Before you decide to sell your property in Toronto, I suggest that you deeply reflect on the opportunity to hold onto the property for the long run. A pros and cons analysis can be conducted to ensure that proceeding with a sale is indeed the right path forward:
Pros:
- capital gain and financial flexibility: you may be able to generate a substantial financial gain if your house (or condo) has appreciated in value from the time you purchased it, which can give you the freedom to pay off debts, invest, purchase a new property, and/or have savings for the future. Note that from an income tax perspective here in Canada, when you sell your home or when you are considered to have sold it you usually do not have to pay tax on any gain from the sale because of the principal residence exemption (if the property was solely your principal residence for every year you owned it);
- downsizing or upgrading: selling your property can allow you to purchase a smaller, more manageable property if the one you currently own is too expensive to maintain. Alternatively, it can provide the funds to buy a property that you aspire to own that has the location and other characteristics that would be a better fit for you;
- relocation: if you seeking a lifestyle change by moving closer to family, better weather or certain amenities, or you need to move for work… and you’re set on not property managing the home from afar (on your own - which can be quite challenging - or via a property management firm), selling it can help you transition smoothly to a new location; and
- reduced maintenance and costs: the ongoing maintenance costs, property taxes, condo fees (if it’s a condo), and other expenses associated with home ownership would be eliminated with respect to this property if you were to sell it.
Cons:
- emotional attachment: it can be emotionally challenging to sell a home, especially one you’ve lived in for a long time, as this involves letting go of memories and a sense of stability;
- transaction costs: when you sell a home, you are likely to incur transaction costs such as a real estate broker commission, closing costs such as legal fees, and potential capital gains taxes (see the Government of Canada website and consult with an accountant on this latter topic);
- market conditions: the real estate market can be volatile, and using a competent real estate broker who has a clear understanding of the local market is advisable to in order to sell at the right time and achieve the highest sale price that the market can bear;
- moving costs and hassle: decluttering, cleaning, and re-organizing your current house (or condo), plus packing, moving, and setting up a new home can be time-consuming, stressful, and costly;
- potential financial implications: if you sell your home then rent the next property you may face rising rental costs over time without building equity, and if you buy another property you may have to take on a larger mortgage;
- loss of long-term investment: real estate holdings in cities like Toronto are broadly considered a good investment when they are held for the long term (i.e., the longer the better in my professional opinion, but ideally at least 5 to 10 years is generally recommended). Selling a residential property means that you may miss out on future price appreciation.
Have you assessed your financial situation, life goals, and the current real estate market, weighed the pros and cons carefully, and consulted with your financial advisor or an experienced real estate broker, and you’ve come to the conclusion that it is wise to proceed with the sale of your house (or condo) at this time? If so, please read on.
In order to sell a residential property for the maximum price in today's Toronto market, you as a homeowner may want to take the following steps:
(1) financial and legal preparation: by speaking with the financial advisor at your preferred financial institution and/or your mortgage broker, be prepared for the closing costs such as legal fees, real estate brokerage commissions, as well as potential taxes, and also come to understand the current mortgage landscape and financing options available to buyers given that these can influence their purchasing decisions. By speaking with your preferred residential real estate law firm, get informed about the disclosure requirements that sellers need to abide by (from a legal standpoint, sellers of Ontario residential properties must disclose material defects, environmental hazards, and other issues affecting the property’s value or safety).
(2) an experienced real estate broker: it would be in your best interest to choose a broker who specializes in the Toronto real estate market, has a well rounded understanding and level of experience within it, provides helpful guidance and insights throughout the sales process, is able to handle the negotiations effectively, and has your best interest in mind.
(3) prepare thorough documentation: have all the essential documents ready, which can include items such as property tax records, receipts and warranties relating to any upgrades you’ve made to the property since you purchased it, warranties and service histories regarding your appliances. Also, note that a pre-listing inspection can help you identify and fix issues in the property proactively, which can make your house (or condo) more attractive to potential buyers and maximize the sale price.
(4) assess current market conditions: has your real estate broker informed you whether the market currently favours sellers or buyers, and what steps will be taken to leverage this understanding to generate the highest sales price given the current market trends? in terms of the timing of the sale, are seasonal trends being taken into account (e.g. spring and early summer often see more activity and potentially higher sale prices)?
(5) maximize the property’s appeal: it’s wise to make a positive first impression with potential buyers by ensuring that the exterior is maintained (including landscaping, painting, and cleaning), that the interior is tastefully and professionally staged with the target buyer in mind, and that any necessary repairs and cost-effective upgrades (such as modernizing fixtures and appliances) are considered.
(6) strategic pricing: is the listing price competitively set in relation to similar properties that recently sold and those that are on the market currently (overpricing can turn away potential buyers, while underpricing can see you leave money on the table)? A real estate broker who is familiar with your market (e.g. historical detached homes in Toronto’s Roncesvalles neighbourhood) can help you determine the optimal listing price through a comprehensive market analysis.
(7) marketing focused on the right buyers: (i) given that many potential buyers start their search online, it’s advisable to ensure that your real estate broker books professionals to take care of high-quality photos, floor plans, and a virtual tour; (ii) ensure that the property is prominently featured not just on the MLS and Realtor.ca, but also that the target audience (e.g. millennial families with a minimum combined income of $200,000 currently looking for properties in Toronto) are targeted via social media, direct mail, and via traditional media channels based on where you are most likely to spend their time gathering information as part of their home buying decision-making process; and (iii) open houses and private showings can be utilized to accommodate the targeted buyers’ availability and preferred method of identifying their next home to be purchased. A marketing savvy real estate broker will be able to advise you on the right marketing tactics to generate the highest sale price.
(8) optimizing the timing: keeping in mind your personal circumstances, if you are able to develop some flexibility in your timeline to sell you will be able to take advantage of favourable market conditions. It would be advisable to collaborate with your real estate broker in listing your house (or condo) for sale at a time that aligns with peak market conditions in order to increase the likelihood of maximizing your sale price.
Are there any other steps that could be beneficial to maximizing the sale price of a residential property in Toronto, in your opinion?