The idea of people selling their own home, (FSBO – For sale by owner), without the services of a broker has become a popular one in some neighbourhoods of Quebec, but it has its ups and downs. As a seller and a buyer dealing with a for sale by owner property, both parties are typically representing themselves and the question is do I need a real estate agent? In Montreal from my experience over 90% of these for sale by owner properties end up being sold through the representation of a broker. The best qualified buyers are working with a broker and sellers realize this. Buyers shopping on their own, are expecting a reduction in price since they feel that the seller is not paying any commission.
FSBO – For Sale By Owner
One of my buyers was interested in a property that was sale by the owner and not listed on the official site that a licensed real estate broker would use (mls.ca and centris.ca). After speaking with the sellers, they agreed to have me show the home to my buyers. The seller understood that the buyer was willing to visit their home only with the representation of their real estate broker by their side. For my buyers, I took the time to explain that although the process may be slightly different, as their broker I am bound to perform my ethical duties and obligations which means following our due diligence process.
To make a long story short, my buyers loved the house and were ready to make an offer! The seller cooperated well and provided us with a filled out Sellers Declaration form for us to review what they had declared about the property. This form is an integral part of the sale and is mandatory when selling. When preparing an offer for a buyer, I diligently do the research, to make sure the property is worth a certain price.
Beware of previous seller’s declarations
After researching the history of the property (taxes, leans, previous listing information etc.), this revealed a previous Seller’s Declaration from the previous owner, mentioning mold in the attic and decontamination work, amongst other things. Having not received this information by the seller from the beginning, raised an alarming flag to my buyers. The building inspector advised them to back out of the offer. The buyers were very disappointed to say the least!
What happened next was that the sellers panicked and realized that despite their good intentions, they misrepresented the property by not knowing exactly what was expected of them from a legal standpoint. The sellers were licensed contractors and did an excellent job renovating the home! They had purchased that property through a broker but since they were selling without one, they made many errors when listing the home by omitting crucial information about the history of the property.
Legal issues down the road without a Real Estate Agent
This could have ended in the sellers selling to other unsuspecting buyers and possible legal issues down the road. In order to resolve the situation, we started from scratch, and put everything on the table using our proven real estate process. The seller was asked to provide all of the documentation and information they had about the property from the time they purchased, so that there was a full disclosure.
The seller and buyer were able to come to a mutual agreement on price and conditions and both feel confident about the transaction!
The main risk of selling your own home or buying a For Sale By Owner home, is that all parties are taking a gamble with all the compulsory verifications that a real estate broker would be obligated to perform on their behalf. The seller may not disclose certain things they feel are not important and by omitting information they jeopardize the sale and increase the chances of legal action against them.
Real estate agents governed by Civil Code
Real estate brokers, are governed by and adhere to the Real Estate Brokerage Act, which is a set of laws and regulations based on the Civil code of Quebec. There is an established process that occurs when we put up a house for sale in Quebec, and a legal procedure and due diligence that follows. When you sell your home on your own, unless you had a real estate license in your past life, chances are you will omit important steps in the process. One small mistake can cost you the sale or worse, it could land you in court!