I need to sell my home quickly and am considering a local agent who advertises “Your home sold or I buy it!” What do I need to know before I sign up?
Selling your home can be an anxious experience, and it’s even more stressful if you need to close by a certain date. Having a fall back plan can be comforting if your home doesn’t sell as quickly as you would like.
But before you jump at this guarantee, make sure you understand all the details involved.
Many of the questions I’ve answered in this column over the past two years come back to the same key idea: it’s important to read and understand all your real estate contracts before you sign.
First, you’ll want to contact the real estate representative offering this guarantee and find out if there are any exceptions to the offer. You’ll also want to confirm that your home qualifies.
Next, you’ll want to get a list of all of the terms and conditions involved. Key issues include:
- At what price will they buy your home? How is that price established?
- After how many days of listing will they buy your home? How many days after that will the transaction close?
- Your listing agreement is with the brokerage. Is the brokerage offering to buy your home or is it the sales representative?
- Can you still try to sell the home while waiting for the representative’s or brokerage’s purchase to close?
- What happens if you change your mind about selling to them? Is the “guarantee” optional or do you have to sell to them if no other buyers submit an acceptable offer?
- What is the commission arrangement if the guarantee is acted on?
- Can the representative or brokerage confirm that they have the financial capability to honour the guarantee?
Keep in mind the price your representative offers for your home may not be the listing price or even the amount you are expecting from potential buyers. If you’re relying on the proceeds from the sale of this home to go towards the payment for your new home, you’ll need to determine if the price being offered as part of the guarantee will cover what you need. If there’s a shortfall, are you able to absorb it?
You’ll also want to interview the representative about their approach to the selling process. How will they market your home? Do they have experience working in your area? Have other sellers taken advantage of the guarantee and how has it worked out for them? Be sure to ask for references and contact those individuals, particularly any sellers that signed or used the guarantee.
For additional perspective, you should interview several representatives to gain further insights about the value of your home and ensure the representative you choose is a good fit for your needs and expectations.
If you decide that the representative offering the guarantee is the best choice for you, satisfy yourself that all of the details of this arrangement are captured in writing the way you want them to be in your listing agreement. By law, they will need to provide a few additional details in writing: 1) disclosure of all facts that they know of that affect or will affect the value of your home, and 2) the full details of any negotiations they may have had for the subsequent sale or lease of the property by them to another person, including the prospective price.
Even when both parties are acting in good faith, misunderstandings regarding an oral agreement can occur. A written agreement is the best way to ensure that you and your real estate representative are on the same page. For additional peace of mind, you can have your lawyer review the agreement before signing.
Asking questions and understanding all the details of your contract before signing will help you make the best decision possible for your situation.Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.