Steps Involved in a Real Estate Transaction

Now that you know the players, it's time to look at what's involved when real property is bought and sold. The main steps are explained in the material that follows.

Listing the Property

If you're selling a home through a real estate agency, the realtor will get all the data-such as the house size, the number of bathrooms and bedrooms, the age of the house, its location, and so on. This information will then be made available to potential buyers.

There are two main types of listing agreements:

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1. Exclusive listings: Exclusive listings give the realtor the exclusive right to sell the property for a specified period of time. During this time, if anyone else-even you personally-sells the property, the realtor is entitled to a commission. And, even when the time period is up, if the realtor shows someone your home and that person ends up buying it, the realtor gets a commission.

2. Multiple listings: Multiple listings enable many agents to pool their resources, so each one has a larger number of homes to show prospective buyers; however, they lose their exclusive right to sell your home. Realtors generally form an association (such as the Calgary Real Estate Board) to operate the MLS-Multiple Listing Service-for their members.

The Real Estate Purchase Contract

When a potential buyer finds a house he or she likes, a real estate purchase contract (sometimes called an offer to purchase or an interim agreement for sale and purchase) is drawn up with the help of the realtor. A purchase contract is legally binding, and anyone who breaks it may be liable for losses suffered by the other party; therefore, it's always a good idea to consult with a lawyer before signing such a document. A purchase contract includes

• an identification of the property

• the price offered and the terms of payment

• the time within which the offer will remain open (If it's not accepted within that time, the offer is withdrawn.)

• the date of possession

• the things the buyer wants included with the property (for instance, the fridge, the stove, the swing set in the backyard)

• any conditions (or "subject to" clauses)

• a deposit to show that the buyer is sincere

Explaining "Subject to" Clauses

Normally, a purchase contract contains at least one condition — that the buyer can arrange financing, usually by way of a mortgage. That means that the offer is conditional upon the buyer's being able to raise the necessary money within a set time frame. This allows buyers to make an offer yet not be bound by the agreement if they simply cannot come up with the money. Another normal condition is that the seller has clear title, with no easements on the property.