Not only did we sell a property for the first time ever (we’ve bought several), but the property we sold was the first one we ever bought.
And our first home together as newlyweds, the home we paid off in less than 5 years, and our daughter’s first home.
And while I’d like to say that it was emotionally difficult to sell, once we decided and were going through the process, I was just happy when everything was over.
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After our daughter was born, our home became less functional. There was no grass in our backyard for kids to play on and no downstairs spare bedroom for our inlaws to stay in when they visited.
These weren’t deal breakers for us, but with a softening in the real estate market in 2019, we decided to see what was out there for us. And after finding our new home and getting a great deal on it, we decided to move.
But since it was a buyer’s market, why would we sell?
By this point, we had 8 other rental properties, so we decided to turn our old home into a rental property until the market turned around.
And if you’re keeping track, that home was once mortgage-free, but then we used a HELOC for down payments on our rental properties, so there was debt on the property. We refinanced it and took as much equity as possible to put down on our new home.
Financially, this rental wasn’t our best. In fact, it was the only property we had that was cash flow negative. The mortgage payments were too high for the rents in the area.
But we told ourselves that we were okay with it because we would eventually sell for a higher price, and this was only a short-term solution.
There were also tax implications at play that were in our favour more long term.
There were numerous times over the past few years that I wanted to sell the property. But J was okay with it because it was easy to rent, and the tenants were building equity for us.
Fast forward almost 5 years, and interest rates have been going crazy. We knew that when the mortgage came up for renewal, the payments would make this property even more underwater.
And so, I finally convinced J to sell. Well, me and an annoying tenant issue that finally pushed him over the edge.
Ideally, like renting out a property we planned to sell in the spring. Our tenants were planning on buying their own place, and we all had a plan in place.
But then our tenants had a relationship breakdown and decided to break their lease at the end of summer.
While it would have been ideal to list the property with them still in it so that we wouldn’t have too many vacant months, we would be responsible for the mortgage payment.
A quick walkthrough with our realtor made us realize that would not be in our best interest.
So, now we were in the position to sell the property in the fall in a rising interest rate environment – not ideal.
Buying vs Selling
I’ve never felt the process of buying a property to be stressful. If we didn’t get one property for the price we wanted, we could just keep looking.
But I found the process of selling to be extremely stressful. We could put our best foot forward, but there were so many uncontrollable factors at play.
And maybe that’s why I found it to be more stressful because I felt like I had less control. And I like to be in control of things.
The Decision to Sell Now
We had thought about re-renting it out until the spring. But didn’t want to eventually have to remove a tenant when we knew we wanted to sell before the mortgage came up for renewal.
It just didn’t sit well with us.
So, once our tenants gave us notice, we started to set things in motion.
We went through the house with new eyes. Things that never bothered us or previous tenants could potentially be roadblocks for a future buyer.
Some things needed to be done to get a top price for this property. Thankfully, a lot of this stuff we could do ourselves.
But it meant an extremely busy week of work for us.
I can now say that we did more work on that property than we have on our own this year.
To Stage or Not to Stage
After we did all the work, we arranged for staging.
This was a big conversation in our household. I thought we needed to stage the property to make it look as best as possible.
Buying a home can be a very emotional process, and we wanted potential buyers to fall in love with the place. Staging would also help cover up minor holes in the walls and pull attention away from minor wear and tear.
But all of that comes with a price. And J questioned if it was worth it.
He is a very logical and rational thinker, so staging would have a minor impact on his decision-making. So, I had to convince him it’s not the same for everyone.
After getting a few quotes, we decided to stage the property for a month to see how things went.
And I’m very glad we did. The staging transformed that house into a beautiful home. It told a story more than a vacant home could.
After the staging was in, we walked through again with our realtor, and he was shocked at the transformation, not only by the staging but by all the work we had done to the property.
This shock resulted in a list price of more than $30,000 above his original estimate.
So, pictures were taken, a listing was made, and we waited.
After numerous open houses (which I have mixed sentiments about), we got an offer from someone who saw it privately with their realtor.
The Negotiation Process
Their offer was much lower than the list price but one we could work with after some negotiating.
My first instinct was to split the difference between our number and theirs as our final offer. We were okay with that amount, and I hate to waste time going back and forth sometimes.
But our realtor advised against that because he told us that people like to negotiate to feel like they are in control of the deal they are getting.
So, we took his advice (we were paying for his services after all – he is a professional) and were really glad we did.
We ended up settling on a price much closer to our original list price than their first offer. In my mind, we won the negotiation.
A Second Negotiation
And then, we waited 2 weeks for the condition period to be removed. The buyer had 2 conditions – financing and inspection.
After the inspection, there was an issue with the electrical identified. I knew this would eventually become an issue, so I wanted to be prepared to negotiate and not lose the deal.
So, I had an electrician come in and give us a quote for the work that would need to be done.
The buyer also had an electrician come in and provide a quote. Their quote was $1000 higher than my quote. And when they came back to negotiate, they wanted us to pay for half of the work with their quote price.
We shared our quote and told them we would pay for half of ours (but honestly, we would have paid the full price of our quote just to get the deal done at this point). They accepted our counter offer, and we had a done deal.
Our property was now essentially sold while we waited to sign paperwork with our lawyer and hand over keys on the possession day.
One More Thing to Worry About
But, of course, there was one more issue to stress me out. The buyer had asked for a real property report (RPR) and a compliance letter from the city.
We had both of these, but they were from 2001 and not very clear. So, we knew we would have to get a new RPR and compliance letter.
I had foreseen this being an issue and was going to order an RPR as soon as we listed the property, but our realtor had suggested we offer title insurance in lieu of an RPR. This would save us over $800, so we decided to go with that.
But then the buyer negotiated an RPR, so we had to get one. No worries, I had everything lined up, and our timing should be okay, even with the longest predicted timelines.
Fast forward, and when we went to sign our paperwork with the lawyer, we didn’t have the compliance back yet. Two days before closing, we still didn’t have our compliance letter. I was stressed (probably shouldn’t have been) and a bit frustrated that I didn’t deal with this earlier.
After some back and forth, digging, and a few strongly worded messages and phone calls, we received a copy of our compliance letter at 8:20 a.m. on the closing day.
There’s nothing like waiting until the last minute.
And, in the end, everything worked out. We were able to close on time without incident:)
Seeing as I write about money and numbers all the time, I would be remiss not to include them here. Here is the breakdown of the sale of our property and all the numbers. (asdf – opportunity to update this sentence for “seo”)
- Original List Price – $423,000
- Final Sale Price – $416,500
- Realtor Commissions – $17,320
- Supplies – $1110.74
- Staging – $3780
- Upgrades – $3208.25
- Cleaning – $1019.35
- Utilities while vacant – $289.67
- Penalty for breaking mortgage – $2527.93
- Mortgage payments while vacant – $3337.14
- Misc – $1163.75
- Home insurance premium refund – $1183.28
- Property tax adjustment – $556.90
- Total profit from sale – $384,483.35 (minus remaining mortgage)
Not as much as we had originally hoped for when we planned to sell this property. But considering all the circumstances and timing of everything, we are very happy with this number.
So what do we plan to do with the profits?
Well, one of the first considerations is always taxes and, in this case, capital gains. This is not a concern for us as the selling price was lower than our appraisal price when we changed the use of the property. So, there should be no capital gains considerations.
Our plan is to max out J’s RRSP as he is a high-income earner, and the tax deduction will help us in the short term and the RRSP contribution in the long term.
Then, we plan on using the remainder to pay off the mortgage on our primary residence.
I know there are always mixed opinions about this, but it’s the right decision for us. We are less than 5 years away from being financially independent and work optional, so the lower we can make our expenses, the better
This whole house sale process has been a wild roller coaster ride. When it comes to buying a property, we’ve done it so many times that we have the systems in place to make things as easy as they can be.
Selling a property, not so much.
Throughout the process, here are 3 lessons I’ve learned that apply not only to selling a property but also to life and finances in general.
Lesson #1 – Control the Things You Can
As someone who likes to have control, it is difficult to relinquish it or to have none at all. Throughout this process, I tried to remind myself to control the things I could.
Stressing out about things I couldn’t control never helped (although it couldn’t always be avoided). So, just know that if you’re ever in a situation stressing out about things you can’t control, you’re not alone. I’m usually right there with you.
A few things I could control in the process
- Having our own electrician to give us a quote to fall back on
- Shopping around for staging quotes
- Making sure the property looked as good as it could
Lesson #2 – Trust the Professionals
There was a reason we decided to hire a realtor. While we could have saved money listing the property on our own, this is not a field we are experts in. Nor did we want to spend the time marketing the property and arranging for viewings.
My greatest fear was that the property would be unsold and vacant all winter, that we wouldn’t be able to secure insurance for this long vacancy, and that we would be on the hook for all those mortgage payments.
Working with a professional helped decrease some of those fears (at times). I just needed to keep reminding myself to trust the professionals because they knew what they were doing.
And in the end, it all worked out.
Here are some professionals you may consider working with at key points in your life
- Realtor when buying or selling a property
- Advice only financial planner throughout life’s milestones
- Doula when giving birth
- Mortgage broker when refinancing a property or renewing a mortgage
- Hairstylist to cut your hair
Lesson #3 – Determine Your Price and Move On
One of my “rules” of negotiating is to be happy with the price I’m willing to pay, even if that means someone, somewhere, may get a better price than me.
I’m reminded of this during the sale of our house. Because even though we negotiated (and I’m glad we did), we didn’t negotiate to try and get one up on the buyer.
We were happy to negotiate the cost for the electrical just to get the sale done. Maybe we could have stood our ground and not paid and walked away with $2500 more in our pocket. But not being flexible could have also lost us the sale in a not overly seller-friendly market.
You can waste so much time and energy contemplating what-if scenarios. Or, you can be happy (or at least content) with your decisions and move on. Use your time and energy on things that bring you joy.
So, now, as I sit here telling you my story, J is on his way to pick up our closing cheque. It is the biggest cheque we have ever received.
And after the whole rollercoaster of the process of selling our first home, I’m glad it’s over, and all worked out. Especially with winter just around the corner.
I feel an enormous lightness as the stress has just melted away. Nothing can go wrong from here. It’s all over.
I hope that home provides many memories for the new owner. And I look forward to what the sale proceeds will be able to do for my family.