Practical Guide for Sellers | ReHome Inspections

Practical Guide for Sellers

2 Practical Guide for Sellers

Practical Guide for Sellers

What you need to know

about selling a home

Selling a house is a complex and sometimes stressful operation. This is why

the Nova Scotia Real Estate Commission prepared this booklet, which con-

tains the main steps you need to follow before, during and after the sale of

your home. In it, you will nd many useful tips to guide you and help you

complete your real estate transaction in a satisfactory manner.

With the compliments of:

Practical Guide for Sellers 3

Table of Contents

Role of real estate professionals........................................................................... 5

Why use a real estate professional? ....................................................................................................5

Distinction between classes of real estate licenses .....................................................................5

Compulsory licensing .............................................................................................................................6

Duties and obligations of real estate brokers and salespeople ...............................................6

Loyalty to the customer .........................................................................................................................6

Obligation to disclose .............................................................................................................................6

Advising and informing objectively and accurately ....................................................................6

Consumer protection mechanisms ................................................................... 8

Professional development ....................................................................................................................8

Entrance examination .............................................................................................................................8

Brokerage audits .......................................................................................................................................8

Complaints and investigations ............................................................................................................8

Professional liability insurance ............................................................................................................8

Recovery Fund ...........................................................................................................................................8

Agency relationships ............................................................................................... 9

What is an agency relationship? ..........................................................................................................9

Seller or buyer agency with you as a client .....................................................................................9

Transaction brokerage with both buyer and seller ......................................................................9

When transaction brokerage is not appropriate......................................................................... 11

Customer status ...................................................................................................................................... 11

The Seller Brokerage Agreement ..........................................................................13

The Seller Brokerage Agreement ......................................................................................................... 13

Types of listing contracts .................................................................................................................... 13

Promotion and advertising ................................................................................................................ 14

Brokerage’s compensation ................................................................................................................. 14

Contents of the brokerage agreement .......................................................................................... 14

Description of the real estate—the Listing Addendum ............................................................. 16

The Property Disclosure Statement ................................................................................................... 18

4 Practical Guide for Sellers

Cancelling the Seller Brokerage Agreement .................................................................................... 20

Withdrawing your property from the market .............................................................................. 20

Showing your home to its best advantage ...................................................21

Preparation checklist ........................................................................................................................... 21

The Agreement of Purchase and Sale .................................................................25

The Agreement of Purchase and Sale ............................................................................................... 25

Conditions of acceptance ................................................................................................................... 27

Inclusions and exclusions and conditions .................................................................................... 28

Receiving oers ...................................................................................................................................... 28

The Counter Oer ................................................................................................................................... 29

The property transfer ........................................................................................................................... 30

Title examination ................................................................................................................................... 30

The closing ............................................................................................................................................... 30

The Nova Scotia Real Estate Commission .......................................................31

Do you have a problem? ...................................................................................................................... 31

Glossary ......................................................................................................................32

Practical Guide for Sellers 5

Role of real estate

professionals

Why use a real estate professional?

Buying and selling real estate requires extensive technical knowledge. This is

why we recommend that you use the services of a real estate brokerage to

make sure that all the steps involved in buying and selling real estate are com-

pleted in accordance with good trade pracces.

The main funcon of real estate industry members (brokers and salespeople) is

to act as intermediary in the purchase or sale of real estate. Industry members

play a prospecng role by nding real estate for the buyer and a buyer for the

seller’s property; they play a negoang role by facilitang communicaons

between the pares involved and, mainly, they play an advisory role and help

the pares dene their needs and complete their real estate transacon in a

sasfactory manner.

Distinction between classes of real estate licenses

A broker is responsible for the supervision of a brokerage, its sta, and its indus-

try members. A broker ensures the business is run competently and in accor-

dance with the Real Estate Trading Act, the Commission Bylaw, and the Policies

and Procedures. A broker may also choose to trade in real estate, represenng

buyers and sellers.

A managing associate broker is authorized to operate or manage a brokerage

under the supervision of a broker. An example of a managing associate broker

role is a franchise branch manager. Brokers and managing associate brokers are

the only industry members authorized to make management decisions and give

management direcves within a brokerage.

An associate broker is licensed to trade in real estate under the supervision of a

licensed broker. This licence permits salespeople to achieve and be recognized

for possessing a higher level of educaon. An associate broker has the same

responsibilies as a salesperson.

A salesperson performs all the funcons of a real estate professional while

working under the supervision and direcon of a broker.

6 Practical Guide for Sellers

Compulsory licensing

All industry members in Nova Scoa must hold a licence issued by the Nova

Scoa Real Estate Commission. A consumer who carries out a real estate trans-

acon through an unlicensed person is not protected under the Real Estate

Trading Act, because the protecon mechanisms apply only when the consum-

er deals with a professional recognized under the law. Before you do anything,

check with the Commission to make sure your industry member is licensed by

the Commission.

Duties and obligations of real estate brokers and salespeople

Real estate brokerage is a profession that is regulated and controlled to protect

the public in real estate transacons. The Real Estate Trading Act, the Commis-

sion Bylaw and the Policies and Procedures dene how the profession is to be

pracced and hold brokerages and its industry members accountable, so that

consumers are served fairly and competently.

Loyalty to the client

Industry members are bound by a strict obligaon of loyalty to their clients,

whose rights they are bound to promote and protect. They must act equitably

toward each party to a real estate transacon.

Obligation to disclose

If your industry member has a personal relaonship with the other party or if

they are acng on their own behalf, they must inform you, in wring, before

signing the Agreement of Purchase and Sale.

Examples of personal relaonships are:

• Family and self

• Business associates

• Ongoing client relaonships

Similarly, if your industry member is to receive compensaon from a nancial

instuon or a professional recommended by them, they must also inform you

in wring and request your approval.

Advising and informing objectively and accurately

As your representave, your industry member must advise and inform you

objecvely and must provide you with all the explanaons you need to fully un-

derstand and appreciate the services they are providing. They must also inform

you of any factors that could negavely impact the transacon.

Industry members are responsible for verifying the accuracy of all informaon they

supply to clients and customers. Your industry member must be able to demon-

strate the accuracy of the informaon they provide using relevant documentaon.

Practical Guide for Sellers 7

8 Practical Guide for Sellers

Consumer protection

mechanisms

Professional development

All industry members are required to complete connuing professional educa-

on annually. Courses are based on subjects that provide industry members

with a higher level of skills and knowledge to help them protect the public.

Entrance exam

The profession’s entrance exam ensures that industry members possess the

knowledge and competence required to provide adequate service.

Brokerage audits

The Commission ensures that the work methods of real estate industry mem-

bers are in accordance with the rules of the profession. To ensure brokerages

are operang within the rules, the Commission’s compliance team conducts

yearly audits and makes recommendaons as necessary.

Complaints and investigations

As the regulatory body for real estate in Nova Scoa, the Commission handles

all public complaints about the conduct and acons of industry members.

Complaints must be submied in wring, which are then invesgated by the

Commission’s compliance department. If an industry member’s acons appear

to violate the Act or the Bylaw, charges may be laid. If an industry member is

in violaon of the Act or the Bylaw, penales range from leers of reprimand

to permanent licence cancellaon. It is important to note that the Commission

does not award damages.

Professional liability insurance

All industry members are required to carry errors and omissions insurance.

Recovery Fund

The Recovery Fund exists to compensate consumers where an industry member

has caused a customer or client a nancial loss through fraud or breach of trust.

Practical Guide for Sellers 9

Agency relationships

What is an agency relationship?

An industry member may or may not have an agency relaonship with you. If

you are a client, you are in an agency relaonship; if you are a customer, you

are not in an agency relaonship. As a client, the industry member and broker-

age have a much higher level of responsibility to you than if you are a customer.

The following secons explain agency and the obligaons industry members

have to both clients and customers.

About common-law agency

In common-law agency, the agency relaonship is between the client and the

brokerage. Under common law, all industry members at the brokerage are

deemed to know all relevant transacon informaon about principals (buyers

and sellers with whom the brokerage has an agency relaonship). When any

industry member employed by a common-law brokerage represents a buyer or

a seller, every industry member at the brokerage is immediately considered to

be a representave of that buyer/seller and therefore owes that buyer/seller

undivided loyalty, advice and advocacy.

About designated agency

In a designated-agency brokerage, the contract is between the client and the

brokerage, but representaon is by the industry member(s) specied in the Bro-

kerage Agreement (the designated agent), not all industry members employed

by the brokerage. In a designated agency situaon, a seller and a buyer can

receive the full benet of agency representaon, complete with the undivided

loyalty, advice, and advocacy of their respecve industry members, while the

brokerage remains imparal. The brokerage’s responsibility is to ensure that

each of the industry members acts in accordance with their respecve agency

responsibilies, and that the condenal informaon of the seller and buyer

remains condenal.

Seller or buyer agency with you as a client

Most sellers and buyers have an agency relaonship with the industry member they

are using. When you are in an agency relaonship with a brokerage, the industry

member has the authority to represent you in real estate dealings with others.

Brokerages and their representaves are legally obligated to protect and pro-

mote the interests of their principals (clients). Specically, the industry member

has the following dues:

10 Practical Guide for Sellers

1. Undivided loyalty. The industry member

must protect the principal’s negoang

posion at all mes, and disclose all known

facts which may aect or inuence the

principal’s decision.

2. To obey all lawful instrucons of the prin-

cipal.

3. To keep the condences of the principal.

4. The exercise of reasonable care and skill in

performing all assigned dues.

5. The duty to account for all money and prop-

erty placed in an industry member’s hands

while acng for the principal.

You can expect competent service from your

industry member, knowing that the brokerage

is bound by ethics and the law to be honest and

thorough in represenng a buyer or represent-

ing a property listed for sale.

Transaction brokerage with both the

buyer and the seller

Transacon brokerage occurs when one industry

member (designated agency) or one broker-

age (common law) is represenng both a buyer

and seller in the same transacon. Because the

industry member has promised a duty of con-

denality, loyalty and full disclosure to both par-

es simultaneously, it is necessary to limit these

dues in this situaon, if both pares consent.

Under designated agency, two designated

agents may fully represent both pares and

transacon brokerage is not necessary.

If you nd yourself involved in a transacon

brokerage relaonship, before making or receiv-

ing an oer, both you and the other party will be

asked to consent in wring to this new agency

relaonship.

This relaonship involves the following limita-

ons:

1. The industry member deals with the seller

and the buyer imparally;

Practical Guide for Sellers 11

2. The industry member has a duty of disclo-

sure to both the seller and the buyer

except that,

• the industry member cannot disclose

that the buyer is willing to pay a price

or agree to terms other than those con-

tained in the oer, or that the seller is

willing to accept a price or terms other

than those contained in the lisng;

• the industry member cannot disclose

the movaon of the buyer to buy or

the seller to sell unless authorized by

the buyer or seller;

• the industry member cannot disclose

personal informaon about either the

buyer or the seller unless authorized in

wring;

3. The industry member discloses to the buyer

defects about the physical condion of the

property known to the industry member;

4. The industry member may disclose all com-

parable property informaon to the buyer

and the seller at any me;

5. The industry member cannot disclose to the

buyer or to the seller condenal informa-

on obtained through any other exisng or

former agency relaonship.

When transaction brokerage is not

appropriate

Transacon brokerage is not always appropriate

and consumers are never obligated to enter into

a transacon brokerage relaonship. The Com-

mission has outlined the following situaons

where transacon brokerage should be avoided:

1. When the industry member is represenng

family, colleagues, or themselves;

2. When the industry member has an ongoing

agency relaonship with one of the pares,

like a builder or a developer;

3. When the industry member is represenng

a novice seller or buyer.

12 Practical Guide for Sellers

In the rst two situaons, regardless of how the transacon is handled, pre-

exisng relaonships may result in the industry member’s imparality being

called into queson. In the case of a novice buyer or seller, their lack of knowl-

edge means they need an industry member’s advice and support, services that

cannot be provided under transacon brokerage.

Customer status

In a no agency relaonship, the industry member represents either the buyer

or the seller in a single agency relaonship. The party that is not represented is

the customer, for whom the industry member performs customer services.

If you choose customer status, the brokerage does not represent you. The bro-

kerage is not your agent and does not owe you duciary dues. The brokerage

will not provide you with any services that require the exercise of discreon or

judgment, the giving of condenal advice or advocang on your behalf.

The services an industry member can provide to you as a customer include:

• exercising reasonable skill and care

• not negligently providing false or misleading informaon

• complying with the Act and the Bylaw

Industry members must ensure any person who is considering customer status

is fully aware of their opon to choose another brokerage to represent them

rather than agreeing to customer status.

An industry member who is not in an agency relaonship cannot:

• recommend or suggest a price

• negoate on your behalf

• inform you of their client’s top/boom line

• disclose any condenal informaon about their principal unless other wise

authorized

You should not provide an industry member who is not in an agency relaonship

with you with any informaon you would not provide directly to their client.

All buyers and sellers, whether in an agency relaonship with an industry mem-

ber, will be given an agency brochure and asked to sign an acknowledgement

that they have been provided this agency informaon and had an opportunity

to review it.

Practical Guide for Sellers 13

The Seller Brokerage

Agreement

The Seller Brokerage Agreement

If you entrust the sale of your home to a real estate brokerage, you will be re-

quired to sign a Seller Brokerage Agreement (SBA), otherwise known as a lisng

agreement. The SBA establishes a professional relaonship between you and

your brokerage for a given period of me. It documents the obligaons of the

brokerage and the seller. As a legal contract between two consenng pares,

sellers are strongly encouraged to read the contract carefully so they under-

stand the obligaons of both pares to the contract. Learn more about these

obligaons on page 19.

Types of listing contracts

The services you receive as a seller depend on the type of lisng agreement you

enter with the brokerage. There is no “industry standard” commission or con-

tract duraon. The commission payable, the services rendered, and the length

of the contract are negoated between a brokerage and a seller.

Exclusive listing contract

All lisng agreements are exclusive in that the seller agrees not to use the

services of another brokerage for the sale of his property. This type of contract

guarantees the brokerage that their eorts to sell the home will be compen-

sated at the me of the sale.

The seller can also expect their brokerage to devote maximum me and eort

to sell the property. The brokerage will cooperate with other brokerages un-

less instructed otherwise by the seller. In an exclusive contract, the seller may

choose to have their property adversed on the MLS® System, or marketed only

by the brokerage. Choosing the MLS® System invites cooperaon from industry

members represenng buyers, as the property is marketed online at realtor.ca.

Fee-for-service agreement

In a fee-for-service agreement, the seller selects which services they wish to

purchase from a set list of services oered by the brokerage. The list of services

may range from signage and adversing, posng to the MLS® System, to hosng

open houses and contract negoaon.

Mere posting agreement

A mere posng agreement provides the minimum level of service a brokerage

may oer. When a brokerage and a seller enter into a mere posng agreement,

14 Practical Guide for Sellers

the brokerage is responsible for posng

the property on an MLS® System, which

will then appear on realtor.ca. The

website realtor.ca, displays properes

from all MLS® Systems across Canada.

This is the only service the brokerage

provides and you, as the seller, are

responsible everything else, includ-

ing signage, adversing, viewings and

negoang the sale. In a mere posng,

there is no agency relaonship be-

tween the brokerage and the seller. The

seller is a customer of the brokerage

and no duciary dues apply.

Promotion and advertising

Discuss markeng acvies (lisng on

MLS® System, adversing, open hous-

es, and so on) to promote the sale of the property with any industry member

you meet with about the sale of your home. These acvies must be discussed

prior to the signing of the brokerage contract so you know what to expect, and

receive the services you require. Ensure any services you wish to have that are

not included in the standard wording of the Seller Brokerage Agreement are

documented in wring.

The MLS® System is the most frequently used promoonal tool. Properes

posted to the MLS® System appear on realtor.ca, a website prospecve buyers

use to view properes. For brokerages posng to the Nova Scoa MLS® System,

it informs the industry members who work in your area that your property is

on the market and that you and your industry member are open to cooperaon

between brokerages in nding a buyer. If you wish to use this service, you have

to inial the appropriate secon on the lisng contract.

Brokerage’s compensation

Regardless of the type of lisng, the amount and condions of the brokerage’s

compensaon must be specied in the lisng agreement/ fee agreement. The

brokerage’s compensaon may be based on a percentage of the real estate’s

selling price, a xed sum, or a combinaon of both. Compensaon based on a

percentage of sale price is typically paid on the closing of the sale. Fee-for-ser-

vice and mere posng agreements are typically paid at the me the agreement

is signed. Remember, there is no set commission; everything is negoable.

Contents of the Seller Brokerage Agreement

The Seller Brokerage Agreement species the obligaons to which the broker-

age and the seller have agreed. The contract must contain the following ele-

ments.

Practical Guide for Sellers 15

Identication of the parties

The Seller Brokerage Agreement must

idenfy the pares bound by it and

must include the following informa-

on:

• name of the brokerage;

• name(s) and address(es) of the

owner(s). In the case of a company

or an estate, the company name

and the name of the person repre-

senng it must be indicated. If the

seller is acng through a represen-

tave, a power of aorney must be

provided to the broker.

Note:It is very important that your

industry member verify that you are

the sole owner of the real estate, i.e. the deed is in your name only. If your

spouse is also an owner and the property is a matrimonial home, your spouse’s

signature is required on all documents. Consult your lawyer if you are unsure. If

your spouse is not available, you must rst obtain a power of aorney drawn up

by your lawyer that gives you the authority to sign on their behalf.

Selling price

An essenal step in the sale of your home is to set a realisc selling price. To do

so, you need to know the current status of the market. Your industry member

can give you an idea of the esmated value of your home by comparing it to

similar properes currently up for sale, recently sold or that have failed to sell

(expired) in the same area. This will make it easier for you to set a fair and com-

peve price.

You also have to idenfy the elements that can act posively or negavely on

the value of your home, such as

• locaon;

• size;

• age and condion of the real estate;

• number and layout of rooms;

• construcon materials used;

• landscaping;

• features specic to the area;

• and so on.

16 Practical Guide for Sellers

Be wary of overpricing your home. Buyers are savvy shoppers. Aer all, their

dollars are being invested. You may miss out on buyers who feel they can’t af-

ford the home and alienate ones who are looking in a higher price range. Your

home may also be referenced by other salespeople to highlight the true value

of other homes in the area. If your property sits on the market for longer period

of me, buyers may think there is something wrong with it.

Should you wish to change the asking price or any other details in the contract,

an Amendment form must be completed and signed by all pares.

Occupancy and signing of the deed transfer

The dates of occupancy (the closing date) must be specied in the lisng con-

tract. The buyer may propose dierent dates in the oer to purchase, but these

are subject to your approval in the same way as the other clauses in the oer to

purchase. However, they can be negoated if necessary.

Description of the real estate—the Listing Addendum

When you want to sell your home, several important details must be collected

and veried right from the beginning (lot size, amount of taxes, general condi-

on of the house and its main components, and so on). It is essenal that you

provide your industry member with all the informaon pertaining to the real

estate, as well as all documents that will allow them to fulll their role.

The Lisng Addendum contains a detailed descripon of the real estate, including

• address;

• lot measurements and area;

• room sizes;

• property details; and

• what does or does not remain. In the case of a condominium, you must

also specify the condo fees, special assessments, number of parking and

storage spaces included in the sale, and their idencaon numbers.

Inclusions and exclusions

The queson of included or excluded items must be examined closely before

the Seller Brokerage Agreement is signed. This step of the sale process is too of-

ten a cause of dispute between sellers and buyers. This is why we recommend

that you specify as many elements as possible. The best is to cover each item

which could lead to confusion by specifying those which are included and those

which are specically excluded, such as

• security systems

• air condioning units

• window coverings

• fridges, stoves, washers, and dryers

Practical Guide for Sellers 17

18 Practical Guide for Sellers

Schedule of Leased Equipment

All leased and rented equipment, such as water heaters, propane tanks, and

furnaces, must be recorded on the Schedule of Leased Equipment. The schedule

must specify whether the equipment is leased or rented, and for leased equip-

ment, whether the leases can be assumed or bought-out by the buyer.

Condominiums

The Lisng Addendum addresses the reserve and conngency funds when con-

dominium real estate is involved. The expenses related to the maintenance and

administraon of common areas held by the condominium corporaon are paid

through this fund, which is set up by the condominium to deal with expenses.

It is important to note that the sums invested in the fund are not recoverable

at the me of the sale of the condominium property. These sums should be

considered the same as property taxes.

The Property Condition Disclosure Statement

The Property Condion Disclosure Statement (PCDS) is designed to protect all

pares involved in real estate transacons. The objecve is to encourage full

communicaon so that buyers have as much informaon as possible concerning

the property. Lawsuits are expensive and frequently result from a misunder-

standing, a communicaon problem, or a lack of informaon.

Without a PCDS, sellers may have diculty establishing that a problem was

disclosed to buyers, and buyers may be unable to establish that a statement

was made or that informaon was withheld unless important informaon is

conrmed in wring on the PCDS.

Sellers are not required to provide a PCDS, but most do. However, there are sev-

eral situaons where disclosure statements are not available and typically relate

to a situaon where the seller did not live in the house. Some examples are:

• Foreclosure—the property is owned by a bank

• Relocaon—a property is being sold by a relocaon company

• Estate—the property owner died and an executor is selling the property

• Rental—the property owner rented out the property to others

If you have not lived in the house you are selling, and are quesoning whether

to complete a PCDS, you should rst consult with a lawyer.

Patent defects and latent defects

Property defects are divided into two types: patent defects and latent defects.

A patent defect is a fault in the property that is readily observable to the un-

trained eye of a potenal buyer (for example, a broken pane of glass, old roof

shingles or peeling paint). A latent defect is a fault in the property that would

not be discovered by a reasonably thorough building inspecon (for example,

a serious crack in the foundaon that has been covered over with paneling or

Practical Guide for Sellers 19

improper wiring covered by drywall). Material latent defects can have a serious

impact on the value of the property or involve health and/or safety issues. Sell-

ers are required to disclose any known material latent defects; otherwise they

may be liable to the buyer for the cost of repairs.

Obligations of the seller

The lisng contract clearly states the obligaons of the seller. These obligaons

deal with exclusivity, the contract term and the details describing the real estate.

Obligations of the brokerage

The obligaons of the brokerage are also specied in the lisng contract. They

deal with loyalty, competence, duty to inform and verify informaon, advers-

ing, obligaons to disclose, conicts of interest, and so on.

Signing the listing contract

Carefully read your contract with your broker or industry member before sign-

ing it and do not hesitate to ask quesons if any clause is unclear.

Your industry member will give you a copy of your home’s lisng cut so that you

can make sure the statement on the lisng contract reects reality. If the lisng

cut contains errors, the industry member must correct them and give you a

revised copy. The lisng cut will be used to market the property and will be sup-

plied to any person interested in the property.

Term of agreement

The term of agreement contains the start and end dates of the agreement.

There is no standard duraon; agreements may be as short as a day or as long

as a year. The only excepon to this is MLS® lisngs, which must be a minimum

of 60 days.

20 Practical Guide for Sellers

Holdover clause

Lisng agreements contain a clause to protect the brokerage for the work it

did during the lisng period. The holdover clause requires the seller to pay the

commission to the brokerage should a buyer, that was introduced to the prop-

erty during the lisng, enter into an Agreement of Purchase and Sale with the

seller during the holdover period, typically 180 days aer the lisng expires.

Cancelling the Seller Brokerage Agreement

Before signing the Seller Brokerage Agreement, make sure you understand and

agree with all of the terms and condions in the document. Once signed, the

Seller Brokerage Agreement is a legally binding contract and cannot be can-

celled easily. The standard wording in the agreement permits terminang the

contract only if there was a material breach of the contract terms (the industry

member failed to do what was set out in the contract). If this is not acceptable,

you may wish to discuss inserng addional cancellaon provisions in the con-

tract with your industry member.

Withdrawing your property from the market

Withdrawing your property from the market is not the same as cancelling.

When a property is withdrawn, it is no longer adversed or shown, but the

contract is sll in eect (you can’t list with someone else). The most common

reasons for withdrawing a property from the market is if the sellers are out of

town for a period of me, or over the holidays, or if they wish to make repairs.

Other considerations

Residency

Are you a non-resident? If so, you must provide a guarantee that you will pay

certain taxes imposed by the federal authories. This is usually accomplished by

holding back a percentage of the proceeds at closing unl the tax requirements

(Capital Gains Tax) are resolved. This is done by your lawyer.

Mortgage repayment penalty

If the buyer chooses not to take over your mortgage, which is usually the case,

you will have to pay back your mortgage loan and have the mortgage cancelled

at your expense. The cancellaon of your mortgage loan may carry a penalty,

which you will have to pay at the me of the sale (see page 23, for selling ex-

penses).

Practical Guide for Sellers 21

Showing your home

to its best advantage

Part of the success in selling your home depends on the impression potenal

buyers have when they view it. Showing it o properly is therefore of prime

importance. Many elements can help get you the best possible price for your

property. Some involve up-front expenses, which may be recovered when you

sell your house. A preparaon checklist is provided on the next page to help

you plan how to prepare your home.

First impressions

First impressions have a considerable impact on a person’s percepon aer a

visit. Therefore, certain visual aspects must be reviewed. Is the outside of the

house in good condion? Do guers need repairs? Is the garage neat? Have

broken windows been replaced? Has the grass been cut and raked? Do the

hedges and shrubs need trimming? In winter, has the snow been removed?

Does the doorbell work? Are door trimmings in good condion?

Indoor aspect

Have cracks been repaired? Are paint touch-ups necessary? Have leaky faucets

been repaired? Are there any burnt-out bulbs? Do squeaky doors need a drop

of oil?

Bathrooms

Are bathrooms shiny? Has the bathtub been re-caulked? Are the oors clean?

Kitchen

Is it spotless? Are the sink and faucets clean? Are cupboards impeccable both

inside and out? Have the fridge and counter tops been de-cluered?

Atmosphere

Have lights been turned on? Is the furnace on if it’s cold? Is there a re in the

replace when it’s cold? Are curtains open during the day? Have you thought

of pung on a lile so music? Do your plants and owers look healthy? Have

animals been removed or locked up for the showing? Is venlaon adequate?

Preparation checklist

Make a list of the work your home needs to show to its best advantage. You

may be able to do some of the work yourself; however, some repairs may

require the services of a paid professional. Although the work may not guaran-

tee the selling price compensates for the cost, it will increase your chances of

selling your property quickly.

22 Practical Guide for Sellers

To do Cost To do Cost

Check Cleaning

xtures

walls

heang oors

electrical lighng

water windows

sepc doors

plumbing cupboards

baths

showers

storage

curtains

appliances

garage/ shed

To do Cost To do Cost

Painting Repairs

entrance siding

kitchen roof

living room windows

bathrooms doors

bedrooms garage

bathrooms landscaping

basement fences

siding deck/balcony

fence walkway

decks/balcony driveway

garage/shed parking

doors

Total cost Total cost

Grand total

Practical Guide for Sellers 23

Selling expenses

Expect some addional expenses when selling real estate. The following table

shows expenses encountered during the sale of a property.

Calculating selling expenses

Mortgage balance $

+Brokerage commission $

+Appraisal fee (if applicable) $

+Legal fees $

+Disbursements $

+Mortgage penalty $

+Property tax adjustment $

= Total selling expenses $

Net proceeds from the sale

The net proceeds from the sale is the dierence between the selling price of

the property and the total selling expenses.

Calculating net proceeds

Selling price of the property $

–Total selling expenses $

= Net proceeds $

24 Practical Guide for Sellers

Practical Guide for Sellers 25

The Agreement of

Purchase and Sale

The Agreement of Purchase and Sale

The Agreement of Purchase and Sale is a contract through which a person un-

dertakes to purchase real estate. In return, the document also indicates that the

seller undertakes to sell the real estate once the Agreement of Purchase and

Sale has been accepted.

Industry members in Nova Scoa are required to use standardized forms ap-

proved by the Commission for all residenal real estate transacons. These

forms make sure that everyone is literally on the same page, reducing errors,

omissions and inconsistencies.

Content of the Agreement of Purchase and Sale

The Agreement of Purchase and Sale content is designed to protect both buyers

and sellers. It is important to make sure that the informaon contained therein

is in accordance with that of the Seller Brokerage Agreement.

Identication of the parties

The Agreement of Purchase and Sale idenes the pares bound by contract

(the seller and the buyer).

Time for acceptance

The me for acceptance sets a deadline aer which the Agreement of Purchase

and Sale becomes null and void.

Description of the property

The Agreement of Purchase and Sale contains a detailed descripon of the

property, including property idencaon number(s) (PID), the street address,

items to be included and condions to be met.

If the property is a condominium, the contract must specify the number of

parking and storage spaces and their idencaon numbers.

Price

The Agreement of Purchase and Sale must indicate clearly the purchase price

oered by the buyer. The price statement usually indicates that the payment

will be made in full upon the closing.

26 Practical Guide for Sellers

Deposit

Typically, the buyer gives the deposit to the seller’s broker-

age to be held in trust as a show of good faith to complete

the transacon. The deposit is credited towards the purchase

price at the me of closing. The deposit can be as much both

pares agree. One way to deter the buyer from backing out

of the transacon is to require a high deposit up front. In all

cases, the deposit belongs to the transacon and can only be

released if one of three things happens:

1. The deal closes;

2. The buyer and seller sign a release agreeing where the

deposit is to be paid; or

3. A court decides what to do with the deposit.

In most terminated transacons, the buyer and seller agree

to end the transacon and sign a mutual release. However,

when the pares are unable to reach an agreement deposit

must remain in the brokerage trust account unl a court

order is obtained.

Declarations and obligations of the buyer

The Agreement of Purchase and Sale contains a clause spu-

lang that the buyer has examined the property and declares

that they are sased therewith. In the case of a condomini-

um, the agreement species that the buyer will examine the

declaraon of the condominium, including the condominium

bylaw and the reserve fund, and declare whether or not the

buyer is sased therewith. It is, therefore, important to read

this document.

Delivery of the real estate

The Agreement of Purchase and Sale contains a clause by

which the seller promises to deliver the property in the con-

dion in which it was when the buyer examined it.

Pre-closing viewing

The Agreement of Purchase and Sale contains a clause that al-

lows the buyer to view the property, before closing, to ensure

it is in the same condion as it was when the oer was made.

This is not another inspecon; it is a home viewing to conrm

the condion of the property hasn’t changed since the buyer

agreed to buy it.

Practical Guide for Sellers 27

Costs relating to repayment and cancellation

The costs relang to the repayment and cancellaon of any

debt secured by a mortgage and not assumed by the buyer

must be borne by the seller. This includes mortgage penales

as well as leased equipment fees (furnace, hot water tank,

and so on) that are not included on the Agreement of Pur-

chase and Sale as costs to be assumed by the buyer.

Ownership documents

The Agreement of Purchase and Sale states the obligaons of

the seller regarding the tles of ownership. Thus, the seller

must supply the buyer with a valid tle of ownership, free of

any debt, charge or other restricon of private or public law

other than the usual easements. The seller’s lawyer must,

therefore, supply authenc copies of the deed.

Defect or irregularity

The Agreement of Purchase and Sale has a mechanism to

protect the buyer who nds a defect or irregularity in the

property aer signing the oer to purchase. This is called the

Inspecon/ PCDS clause.

Declarations and obligations common to the

parties

The Agreement of Purchase and Sale contains a number of

declaraons and obligaons which apply to both pares:

• the adjustments relang to property taxes, general taxes,

co-ownership expenses, fuel reserves and income or

expenses relang to the real estate;

• the date of closing;

• the inclusions and exclusions.

Reference to addendums and schedules

The Agreement of Purchase and Sale may contain a reference

to addendums and schedules. These form part of the Agree-

ment of Purchase and Sale.

Signatures

The Agreement of Purchase and Sale must include the buyer’s

and seller’s signatures as well as that of their respecve

spouses, if applicable. Each copy must bear the original signa-

ture of each of the pares. In addion, a witness’s signature

28 Practical Guide for Sellers

Remember!

Make sure you read and understand any oer you receive because once an

oer is accepted, it becomes a legally binding contract. Ask your industry

member any quesons you may have so that no doubt remains in your mind.

Declarations

Your declaraons in the lisng contract must also appear in the oer. If

some elements do not appear, you can add them using a counter oer.

Checking the dates

Make sure the dates for the closing, the condions, and the occupancy are

in accordance with your needs and do not turn over the property or the

keys unl the closing is complete.

Inclusions and exclusions and conditions

Make sure included and excluded items are indicated in the contract and

that the buyer’s condions are achievable in the me period specied.

Receiving oers

As seller, your industry member is required to present you with all oers

received on your property, even aer it is subject to an accepted oer.

Practical Guide for Sellers 29

strongly is recommended. Should there be any changes or addions to the

wording of the agreement, they must be inialled by all pares.

The Counter Oer

You may accept or refuse any oer presented to you. You may also make a

Counter Oer. The rst purpose of the Counter Oer is to inform the buyer that

the oer, as wrien has been rejected, but that you would be agreeable to the

oer if specic changes or addions are made.

The Counter Oer may also be used to include or exclude certain items, change

the selling price or simply to further clarify the oer. The buyer, in turn, may not

accept the Counter Oer and wish to make a new oer.

Conditions of acceptance

The condions of acceptance in the Counter Oer set a deadline for its accep-

tance and nocaon. Therefore, the deadline for accepng the Counter Oer

is a date and me by which the seller cannot withdraw the Counter Oer, and

by which the acceptance by the buyer is given to the seller in order to be valid.

Any Counter Oer should include a reasonable deadline (usually between 12

and 24 hours) by which the Counter Oer must be rejected or accepted.

If the Counter Oer is accepted, the property is considered condionally sold,

although the transacon only becomes ocial upon closing. However, the

transacon cannot be completed unl all of the condions of the contract are

fullled. Therefore, a nal deadline must be set for the condions to be carried

out, so the closing can be nalized.

Standard conditions of the contract

Agreements of Purchase and Sale have a number of standard condions. They

are:

• Deposit

• PCDS/ inspecon

• Financing

• Insurance

• Lawyer review

Each of these condions assigned a date by which they are deemed sased un-

less noce is given to the contrary. If noce to the contrary is given, either party

is at liberty to amend the contract or terminate the contract. For example, the

buyer is unable to obtain nancing, the buyer must give noce to you or your

industry member by the date in the contract, at which point the buyer may ask

to amend the contract to give them more me or terminate the contract. If the

buyer asks for an extension, you may grant the amendment, propose a further

amendment (a dierent date) or terminate the contract.

30 Practical Guide for Sellers

The property transfer

Once the oer or the counter oer has been accepted and the condions are

met, the next step is to make the transacon ocial. The two main components

at this stage are the tle examinaon and the closing. The property transfer

requires the services of a lawyer, but your industry member connues to play a

central role at this step of the real estate transacon. Among other things, they

make sure that all documents required are available and will be of assistance if

any problems arise.

Title examination

The lawyer completes the necessary research to guarantee marketable tle of

ownership. The lawyer veries that the seller is indeed the owner of the prop-

erty, whether they have the right and the ability to sell, and if a spouse or other

person must consent to the sale, and so on.

All property sales in Nova Scoa are registered through the new Land Reg-

istraon Act requirements and the government ceres tle. This means all

property that changes hands in Nova Scoa must be converted over to the new

Land Registry System. Should the property not currently be on the new system,

it is the seller’s responsibility, through their lawyer, to take necessary steps to

convert the tle to the new system, typically at the seller’s expense.

The closing

The nal step of the transacon is the closing which involves the compleon of

the necessary legal and mortgage documents. This is typically completed aer

the buyer has completed their preclosing viewing.

Registration of rights of ownership

Once the closing is nal, the lawyer registers the transacon with the Registry

of Deeds. The lawyer may retain the funds unl this step has been completed.

Practical Guide for Sellers 31

The Nova Scotia Real

Estate Commission

Created by the Real Estate Trading Act, the Nova Scoa Real Estate Commis-

sion is an independent, non-government agency, responsible for regulang

the real estate industry in Nova Scoa. The Commission’s mandate is to ensure

consumer condence in the real estate industry. Among other dues, it ensures

that industry members carry out their acvies in accordance with the Act and

Bylaw.

The Registrar, the senior sta person at the Commission, is responsible for over-

seeing the acvies of the industry members, including auding their records,

accounts and acons. The Registrar may order an invesgaon and lay charges

if an industry member refuses to follow the Act and the Bylaw.

At the direcon of the Registrar, the Commission’s compliance team is respon-

sible for invesgang if there is reason to believe that an industry member has

acted improperly, and may recommend charges to the Registrar if necessary.

Any industry member who does not act in accordance with the Act and the

Bylaw may be charged and required to appear before the Discipline Commiee,

which has the authority to impose nes, suspend violators or even revoke their

right to pracce.

Do you have a problem?

The rst thing to do is to discuss the problem with your industry member. If

you are not sased with the outcome of the discussion, contact the broker or

managing associate broker where your industry member is licensed. If this does

not yield results or if you feel you haven’t received informaon leading you to

believe that everything is being handled properly, contact the Commission’s

compliance team who can get the informaon you need to clarify the situ aon

and nd out about your rights.

32 Practical Guide for Sellers

Amorzaon

Period required to pay back a mortgage in

full through regular payments. The amor-

zaon is usually based on xed terms of

10, 15, 20, or 25 years.

Appraisal

Process which consists in esmang the

market value of real estate based on the

general condion of its components and

its specic features. The appraisal is oen

the result of a comparison with similar

real estate up for sale or recently sold in

the same area. It is done by a licensed

appraiser.

Cancellaon

Cancellaon of an agreement or the

registraon of a right through which one

is freed from certain obligaons, under

certain condions.

Charge

Amount to be paid according to a preset

deadline. Tax payable on the use of a

public ulity, for example.

Chaels

Personal property which is moveable and not

aached, such as furniture and appliances.

Client

A client is any person that is in an agency

relaonship with an industry member.

This relaonship may be formalized, as in

a Seller or Buyer Brokerage Agreement or

it may be verbal or as a result of acons of

the industry member. The client relaon-

ship ends once the purchase or lease

negoated closes or the expiraon date of

the contract. If the industry member does

not provide disclosure, then it is assumed

you are in a client relaonship.

Commonarea/condofees

Expenses related to the maintenance and

management of the common areas of a

condominium property. Monthly payment,

usually xed, used to set up a fund to pay

for current and unforeseen expenses (re-

pairs, equipment replacement, and so on).

Glossary

Counteroer

A response from the seller presented in

reply to an oer.

Note: The rst purpose of the counter

oer is to signify refusal by the seller of an

oer by the buyer.

Customer

A person who has not engaged or em-

ployed the brokerage in an agency capac-

ity or as the person’s transacon broker.

Deedtransfertax

Tax imposed by a municipality on any

transfer of right of ownership in its juris-

dicon.

Deposit

A sum of money that accompanies an

oer to purchase real estate to be applied

against the purchase price if and when

the sale is nalized. The deposit must

be placed in a trust account and will be

deducted from the balance payable at the

closing, or will be returned to the buyer

if the sale does not go through. It may

also be claimed by the seller if the buyer

refuses to complete the sale.

Lisngcut

Document on which a brokerage has

presented the features (construcon year,

taxes, measurements, and so on) of real

estate listed for sale.

Downpayment

Personal contribuon of the buyer to the

nancing of real estate purchase. Cash

poron deducted from the selling price,

which determines the amount of nancing

required to complete the purchase.

Note: If the down payment for the

purchase of the real estate is less than

25% of the purchase price, the loan must

be insured by the Canada Mortgage and

Housing Corporaon (CMHC) or another

mortgage insurer.

Practical Guide for Sellers 33

Easement

Restricon of the right of ownership for

reasons of general interest or public use.

Right of access or use of land by others,

for a dened purpose (passage, parking,

public ulies, and so on).

Financing

Means used by a buyer to acquire real es-

tate. Financial resource, oen in the form

of a mortgage loan provided to the buyer

by a nancial instuon for the purchase

of real estate (see Mortgage).

Fixtures

Items aached to the property or a build-

ing and considered part of it, such as

plumbing xtures or a fence. If in doubt as

to whether an item is a xture or a chael,

include it in the Agreement of Purchase

and Sale.

GrossDebtService(GDS)rao

Poron of the borrower’s gross income

used to pay monthly housing expenses

(principal, interest, taxes, heang).

Industrymember

A person who holds a license issued by

the Nova Scoa Real Estate Commission

authorizing them to carry out brokerage

transacons on behalf of others for the

purchase, sale or rental of real estate.

An industry member is only authorized to

act for and on behalf of a broker. They act

as a representave of the brokerage.

Inspecon

General vericaon of the state of the

main components of real estate (foun-

daon, structure, roof, heang system,

electrical system, and so on) to assess

condion.

Interestrate

Percentage represenng the amount of

interest produced by an amount of one

hundred dollars. A four per cent interest

rate will produce an interest amount of

$4 payable to the lender for every $100

borrowed.

The interest rate is used to calculate the

amount to be paid to the lender in ex-

change for nancing to allow the buyer to

purchase real estate.

Licence

Operang permit issued by the Nova Sco-

a Real Estate Commission to any person

or company, who meets the legal require-

ments to carry out real estate brokerage

acvies in Nova Scoa. The granng of

a license is condional to the successful

compleon of a specialized real estate

brokerage course and an entrance exam.

Lisngcontract

Agreement under which a person autho-

rizes a real estate brokerage to act on their

behalf for a given period of me, as inter-

mediary in the purchase, sale, rental or

exchange of real estate. The Seller Broker-

age Agreement documents the obligaons

to which the broker and the seller agree

by mutual consent.

Locaoncercate

Document containing a report, in which

the land surveyor expresses their opinion

on the locaon and condion of real

estate compared to the tles and the legal

descripon as well as laws and regulaons

governing the real estate. The locaon

cercate indicates whether or not the

buildings are on the property, but does

not verify any dimensions.

Mortgage

Method of nancing in which the real

estate is used as collateral for debt repay-

ment.

Mortgageinsurance

Insurance purchased by a home buyer to

guarantee the payment of the monthly

installments required to reimburse a

mortgage in full.

Note: If the down payment for the pur-

chase of the property is less than 25%

of the purchase price, the loan must be

insured by the Canada Mortgage and

Housing Corporaon (CMHC) or another

mortgage insurer.

34 Practical Guide for Sellers

NovaScoaRealEstateCommission

Regulatory body created under the Real

Estate Trading Act whose mandate is to

ensure consumer condence in the real

estate industry by regulang the acvies

of all real estate brokerages and industry

members praccing in Nova Scoa.

Oertopurchase

Undertaking by a person to purchase real

estate under certain condions set by that

person. Contract through which the seller

agrees to sell the real estate once they

have accepted the oer to purchase.

Principal

Amount of money borrowed through a

mortgage.

Professionalliabilityinsurance

All industry members are required to have

professional liability insurance (errors and

omissions). This insurance protects indus-

try members against the nancial conse-

quences of any fault, error, negligence or

omission, which their representaves or

themselves could be responsible for in the

course of their acvies.

Realestatebroker

A licensed broker is responsible for the

supervision of a brokerage, its sta, and in-

dustry members. Supervision includes be-

ing acvely engaged in the management

of the business and must be physically

available to oversee the business. A broker

ensures the business is run competently

and in accordance with the Act, the Bylaw,

and the Policies and Procedures. Brokers

may also trade in real estate.

Realestatebrokerage

The professional acvity of industry

members. Brokerage transacons and

professional acts carried out by industry

members concerning the purchase, sale,

rental or exchange of real estate. Services

which can only be pracced by individuals

licensed by the Nova Scoa Real Estate

Commission.

Recoveryfund

Fund created under the Real Estate Trad-

ing Act, to which all industry members

in Nova Scoa contribute to compensate

consumers who are vicms of fraud or

breach of trust by an industry member.

Relatedexpenses

Addional expenses to be paid when buy-

ing real estate, including building inspec-

on, property appraisal, loan applicaon,

legal fees, taxes, insurance, and so on.

Rightofownership

Recognion that gives the owner of a

property the right to use, enjoy and

freely and fully dispose of the property,

to the extent of the limits and condions

imposed by law.

Salesperson

A salesperson is a licensed to trade in real

estate on behalf of a brokerage under the

supervision of a broker.

Titleofownership

Ocial proof of the right to own a lot and

buildings erected thereon.

Trustaccount

Deposit account in a nancial instuon in

which a real estate brokerage can deposit

sums entrusted to it in the course of a real

estate transacon.

When presenng an oer, the buyer oen

gives the lisng broker a deposit on the

purchase of the real estate. This deposit

must be placed in a trust account once

there is an accepted Agreement of Pur-

chase and Sale.

We are just a phone call away!

• Licensing information

• Standards of business practice and code of conduct

• Complaints or problems

Email: info@nsrec.ns.ca

Tel: 902-468-3511 or 800-390-1015

Fax: 902-468-1016 or 800-390-1016

Website: www.nsrec.ns.ca

7 Scarfe Court

Suite 200

Dartmouth NS B3A 1W4