Selling your property
What should be negotiated
Eureka.House strongly recommends that both seller and buyer are in agreement before the offer is written up.
The offer to purchase will include certain conditions and other details to be negotiated. For example, will you include your furniture or appliances in the sale, such as the dishwasher? Should the buyer present proof that he/she has been approved for a mortgage before signing the deed of sale?
What should you negotiate? And what is non-negotiable?
You can negotiate anyconditions you like, but the buyer also has the right to refuse them. For example, almost all buyers will refuse an offer if they cannot carry out certain tests, such as vermiculite.
What should be negotiated
Here are the main detailsthat should be negotiated:
This is probably the most important point for you and the buyer.
It will be easier for you to get a better offer if you can justify it with solid arguments. Does your home have any advantages over similar properties? Are important details, like the structure of your home (roof, plumbing, electricity, windows, etc.), in impeccable condition?
Most ofteninspections reveal what work needs to be done. It’s normal for the buyer to want a price reduction after inspection.
Inclusions and exclusions
- Inclusions and exclusions
- Exclusions are items (ex.: furniture, appliances) not included in the sale and which you will take with you when you leave
Make sure the inclusions and exclusions are clearly listed in the offer to purchase.
If the buyer does not want certain items included (ex.: the buyer already has a lawnmower), you can add these items to the list of exclusions without lowering the price.
Date of sale, date and time of occupancy
The date of sale is the day on which the buyer officially becomes the new owner of your property.
The date and time of occupancy is the day and time when the buyer takes possession of your property. For example, your property is soldas soon as the deed of sale is signed at the notary, but the date of occupancy can be one month later, giving you time to move.
During the period between the sale and occupancy, you are no longer the owner of your home. If you continue to live there, it is as renting it from the new owner. In other words, you might “feel at home”, but you’re a tenant. The new owner does not have the right to enter the premises, unless, of course, you give him/her permission.
It is your obligation to transfer the property on the date and time agreed upon and in the same state it was in during the buyer’s last visit prior to signing of the deed of sale. If you cause any damage before occupancy, you are responsible for any repair costs.
Some buyers will charge rent during this period. This must be specified in the deed of sale and is therefore negotiable.
Hidden defects and selling without legal warranty
A hidden defect is a serious problem that decreases the value of a purchased property.
Here are two important facts about hidden defects:
- As the seller, you are responsible for hidden defects, even if you are unaware of them and regardless of whether you’ve sold your home yourself or through an agent.
- There is no time limit. You can be pursued for a hidden defect years after selling your home. However, the hidden defect had to have been there at the time of the sale.
Attention! Three conditions must be met for a defect to be considered “hidden”:
- The defect must be undetectable during the sale, even during professional inspection. For example, if the basement is prone to flooding each spring, the new owner might not have noticed this if theybought the home in autumn. This is considered a hidden defect. On the other hand, if the foundation is cracked and visibly apparent when viewing the basement, then the defect isn’t hidden.
- The buyer
must not be aware of the defect. Taking the example above, if your seller’s declaration specifies that there are flooding problems, then it’s not a hidden defect.
- The hidden defect must existat the time of the sale. If the foundation starts to deteriorate years after the sale, this is not a hidden defect, as it was in good condition when you sold your property.
As a general rule, homes are sold with a warranty against hidden defects. If nothing is specified, the property is automatically covered by this warranty.
This said, to protect yourself, you might even consider selling your home “without legal warranty”. In that case,hidden defects become the buyer’s responsibility.
If you sell your home without legal warranty, the buyer might want a compensatory price reduction according to market value.
Follow these two rules to sell your home without legal warranty (against hidden defects):
- Clearly specify the hidden defect in your listing and on your seller’s declaration.
- Fix the asking price in advance, by reducing it by $5,000, for example. Tell buyers that the price has already been lowered, so they don’t ask you to lower it again.
It is against the law to make any false declarations.
For example, if the foundation is completely cracked, some sellers will cover up the defect by filling and painting the cracks without repairing the foundation, then declare that, to their knowledge, there are no foundation problems.
This is a false declaration, as the seller knows this is untrue. Even if the home was sold “without warranty”against hidden defects, this doesn’t change anything: the seller is always responsible for fraudulent declarations!
If you make a false declaration, you could be pursued for the loss of value on the home or for ensuing damages.
Each condition must be met within a strict deadline. For example, you can give the buyer two weeks to have your home inspected and another week to give you an answer regarding the inspection results.
The Eureka.House sample offer to purchase includes the standard deadlines. If you cannot meet any of these deadlines, inform your buyer why and agree on new deadlines.
Buyers who do not respect deadlines lose their rights. For example, if a buyer informs the seller only after the deadline has passed that inspection revealed a major defect, then said buyer loses the right to cancel the offer to purchase.
Attention!You must make yourself available to meet deadlines. If you are never available for the buyer’s inspection, then you will be at fault and the buyer can cancel the offer.
What is non-negotiable
Certain conditions cannot be negotiated and must be included in the offer to purchase.
Here are the non-negotiable conditions of sale:
Obtaining a mortgage
Eureka.House coaches strongly recommend that you don’t negotiate with buyers who are not pre-approved for a mortgage. Not only will you waste time, but you could also lose another offer where the buyer has the financial means to purchase your property.
The offer to purchase must be conditional to a buyer obtaining a mortgage (or, proof that the buyer has the funds to purchaseyour property without a mortgage).
Attention! Pre-approval is not a mortgage. A buyer must obtain a letter from his/her financial institution confirming the mortgage to buy your property before the date specified in the offer. The confirmation must be without conditions and must include the address of your property for sale. Without this letter, the offer can be cancelled.
It is unwise to buy a home without having it professionally inspected. This is why buyers normally hire qualified inspectors.
The inspector will inspect the roof, the foundation and other characteristics of your home. The buyer will receive a written report that will give them a better idea of any work that needs to be done.
If, during the inspection, the inspector finds that major work is required, the buyer can ask for price reduction or cancel the sale.
The offer to purchase must include a condition in which the buyer must carry out an inspection and approve or disapprove the inspection report. If you refuse to include this condition or ask the buyer for another arrangement, the buyer can walk away from the sale.
A buyer has the right to do any tests deemed necessary. Here are the most common ones:
- o Pyrite testing beneath the cracks in concrete slabs
- o Vermiculitetesting for contaminated insulation
- o Water quality tests, if water is not provided by the municipality
- o Verification of the septicsystem, if the property is not connected to the municipal sewage system
As with inspections, theoffer to purchase must include a condition in which the buyer must approve or disapprove the results of these tests. If you refuse to include this condition, or if you ask the buyer for another arrangement, the buyer can terminate the sale.
Divided and undivided co-property documents
If your dwelling is a divided or undivided co-property, the buyer has the right to verify the declaration of co-ownership, the building regulations and the balance of the contingency fund.
The offer must therefore include a condition in which the buyer must approve or disapprove of these documents. As with the inspection, if you refuse this condition, or if you ask the buyer for another arrangement, then you risk losing your sale.
- • You are sole owner of your dwelling.
- • You are not co-owner of the other dwellings.
- • You co-own the common areas.
- You are co-owner of the entire building, including all dwellings and common areas.
- Similarly, ownership of your dwelling is shared between all co-owners. You are thereforenot sole owner of your own dwelling.
Feasibility of modifications
A buyer might want to make modifications to the property, such asadding an extension.
In this case, the offer to purchase must include a condition in which the buyer must obtain necessary authorization (ex.: municipal permits) to carry out the work and that the budget is reasonable for him/her (ex.: obtaining a quote from a contractor).
Most sellers accept this condition without negotiation. However, you might find this too complicated and refuse – it’s your right. Eureka.House coaches recommend that you accept this condition.
Who pays for these conditions?
As a general rule, all costs are assumed by the buyer. Sometimes an owner will agree to pay for certain tests.
Step #7 Negotiate with buyers