The short version
- Overpricing costs more than it gains.
- The best offer is not always the highest one.
- Find out your mortgage penalty and rental contract buyouts before you list.
Selling a home is a handful of big decisions made over a few weeks. These are the seven that most often go wrong.
1. Pricing on hope
The most expensive mistake is listing too high. A new listing gets the most attention in its first two weeks. If the price is out of line with recent sales, buyers skip it, the listing goes stale, and you end up reducing to a number lower than you would have got at the start. Price from what comparable homes nearby have actually sold for, not from what neighbours are asking.
2. Looking only at the price on an offer
An offer is a price plus terms. Compare:
- Conditions. A firm offer, or one with short conditions, is worth more than a higher offer that depends on the buyer selling their own home.
- Deposit. A larger deposit shows a serious buyer.
- Closing date. A date that fits your next move can save you bridge financing or a month of rent.
- Inclusions. Appliances, window coverings and fixtures all have value.
3. Not knowing your mortgage penalty
If you sell before your mortgage term ends, your lender may charge a prepayment penalty. On a fixed-rate mortgage it can be thousands of dollars. Call your lender before you list and ask for the payout amount and penalty in writing. Ask whether you can port the mortgage to your next home.
4. Forgetting rented equipment
Water heaters, furnaces, air conditioners and water softeners are often rented. A buyer has to agree to take over the contract, and many will ask you to buy it out. Find your contracts and get the buyout figures early so they do not surprise you during negotiation.
5. Hiding a problem
Ontario law expects buyers to inspect, but sellers must disclose hidden defects that make a home dangerous or unfit to live in. The Real Estate Council of Ontario notes that concealing a defect can lead to litigation after closing. Tell your agent what you know. Problems that are disclosed and priced in rarely kill a deal. Problems discovered later often do.
6. Mistiming your sale and your purchase
If you are buying as well, the two closing dates need to work together. Sell first and you know your budget but may need temporary housing. Buy first and you may carry two homes. A long closing, a condition on your purchase, or bridge financing can close the gap. Plan this before either deal goes firm.
7. Underestimating the costs of selling
Budget for:
- Real estate commission, plus HST
- Legal fees
- Your mortgage payout and any penalty
- Rental equipment buyouts
- Moving, cleaning and staging
- Tax, if the home was not your principal residence. Ask your accountant.
Before you list
Ask for a written home evaluation and a net sheet: an estimate of what you will walk away with after every cost. It is the number that matters, and we prepare one free.
General information for Ontario, not legal, tax or financial advice. Rules and rates change, so confirm details with your lawyer, lender or accountant.