Setting your listing price is important. Your real estate licensee has tools and information to help set an appropriate price.
One of the tools real estate licensees’ use is a Comparative Market Analysis (CMA). In a CMA, real estate licensees use data about recently sold comparable properties to arrive at an appropriate listing range for your property.
But it’s important to understand this is not a professional appraisal of your home. CMAs must only provide a range of value for the property, not an exact value. Only individuals licensed as real estate appraisers are permitted to professionally appraise your home and give an exact value.
You would then use the CMA’s range of value to set a listing price for your property. You cannot use the CMA to obtain mortgage financing for a property.
The listing price is your decision—but your real estate licensees’ job is to help you set one that will sell your property for the most amount of money in the least amount of time.
The report you are given must include a statement indicating:
Have you ever seen an ad from a real estate licensee indicating they’ll guarantee the sale of your home OR they’ll buy it themselves? What they’re likely advertising is called a guaranteed sales agreement and while they are allowed in Alberta, there are rules.
As a seller who may be attracted by such a promise, you need to know what the rules are and what you can expect through a guaranteed sales agreement.
If you’re selling your home to buy another home, you may be interested in a guaranteed sales agreement for the home you own now. This would mean you could avoid owning two homes and paying two mortgages if you take possession of your new home before a buyer comes forward for your current home. A guaranteed sales agreement may provide you with a bit more confidence in proceeding with your new home purchase before selling your current one.
There are, however, things that sellers need to know about guaranteed sales agreements.
Individual licensees cannot offer or enter into a guaranteed sale agreement except on behalf of their brokerage.
Even if a seller has entered into a guaranteed sales agreement with a brokerage, the brokerage will continue to market the seller’s property until the date of the guaranteed sale to the brokerage. It is to the mutual benefit to the seller and the seller’s brokerage to find a buyer during that period of time.
The brokerage policies should capture how the brokerage arrives at a guaranteed sales price and who’s in control of the property’s asking price during the listing period—it may not be the seller.
In any guaranteed sales program, the brokerage is going to attempt to minimize their risk. Sellers should review the terms of any guaranteed sales agreement very closely. There could be terms within the guaranteed sales agreement that affect the listing agreement (i.e. guaranteed sales agreement might call for a review of listing price at key points during the term of the listing). If a brokerage has a guaranteed sales program that calls for a review of listing price at certain points during the term of the listing, that detail must be included in the brokerage’s policies and must be communicated to the seller.
When a brokerage enters into a guaranteed sale:
Guaranteed sale program advertisements often do not include how the brokerage calculates the price. The implication is the purchase price is based on the listing price or the property’s market value. This is usually not the case.
In most cases, the brokerage calculates the purchase price using a formula where the commissions, legal fees, carrying cost and commission on the resale are offset from the purchase price. When this type of formula is used, the brokerage:
Brokerages may not charge commissions or deduct commissions from the purchase price on guaranteed sale agreements. Usually, an amount equal to what commissions would have been in a normal sale is considered when deciding upon the guaranteed sales price.