Selling
Your Home
There are a million different reasons why people sell their
homes, but every seller has one thing in common: the desire
to get as much money as possible from their existing residence
as quickly and as hassle-free as possible. (If your home
is your principal residence, you won't have to pay capital
gains tax on any profits from the sale. If, on the other
hand, it is an investment property, prepare for the tax
man!)
Before
you begin the selling process, really evaluate why you're
moving. Do you have too few rooms, or too many? Has your
job moved to another city and you're relocating? Are the
neighbours driving you away? Or are you simply looking for
a change? A complete analysis of your current position will
set a good foundation for your next home hunt.
When
is the Best Time to Sell Your Home?
Everyone seems to have specific ideas on when the right
time is to sell. Some base their theories on the overall
economy, while others will tell you that there are key buying
months that you'll want to capitalize on.
If
you're not buying and selling strategically or for investment,
the best time to sell is really when you feel your existing
home will not meet your future needs. The best reason to
purchase a new home is to take advantage of your family
and lifestyle changes. Do you wish to be closer to a school?
Are you switching jobs? Do you have an aging parent to care
for?
In
Canada, weather and holidays do play a factor. Almost no
one goes house hunting around Christmas, and few give up
their summer vacations. Of course, those with school-aged
children are less likely to move during the school year
and summer is an ideal time. In some areas, there is a definite
"spring cycle" -- perhaps it's a bit of spring
fever and a wish to break out of the bonds of winter.
Some
gamblers look for winter bargains and then try to sell their
homes during the spring cycle. But overall, that could be
more tension and aggravation than you wish. And the monetary
results may be disappointing.
Another
key factor to consider is the economy. Are interest rates
higher or lower in comparison to your current mortgage?
If they are higher, you may want to stick with your current
home, as your new mortgage payments could be uncomfortable.
If rates are lower, you might be able to trade up to a more
expensive home without a significant increase in your monthly
mortgage obligation.
What's
more, if it's a buyers' market, you may be in a strong position
to purchase a new home, especially if you have accumulated
some equity in your current property.
Are
There Costs Involved in Selling?
Unfortunately, the answer is yes. Even if you think your
home is perfect, you may have to do some minor repairs or
upgrades to make your home more attractive to potential
purchasers.
A
professional home inspection may be a condition of the offer.
If the inspection points to problems, your purchaser may
ask that you make the necessary repairs or choose not to
close the deal.
Closing
costs, such as lawyers' fees or unpaid taxes, will also
have to be paid.
Mortgage discharge fees may be levied by your lending institution.
Sales commissions must be paid. They usually amount to 6%
of the selling price.
Buy
or sell first?
That's tricky. After all, if you find a purchaser for your
existing home, before you've found a new one, you may find
yourself living out of a suitcase if convenient closing
dates can not be negotiated. On the other hand, if you find
your dream home before you've unloaded your old one, you
may be faced with carrying two mortgages for a time.
So
how do you manage? Easy. Do your homework and have a good
idea about the neighbourhood and type of home you're looking
for. Do an honest evaluation of your family's needs and
budget.
If
you've found a home, before you've sold your existing one,
use "sale of your existing home" as a condition
on your offer. If you don't sell your house within a fixed
period of time, you can choose not to go through with the
offer. This, however, is a difficult condition for many
vendors to agree upon and you may find that you have to
forgo your price negotiating power.
Purchasing
a home before you sell could be a risky strategy if you're
counting on the proceeds from the sale.
If
you've found a purchaser before you've found your next home,
use "purchase of a new home" as a condition when
you sign back the agreement. Again, it will only be for
a fixed time. Even if you have not found the ideal next
house by the time the deal closes, you may still wish to
proceed with the offer. As a buyer with a "sold house"
you will be in a better position to negotiate price.
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