case may be, become dual agents, with their duties being limited as follows:

• the brokerage and/or its designated agent must deal with the buyer and seller impartially;
• the duty of full disclosure is limited so that the brokerage or its designated agent are not required to disclose what the buyer is willing to pay for the property, what the seller is willing to sell the property for, or the motivation of either party; and
• the brokerage or its designated agent must not disclose personal information about the parties, unless authorized to do so in writing.

No Agency

A brokerage or its designated agent may also agree with a buyer or seller that they will not act as an agent on their behalf in a transaction. In other words, there will be no agency representation.

In such a case, the buyer or the seller will be the “unrepresented party”, not the client of the brokerage or its designated agent. This may occur when a real estate professional already has an agency relationship with a seller, for example, and a buyer becomes interested in the seller’s property.

In this situation, the real estate professional is not permitted to recommend or suggest a price, negotiate on the unrepresented party’s behalf, inform the unrepresented party of their client’s bottom line price point or disclose any confidential information about their client unless otherwise authorized by the client.

However, they can provide an unrepresented party with other services, such as:

• explaining real estate terms, practices and forms;
• assist in screening or viewing properties;
• prepare and present all offers and counter offers at the unrepresented party’s direction;
• inform you of lenders and their policies; and
• identify and estimate costs involved in a transaction.

How to choose a real estate professional

There are many ways to find a real estate professional with a reputation for excellence.

Word-of-mouth is one good source. Ask friends, neighbours and fellow employees who have recently bought or sold a home to recommend their real estate professional.

You might meet a real estate professional you like at an open house who is showing one of the properties for sale in your neighbourhood. Or, you could contact several local real estate brokerages to inquire if they have someone who specializes in selling homes similar to yours.

The internet is also a good way to locate professionals who specialize in properties and regions that may be of interest to you. Make appointments with candidates to discuss their range of services, background, knowledge, and fees or commission rates. After these interviews, choose the one who seems best able to render the services and produce the results you are seeking.

What will they charge?

In general, real estate professionals work on a commission basis and receive payment only after the successful completion of a sale.

As the seller, you will be asked to agree to pay this commission as a fee for their services. The commission is usually stated as a percentage of the total sale price or as a fixed dollar amount.

Note that GST is applicable to commissions.

The commission rate is neither fixed by law nor by any real estate board; it is negotiable between you and the real estate professional you engage to help you. The seller’s brokerage traditionally shares this commission/fee with the brokerage working for the buyer.

Service Agreements

Once you have selected a real estate professional to work with, that professional will use market research, along with his or her knowledge and expertise, to assist you in setting the best possible listing price for your home. Keep in mind that the price you set must be attractive to potential buyers under the current market conditions.

Before finalizing the asking price (sometimes referred to as the list price), you may wish to ask your real estate professional to prepare an estimate of the net cash proceeds you will receive on completion of the sale, based on the suggested asking price and the financing arrangements currently in place.

After an asking price has been established, you will be asked to sign a service agreement. This service agreement is typically referred to as a listing contract.

Types of listing contracts

In BC, the two most common types of listing contracts are:

• the Exclusive Listing
• the Multiple Listing

Each type of listing lasts only for the time period which is specified in the agreement. Be sure to take note of what this time period is.

An Exclusive Listing gives the seller’s brokerage the sole right to sell the home. This means that even if you sell the home to a prospect of your own during the term of the listing, you must pay the agreed commission to the seller’s brokerage unless that prospect was specifically excluded on the listing agreement.

You should also be aware that even after the exclusive listing expires, you may be obligated to pay the seller’s brokerage a commission if you sell your home to a person who purchases because of the licensee’s actions during the time of the listing.

A Multiple Listing is a form of exclusive listing which differs from the previous example only in that the seller’s brokerage agrees to register your home in a Multiple Listing Service (MLS®) so that its availability is made known to all real estate professionals who are members of the local real estate board.

In this case, the seller’s brokerage agrees to share a specified amount of the commission with any other member of the real estate board who is able to find a buyer for your home.

Discuss your objectives with your real estate professional before deciding which type of Listing Contract will best suit your needs.

Terms of the listing contract

The Listing Contract legally defines your arrangement with the brokerage and, in accordance with the Real Estate Rules, it must contain:

• your name and the name of the brokerage that you have chosen to work with;
• the address of the property you are selling;
• the effective date of the agreement;
• the date the agreement expires;
• a general description of services to be provided by the brokerage;
• the remuneration to be paid under the agreement and the circumstances in which it will be payable;
• a provision respecting the use and disclosure of personal information.

In addition to the Listing Contract, the real estate professional may ask for additional information to assist in the marketing of your home, including:

• the existing financial arrangements and whether this financing can be assumed by a new owner;
• a list of items attached to the building (normally called fixtures) which are not to be included in the sale; for example, a fireplace insert or a crystal chandelier; and
• the date on which you can give possession of the home to a new owner.

Before you sign the listing contract

Ensure that:

• it has been completed to your satisfaction, and
• you have a thorough understanding of all of the terms it contains, especially the list price, the commission rate, and the length of the contract.

The real estate professional will provide you with a copy of this contract which you should keep for future reference.

Remember: the Listing Contract is a contract. You cannot simply back out of the contract without the consent of your real estate professional. If your real estate professional says that you can cancel the listing agreement at any time, ensure that you get this in writing.

Your responsibilities as a seller

When you employ a real estate professional, you are responsible for providing him or her with accurate information concerning your home, such as:

• its age,
• the current financing arrangements,
• the condition of the roof and hot water heater,
• the property taxes.

The real estate professional will also need your assistance and/or authorization to gather information about such things as the ownership details, the outstanding balance owing on the mortgage, the home’s assessed value, and the current zoning of the property.

For strata titled properties, real estate professionals will want your assistance to gather and provide information, including:

• minutes of all strata meetings in the last two years,
• current financial statements,
• registered bylaws,
• current rules,
• building inspection or engineer’s reports,
• Information Certificate (Form B prescribed under the Strata Property Act),
• how parking stalls and storage lockers are designated
• whether a special assessment is being proposed, and
• any other documentation relevant to the strata property.

Obligation to disclose defects

Sellers must disclose known material latent defects about their property to a buyer. A material latent defect means a defect that cannot be discerned through a reasonable inspection of the property, including a defect that renders the real estate:

• dangerous or potentially dangerous to the occupants;
• unfit for habitation; or
• unfit for the purpose for which the buyer is acquiring it, if the buyer has made this purpose known to the seller.

Material latent defects may also include:

• a defect that would involve great expense to remedy;
• a circumstance that affects the real estate in respect of
• which a local government or other local authority has given a notice to the seller, indicating that the circumstance must or should be remedied; or
• a lack of appropriate municipal building and other permits respecting the real estate.

Common examples of material latent defects could include:

• the fact that the basement leaks when it rains,
• structural damage to the property,
• failure of the building’s envelope (water ingress),
• underground storage tanks located on the property,
• problems with the potability/quantity of drinking water
• un-remediated damage caused by the illegal use of the property, e.g. marijuana grow operation.

New installations or renovations of electrical or gas systems completed without appropriate permits and inspections may also be considered examples of material latent defects.

For information on what type of work in a home requires gas and electric permits, please contact the BC Safety Authority at 1-866-566-7233 or visit www.safetyauthority.ca.

Failure to disclose material latent defects could result in future problems, including legal issues if the new owner discovers problems that you were aware of and did not disclose.

Questions?

We are ready to answer any of your questions. Call Stan Stanchev at 604-202-1412.

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